Stealth Savings: Little Moves that Equal Big Money
So, you’ve banned takeout, swapped all venti fat-free lattes for the trusty Mr. Coffee at home, staged the yard sale, cut the cable, dropped the landline, raised your insurance deductibles, brown bagged every single lunch for months, and plan to limit the A/C all sweatin’-summer long.
But you still need to build your emergency fund. What can you do?
Make little changes for maximum impact.
- Automate it . This is easier than ever and surprisingly effective. Have your bank, credit union or mobile app siphon off a small amount each payday. Learn to live on what’s left. Increase the amount slowly to give yourself time to adjust your spending. One company, Digit, offers a free mobile app that you can connect to your bank accounts. The app checks your spending patterns and moves money it’s calculations say you can afford to miss into a Digit account. If you need the saved money, you simply withdraw it for free. Acorns is another so-called micro-savings account that invests the spare change that it pulls from your purchases by rounding up and puts it into a diversified investing portfolio. Banks like Bank of America offer similar programs.
- Bank your rewards. Switch to a cash rewards credit card and use it to pay for everything you can (but never more than you can pay off). Save the cash-back.
- Bank your raise. If you got one, you lucky dog. Here’s how: Pretend you didn’t get one, and keep on keeping on with your previous take-home pay. Automate the rest into savings.
- Bank your bonus. If you get any kind of extra cash at work, spend 10 percent of it on something you really need (or want) and save the rest.
- Bank your reimbursements. Getting paid back for work-related expenses or a check from your flexible spending account? If at all possible, put it into savings rather than checking.
- Bank your coupons. You saved $6 on the groceries? Swell! But it’s not savings unless you save it. Tuck away those discounts from manufacturers coupons and/or your customer loyalty card.
Creature of habit?
- Drop bad habits. It’s tough to quit smoking or, for that matter, to stop buying comic books. But as you taper off, put what you would have spent on coffin nails or anime into long-term savings.
- Recognize good habits. Rather than having a “swear jar” with a penalty for every F-bomb you drop, why not have a “Go you!” jar? Maybe you packed a lunch today instead of eating out — go you, then, and put a quarter (or more) in the jar.
- Recreate favorite habits. Do you meet friends for brunch or lunch every weekend? Replace at least one of these gatherings per month with meals at home (and take turns hosting). Hooked on opening-night movies? Learn to appreciate the bargain Saturday matinee, right after a big breakfast that will keep you from dropping a fortune on popcorn.
- Round it up. When you use your debit card or write a check, record it for the next dollar up (e.g., $7.29 becomes $8). At the end of the month, add up the differences and transfer to savings.
- Pay it forward. Finally made the last installment to the auto dealer or the orthodontist? Keep making that payment, i.e., transfer it into savings each month. (Can’t quite swing that? Save half the amount, then.)
- Launder some funds. Every time my partner and I do a load of wash, we put $2 in a jar. Try this — you’ll be surprised how quickly it adds up!
- Swipe some cash. Look at your checking-account balance on the day before payday. If there’s $117 in there, send $7 (or $17, or more) into savings.
Make it a challenge!
- The spare-change challenge. Dump some or all of the change from your wallet/pocket into a jar every night. Once every couple of months, wrap it and bank it.
- The dollar-bill challenge. Remove all the Washingtons from your wallet every night. And here’s the super-flush version: Make it the $5 challenge.
- Random number challenge. Pick a number, then check your wallet nightly for bills whose serial numbers end in the digit you’ve chosen. Set them aside to bank.
- Weekly challenge. Actually a monthly challenge: Set aside $1 the first week of the month, $2 the second week and so on. Bank the resulting $10 to $15 per month.
- Calendar challenge. The first week of January, bank $52. The second week, $51. Etc. This can be tough at first, but by the end of the year you’ll have banked $1,378!
- Savings buddy challenge. Get a mildly competitive relative or friend interested in building a cash cushion too. Set a time limit and a reward, e.g., “If I save less than you in the next six months, I have to pick up all the dog poop in your back yard.”
- I Spy challenge. See a dime on the floor at the checkout counter or a quarter in the vending machine’s coin-return slot? Once you start looking, you’ll see money everywhere. (My found-coin totals dropped when I moved back to Alaska. But even so, I found $14.27 in past years. Mine goes to a local food bank, rather than into savings.)
- Get symbolic. Deposit your age, or your children’s combined ages, every week or every month. Suppose you want to retire by age 50? Deposit $50 into savings every month, or every week if you can swing it.
- Bill yourself. Turn savings into a monthly obligation, and pay it. The “bill reminder” feature on sites like Mint make it easy to hold yourself accountable, so to speak.
- Remind yourself. Rubber-band a picture of your dream (new house, backpacking trip, whatever) to your credit card to discourage in-the-moment spending.
- Remind yourself, Part 2. Change an online shopping account password to something with personal resonance. Signing on with “Sept2016uClA” will remind you how soon your oldest kid starts college — which in turn might help you apply the want-or-need filter before you click “purchase.” Talk about password protection!
- Opt for inconvenience. Don’t pick the bank or credit union with a branch in your neighborhood. You don’t want it to be easy to get at this money. There’s no need to go there in person because you’re using direct deposit. (Aren’t you?)
- Choose an online bank. That way it takes a couple of days to get the money. You might come to your senses by then and realize that a new fishing rod isn’t the best use of your funds.
- Name your bucks. Does your financial institution let you set up sub-accounts? (I’ve got two named for my great-nephews’ college funds.) Contributing to the “new car for cash” or the “summer vacation” fund has its own special frisson.
- Engineer discounts. Pay for the items you need most often with discounted gift cards bought on the secondary market. For example, buying a $100 PetSmart card for $87 and a $50 Walgreens card for $44 means you could transfer $19 into savings.
Listen to the Audio!