You know how to save. Spend less than you earn and put the difference in a safe place.
So, why isn’t it always that simple?
Well, sometimes it can be. Here are simple tricks that help you fool yourself into saving more. Use them to divert money into savings before you even notice that it’s gone from your wallet.
1. Save your ’round-ups’
Use a bank that “rounds up” purchases and moves the difference to your savings. You likely won’t miss these tiny amounts, but over time, they can add up.
A couple of examples:
- Bank of America’s “Keep the Change Savings Program” rounds up each of your purchases to the next dollar when you use a participating debit card. The bank automatically transfers the change from your checking account to savings.
- Ally Bank rounds up purchases from a debit card, electronic payments, and checks written from a qualifying checking account. It automatically harvests the money when “roundups” reach at least $5, transferring it to your savings.
As always, check a bank’s rules and confirm that no fees are involved.
Tip: Apps — Acorns, Qapital and Digit are a few — can do this, too. There may be fees involved with apps, though, so take that into account when deciding if an app is worth it.
2. Set it and forget it
You’ve probably heard this advice: “Pay yourself first each month.” In other words, treat your savings account like another bill, and pay it before you pay any other.
Good advice, but it works even better when you can forget about making the payment. Do that by setting up a recurring, automatic transfer from your checking account to your savings account every month. Out of sight, out of mind.
Check your bank’s website or call to learn how to automate transfers between accounts. This may require signing up for the bank’s online or mobile service. Depending on the bank, you can schedule transfers between accounts within a bank, or even between banks.
Tip: If your bank doesn’t offer the option, it may be time to shop for a new bank.
3. Use a cash-back rewards card
Using a credit card that pays rewards for certain types of purchases lets you recoup a bit of your spending.
I’ve earned about $118 so far this year on a cash-back card linked to my Amazon spending. It’s not a huge amount, but it covers the cost of a few purchases each year. Free is good.
Tip: Find cash-back credit cards at Money Talks News’ Solutions Center. Use the “Card Type” menu to select “cash back” cards.
4. Ignore raises and bonuses
Supersize your retirement savings by sending raises and bonuses directly to your company’s retirement savings plan.
Just pretend the raise never happened. Keep your spending at the same level as before, giving your savings plan a major boost.
Tip: Read “7 Ways to Save for Retirement Without a 401(k).”
5. Offered a 401(k)? Use it
Don’t make the mistake of ignoring your 401(k) at work. The beauty of these plans is that your retirement savings can build unnoticed while you get on with life.
If your current workplace doesn’t offer a retirement plan, think about switching jobs for one that does.
When you enroll in a 401(k) plan, you’re asked to say how much of your paycheck — 6%, for example — is sent directly to the plan. As your paycheck grows, the amount you save grows, since 6% of the new, bigger amount means more sent to investments. You, meanwhile, don’t notice the change.
Don’t stop there. Aim to contribute at least as much as your employer is willing to match, so you get all the money you deserve from your work.
Tip: “401(k) Mistakes to Avoid at All Costs” tells you how to maximize employer matching contributions.
6. Nudge up retirement contributions
Whenever you can — especially when you get a pay increase — nudge up the percentage of your pay that goes to your 401(k). Bump up your contribution amount in small increments, so you don’t feel a hit to your take-home pay.
Tip: Do this as often as possible, to keep the savings growing.
7. Divert coins to savings
Take the change from your cash purchases and stash it away. An empty jar or coffee can will do.
Make this a fun game with children to get the whole family saving and to help them learn the habit of saving from a young age.
Tip: At the end of the month (before your collection becomes too heavy) find a Coinstar change sorting machine near you, count the money and deposit it into your savings.
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