A Simple Trick on How to Save Up A Lot of Money Fast
Money Saving Tricks That Work
We've all heard experts say that we should put away 10 percent of our income. But for most of us, investment advice is beside the point: Once we've bought the groceries, stopped to buy gas, bought school and work clothes, and paid the mortgage, there's nothing left. The truth is, we're just scraping by, trying to figure out how to rob Peter to pay Paul. The last thing we need is advice on which mutual fund to buy. And when it comes to saving for the future, well, that's a luxury many of us can't afford. But over the years, I've noticed that some of the people who manage to save money don't seem to have much more to start with than the rest of us. In fact, it's usually the people with moderate incomes who do the best job of saving. That's because saving money is more a psychological exercise than a financial one. If you can figure out how to play a game with yourself to make stashing money a challenge, you'll get over that hurdle.
1. Open a savings account at a small bank or a credit union that offers no ATM machine and where you do not have a checking account. If you cannot find one without an ATM machine, don't get an ATM card. The idea here is not to have ready access to your money. An additional advantage is that many small banks do not require a minimum deposit to avoid fees. Even in large cities like New York, there are banks such as Carver Federal Savings Bank, where you can maintain a small savings account without paying a monthly fee. I found a number of small banks with minimums as low as . The disadvantage is that these banks offer no conveniences. In this case, that's just what the money doctor ordered. You don't want to make it convenient to get your money out. Start with a small amount—something you're certain you can spare, like . Promise yourself you won't touch it. While you're at the bank, pick up a bunch of deposit slips and envelopes— mailing envelopes if they are available, or the kind you can drop into the overnight deposit.
2. Each day, take one dollar bill out of your pocketbook and put it aside in a bank deposit envelope for your savings account. Keep the envelope for a month before you deposit the money in your savings account.
3. Once a week—or once a month—write out a check to your new savings account. Make it a small one, say . If things are really tight for you, don't deposit it right away. Fill out the deposit ticket and put it in the bank envelope. But leave it in your dresser or on your desk. That gives you a little artificial cushion in your checking account. You've written the check, but it won't be cashed yet. When the time comes to write the second check, mail the first one. Once you deposit it into your savings account, remember that you can't touch it.
4. Take a look at your budget with an eye toward expenses you could eliminate—even little ones. Put whatever money you're able to save into your new savings account. Suppose your grocery budget is 0 a week, for example. You clip coupons, visit a couple of different markets and figure out a way to get by on 8 this week. Then put in your savings account.
5. When you're able to eliminate a major expense, put half the savings into your new account. When you finish paying for your car, for instance, save one half of the car payment each month. Or suppose you save a week on child-care expenses when your kids start school. Put .50 per week into a savings account. That will build up really quickly!
6. Decrease the number of exemptions on your withholding form at work. Go down by one notch. In other words, if you now claim three exemptions, drop to two. That means the government will take a few more dollars out of each paycheck. At the end of the year, you'll get a tax refund. Financial experts say it doesn't make sense to give the government free use of your money. But if that's the only way to save it, it can make sense for you. Be sure the money goes straight into your savings account, though. Don't blow it.
7. Round up the amount you pay on your mortgage payment to the next , or 0. If your mortgage payment is 7.50, for example, pay 0 a month. You are saving money in two ways here. First, by adding .50 to the principal, you are adding to the equity on your home. Second, you are getting a good return on your money. That's because you're decreasing the principal amount on your loan and earning a return of whatever your interest rate is. If your mortgage carries an 81⁄2 percent interest rate, paying down your loan earns you 81⁄2 percent.
8. Watch your ATM withdrawals. This is a major cash leak. Rather than stopping by the machine every time you need money, decide how much you will take out for the week. Make it a little tight. For instance, you might decide you need . Take it out on Monday and then make a game of stretching it out over the week. If you have just left on Saturday, skip the video rental and figure out a way to make it last. If you have left on Monday morning, that money goes in your savings account envelope.
9. Pick up all the coins off your dresser, from your purse and your pockets and put them in a jar. Buy a bag of assorted coin rolls and, once a month, roll up the coins and deposit them into your savings account.
10. Trim your homeowner's and auto insurance bills and put the difference in your bank account. The best way to cut premiums is to boost your deductible. But you may also be able to save money by switching insurers. Call three different insurers to get quotes and pick the best one.
Video: 7 Psychological Money Saving Tricks - How to Save More Money Each Month!
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