Saving can be fun
When it comes to saving, there are the oldies but goodies: Toss pocket change into a jar. Automate monthly savings. But my neighbor Sasha Fine turned me on to a creative way of socking it away. She and her husband have a rule: No $5 bills in your wallet! You get a fiver in your change, it goes into a giant glass jar on a hallway bookshelf. "It becomes a game," she tells me. This is not just a cute habit. It works: They save between $3,000 and $4,000 each year — a fund designated for vacations. "No one really misses a fiver, unlike the pinch of a $10 or $20," she says. "And yet, before you know it, you're off to the beach for the weekend without a care!"
Here are some more creative ways to lock away funds for rainy days:
Stacey Lewis and her Long Beach, Calif., family have a good time with the "To the Letter" game. Since every dollar bill's front left side is inscribed with a letter of the alphabet, they choose one letter each year. All dollar bills except those depicting the chosen letter must be placed in their "savings bucket," while those with the special letter can be spent. The savings are used for events, gatherings or school shopping. "One year, we saved over $500 and had a wonderful time shopping for school clothes and supplies," she says. "We even had enough cash left over for a couple of family movie nights and dinners."
The anonymous author of the No Debt MBA blog started a vacation fund to remedy this problem in her life: "My significant other and I constantly complain that we don't have enough time with each other, so we've started a new policy: Every time one of us starts feeling like we don't spend enough quality time together, we put $1 or more into our 'beach fund,' which is allocated for long vacations together on the beach or to downshift work. Putting the savings in that context also makes it untouchable for anything but our goal, since taking money out implies you don't want to spend time together. It also cuts down on complaining."
Boston financial counselor Andi Wrenn advises clients to stick to their current budget, even when they get raises or pay off debt. Any extra money coming in from a raise or freelance work is earmarked for savings, as are funds that had previously gone to car payments or student loans.
Angil Tarach-Ritchey of Ann Arbor, Mich., rounds up all purchases made with checks to the next dollar. "If the purchase is for $15.25, deduct $16 from the balance. That change adds up quickly," she says. Others use the tactic for interest on savings and investments. If your statement says your money earned you, say, $286 this month, add from your checking account to make it a smooth $300.
Sock away money you save using discounts and budgeting. Marie-Josee Shaar of Philadelphia paid for her $2,100 wedding dress by allocating funds saved by couponing and skipping pedicures and services she would normally outsource, such as ironing her fiance's shirts as opposed to sending them to the cleaners. Tiffany Victoria Bradshaw of Los Angeles takes the value of any purchased items she returns to the store and plops it in savings. Robin Wallace, of New York City, uses the savings amount printed on her grocery store receipt as the figure she transfers from her online checking to her savings accounts. "In just over a month, I'm into the triple digits in my new virtual change jar," she says.
The trick to savings is, well, you can't spend it. Sasha and her husband also stow the day's change in the same jar, and cash it into $100 bills they stash in the apartment for emergencies.
"We are less inclined to spend ($100 bills) frivolously," she says. Melissa Armstrong, of Birmingham, Ala., likes to deposit nice round numbers into her checking account on payday. She whisks the extra $14 biweekly into an account that does not produce mailed paper statements or is attached to a debit card. "I not only have no idea how much is in there, but I also cannot take it out when I get the urge to splurge," she says. "About once a year I use the money for something I either need and can't afford, like car repairs, or something totally frivolous, like a new pair of ridiculously expensive shoes."
Frugal living expert Judy Woodward Bates, of Dora, Ala., suggests attaching a payment to tasks you hate. She pays herself for all nonwork-related household tasks, including $50 for cleaning house weekly. These payments go in a travel fund, which this year will pay for a three-week trip to Norway for her and her husband, Larry. Similarly, Bates advocates for saving money you would otherwise spend on bad habits. Example: Save any money you might normally spend on sodas while dining out — an expense she estimates adds up to $800 per year for a family of four. Also applicable: doughnuts, smokes, more than three margaritas.
Many savings tips involve cash. If that doesn't work for you, find a way to save with your credit card. Manhattan CPA and financial planner Jonathan Gassman says one client saves 5 percent of all his credit card purchases.
Dennis Kravetz, of Scottsdale, Ariz., recounts this childhood memory of extreme saving: "When I was a kid in the '60s and '70s, my uncle had a clever way of saving that was painless. He got a metal pipe that was about 7 feet long and encased one end in a heavy cement base, which made it stand upright. The weight made it difficult for thieves to take if they ever discovered what he was doing with it, and it was just high enough that an adult could reach the open end without using a ladder.
"Whenever my uncle came home each day, he would put any half-dollar, dollar or quarter coins into the pipe. Once, when he and his wife emptied the pipe, there was more than $400 in coins. At that time, this was enough to take a nice trip from Chicago to Florida."
Emma Johnson lives in New York City, where she writes about the intersect of money and life for www.Deals.com