Twenty percent of Americans aren’t saving any money at all. Many say it’s because they can’t afford to save, but the truth is that no one can afford not to save. Almost half of all Americans say they cannot afford a surprise $400 expense, but these expenses are simply a fact of life. If you can’t afford to save large sums of money or simply need a way to save more, these five strategies offer small bonuses in savings. Effective savings requires you to steadily accumulate wealth while benefiting from compound interest, so don’t worry if you start slowly. Any savings is better than none at all.
Put Money You Decide Not to Spend in Savings
When you debate whether to make a discretionary purchase, you probably phrase things in terms of whether you’d like to have the item or have the money. Change the way you think. Instead, make the choice one between making the purchase and saving the money. After all, if you can afford to make the purchase, then you can afford to put the money in savings. Every time you decide not to make a purchase, sock that money away in a savings account. You might find that you soon have an incentive to spend less.
Get Your Bank to Help
A number of banks offer savings programs that transfer spare change or $1 from each purchase to a savings account. Wells Fargo, for example, offers the Way2Save program, which transfers $1 from each purchase to savings. This means that every time you spend money, you’re actually saving money, too. You’ll probably never notice the missing dollar, but you’ll almost certainly notice the funds accumulating in your account.
Commit to a Small Auto-Transfer
Most people are paid on a recurring basis—whether through monthly payments connected to a reverse mortgage, biweekly paychecks, or monthly Social Security payments. Ask your bank to automatically transfer a small portion of each check to savings. If the money is gone before it even hits your account, you’ll never miss it. And something as small as $10 a week can add up over time. There is no amount of savings that’s too small. Just figure out an amount you can spare and stick with it.
Pay in Cash
If you spend more than you’d like, consider paying in cash, since people who do so tend to spend less money. If this seems impractical, commit to using cash when you make discretionary purchases. Then put the change in a change cup. It won’t be much at first, but over a few months it can add up to hundreds of dollars. When the cup fills, have the coins sorted and cashed, then deposit the money directly into a savings account.
Use Gift Cards
If unanticipated small expenses—an extra pot for the kitchen here, cleaning supplies there—seem to be slowly eroding your budget, consider saving for those, too. One easy way to do it is to purchase a $5 gift card every time you go to your local grocer, drug store, or super center. Then, the next time you need something, you’ve already set the money aside for it. You can deposit the money you don’t spend directly into savings.
Annie Doisy is a reverse mortgage expert who helps seniors enhance their lives by taking advantage of the equity in their homes. Annie writes for ReverseMortgages.com where her goal is to educate consumers on a wide range of topics around mortgages and other financial services.
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