The following is a guest post from No Debt MBA, who has saved and is working to get an MBA from a top business school debt-free.
I going to brag a little here. I’m pretty good at saving money and living frugally. I may not be a poster child for Squirreling Gone Wild, but each year I tuck away a tidy sum, I’m debt free and I’m on track to pay for my MBA in cash. Okay, bragging aside, I have a few tricks to help you pad your savings with less pain. Remember, your savings won’t benefit from these tips unless you actually follow through with them and do it. So here are some strategies to put more money away:
- Do it automatically – Everyone’s been talking about it for years. You know why you should be doing it, but are you actually following through?
- Do it in lump sums – Let’s be honest, it takes a lot of $25 automatic monthly transfers to add up to anything like $5000. (Think more than 16 years) It pays to bring out the big guns and tuck away lump sums.
- Do it before you see it – That pre-tax 401k, FSA, or HSA your employer offers? It can be savings godsend, allowing you to squirrel away thousands or even tens of thousands of dollars before it even hits your accounts. Start this immediately and keep ramping it up – you’ll hardly even notice it.
- Do it with change – Our very large coin jar recently got cashed in. After the hefty labor of carrying it to the bank we found we’d saved $250. The change became bills which will be put in the bottom of the jar and we’ll begin filling it with coins again. When it’s filled with bills…. that’ll be a nice day.
- Do it with found money – Yard sales, change found on the ground, bonuses and more – unexpected money should help you beef up your savings a little or a lot at once. Since it’s not in your budget there’s no reason not to save it, right?
- Do it with purpose – By giving your money a cause it’s a lot harder to cheat – you’d be robbing the cause you selected for more discretionary money. Our coin jar has a cause – spending more time together through vacations or downshifting. Any time I take quarters out for laundry I pay the jar back with dollars. Otherwise I’d be saying that a convenient source of quarters was more important than spending time with my SO. Named, separate savings accounts are another way to do this. It’s a lot harder to take money out of the bank when it’s labeled little Janey’s college fund or Christmas gift money.
- Do it with leftovers – If you already have a budget challenge yourself to slash one area of it for a month and put the rest towards a savings goal. If you don’t have a budget, try one for a month and save the difference over what you normally spend in a month. I’m channeling all the savings from our $25 a week grocery budget towards next year’s tuition for my MBA.
My Questions for You:
What are your best strategies for saving a little extra money?
Which of your goals could use some extra cash?
I love the change jar. We have one for pennies and the other for “silver” coins. We just rolled $29 in pennies the other day and also had $160 in nickels, dimes, and quarters. That is a great idea to stuff the bills back in.
Wow, rolling all those pennies probably took some time! We just take them to a bank with a free coin counting machine. But rolling is better than paying double-digit fees to coinstar.
Biggest problem people have is inertia! When I setup auto payments into my Roth, I hesitated too – but told myself if I needed the money I can always take it back! Of course I won’t and never did, but the attitude removed the obstacle.
That’s the same reasoning I had when funding my Roth – you can always withdraw the contributions. Makes saving a no-brainer.
my retirement goals could use more money. since i work for state government, i have a guaranteed pension and that’s made me a little lazy. i do contribute money autmatically to my retirement account each pay but it’s not nearly enough.
i love our change jar. we’re waiting until it gets to the top to cash it in. we haven’t decided what we’re going to do with it yet but i’m sure it involves a hotel.
I like the idea of saving up all your loose change. Those nickels and pennies really do add up over the years. I know this man who has been saving loose change in 5-gallon water jugs for years. He has filled several of them with loose coins, and estimates that there are thousands of dollars worth in them. He calls it his ‘Rainy day fund”. Well, thank goodness for Coinstar!
$25/week grocery bills, I think I hate you! J/k, though I am going to figure out how you are doing it. Now to convince my DH to go along with it.
The more automatic I can make it the better it works. I set up a payroll deduction for my 403B, IRA, and Roth IRA. I used to have a payroll deduction to accumulate property taxes, property insurance and mortgage. Now, I try to have as many expenses post to my credit card. Since it is a rewards card, I am earning frequent flier miles.
I love the coin jar with the folding money in the bottom! Whenever I find a good deal on something & “save money” by buying it, I try to put the amount saved into a savings account. Otherwise it just gets spent on something else & there is no savings!
Our 401k savings are automatic, as are a couple of other things. I save change all year and I use that for Christmas shopping.
I wish we had saved more for college, but that was the tradeoff for me not working for many years and being home with the kiddos. I guess we didn’t attain all our financial goals, but we will be ok.
Automatic saving and doing it through payroll deduction really works wonder. That’s why saving for retirement using these two methods really works.
Most people forget to “Pay yourself first” and end up nothing to save because they have spend all their budget!
If I didn’t do it automatically, I don’t know where I’d be right now. Probably in huge consumer debt and living pay cheque to pay cheque.
Doing it with left overs is what I need to start doing, and cashing in all the coinage I have too.
Great tips, No Debt MBA!
I like loose bills, $1 and $5 notes. They go inside the “stuff” box on top the dresser in the closet. Out of sight, out of mind. Occasionally that gets cashed in for a special dinner out, or an outing, or a gift for the Mrs.
Automatic saving worked best for me. If I don’t see the money in the bank, I won’t be tempted to spend it. The 401k is my biggest account at this point and if I didn’t auto deduct, who knows where that money would have gone. (Well, 25% would have gone to Uncle Sam!)
The strategy I would like to stress is the one to save found money. Too many people, including myself, think of it as free money to spend.
I like to allow myself 10% to spend and the rest goes to debt or savings.
These are great ways to start saving some serious money. Over the last year I have been a barista at a local coffee shop and I have practiced the coin jar technique with my tip money. Other co-workers like to cash in their quarters for a five dollar bill at the end of a shift, which is tempting, but I find myself bringing home a pocket full of change each day and it is amazing how much it adds up. Over the course of two or three months, I had saved over $300!
Thanks for the advice and best of luck with the MBA!