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Tuesday, April 15, 2014

Smart Money: Stealth Savings

Sometimes I think the saving habit is one of the hardest habits to develop.  But that savings account has saved my butt so many times, I just don't understand how people function without one.  

I think the trap people fall into is thinking that they don't have "enough" money to develop a regular savings habit.  That's kind of delusional thinking because the emergencies aren't going to stop coming just because you don't have the money on hand to deal with them.  



So when the car breaks or the water heater floods the basement, you are going to reach for the credit card, borrow from relatives, or heaven forbid, resort to the dreaded payday loan.  Those are all strategies that just dig you deeper in the hole. 


So, how to deal with that pesky problem with finding the money to fund your savings account.  The answer is you need to learn to fly under the radar with stealth savings - lots of tiny changes to generate extra money to save.  Here are some ideas for you:

Illegal Tender:  This was my Mom's favorite strategy.  She would declare certain denominations of money as "Illegal Tender" - usually quarters, but sometimes just nickels or dimes.  Then she would sort the extra change out of her wallet every night and put it in a special jar.  It added up a lot faster than you would think and she would usually be able to deposit an extra $30-$50 per month to have savings account.  

There are some banks that will do this for you automatically now. Every time you use your debit card, it rounds the transaction up to the nearest dollar amount and moves the change off to your savings account - sweet!

Couponing - Extreme or Otherwise:  It takes extra time and dedication, but you can save a ton of money with coupons.  The trick is to figure out how much money you actually saved and bank it.  Otherwise, it just slips off into the wild blue yonder and you never seem to benefit from it.  

Pay Cash:  This one is bigger than you might think.  Paying with cash hurts a lot more than just whipping out a debit (or credit) card.  Knowing that the cash will be gone once you spend it, is a great way to get your daily spending under control and generate some extra savings.  

Brown Bagging: If you aren't already doing it, you can save money through brown bagging your lunches, or other types of cutbacks.  For instance, meatless Mondays, breakfast for dinner, or cutting back on eating out.  This was a big help for me - I switched from eating in the company cafeteria at $5-$7 a day to bringing Lean Cuisines for $2-$3 a day. I saved money and lost 20 pounds in the bargain.  Again, the important part is to track your savings and funnel that money into the bank.  

Garage Sales/Ebay/Craigslist:  If you are not having luck with any of these methods, its time to get more intense.  Start digging around your house for stuff you can sell for extra money.  I've done this for years and I've made thousands and cleared a lot of unwanted stuff out of my house.  It definitely is a lot of work, but it can be worth it.  

Extra work:  There's a ton of ways you can fund your savings account by doing extra work.  It doesn't always have to mean commiting yourself to a second job.  You can occasionally babysit or tutor kids, give piano/guitar lessons, do hair, or clean houses, whatever floats your boat.  I do decluttering work for people when I have an extra evening and my husband does odd jobs and lawn mowing for people in the neighborhood. 

Direct Sales (party plan businesses):  This one comes with a warning.  Do NOT get into this if you have a shopping problem.  Voice of experience here!  It takes a lot of discipline to make this work properly and not be a liability to your budget.  However, if you're smart and disciplined about it, you can make quite a bit of money in these businesses.  In the past, I've sold both Stampin' Up! and Pampered Chef.  I didn't make a fortune, but it's a nice trickle of extra money, and I get a lot of stuff for free that I would have bought anyway.  

The important thing is to get that money into the bank anyway you can and once it's there - forget about it and let it grow.  

What are your best ideas for stealth savings?

If you'd like to see past posts on the subject, click the label at the bottom of this post for a complete list of my Smart Money series.

Photo credit:  Image courtesy of Janoon028 / FreeDigitalPhotos.net.

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3 comments:

Megan Walker

My trick is to set up an automatic transfer at the beginning of the month when I get paid into my savings account. I never see that money, so I don't miss it when it gets transferred. The amount transferred is relatively small, but every bit helps!

I agree with you: my savings has saved my butt many times, so I like to keep it healthy.

Kristin Wong

Great round-up of savings methods, Adrian. Like Megan, I'm a fan of the auto-transfer. When I need to rein in my spending, I use the cash method. It's very effective. I like your mom's "illegal tender" strategy!

Melinda Means

{Kathy} Great suggestions! Saving money is a decision that happens way, way before any money comes into the door!

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