Getting Disciplined About Money

I certainly applaud Ms. Franklin on her ability to save, especially since she manages to save while at the same time being a Starbucks customer (I know some people consider the two polar opposites!). And she is correct in that it takes discipline, but if you are disciplined in saving, tricks aren’t necessary. I definitely do not agree with “rounding tricks” when it comes to cash accounts. I’m not condemning them, I personally believe that one of the main tenents of financial success is accuracy and being able to reconcile your accounts on a monthly basis, and urge my clients to get into that routine, which can get tricky if you round transactions in the register.

I also agree with Eric regarding the check card. It is a lot faster to many people, eliminates the trips to the bank for cash, simplifies expense tracking, and if you use a credit card even provides added purchase protection (not to mention rewards, etc.).

I once heard a radio talk show host describe his own dollar bill saving trick. He saved all $1 bills he encountered (the only exception being ones used for tips, etc.). His wife and daughter constantly made fun of him for it. When his daughter turned 16 he presented her with 1800 one-dollar bills in a little wooden box. She didn’t make fun of him anymore!

Also just to add to what I said before the same method will not work for everyone. Find the one that works for you and stick to that. Don’t force it on others either. Let them do what works for them.

I added an extra amount to the withdrawals that eventually chain link to my Roth IRA contribution. The extra money goes into my ING account and adds into my savings twice a month. Making this automatic ensures I am saving without any effort!

At the risk of outing myself as even more bizarre than at first glance, I also do this five dollar thing. I have nowhere near 12 grand (mainly because like those above I mostly use my debit card), and I don’t save every one that crosses my path, but quite a lot of them. Why five bucks? I lived in New York during both Sept 11 and the blackout, and both days needed small bills for water, radios, and other assorted “appears on street corners at inflated prices” stuff. After that I wanted to always have 5 dollar bills on hand. They’re all sitting inside a copy of the Illustrated Life of Pi on my bedside table right now!

(I also save most of the 2 dollar coins I get, and cash them in annually. When my husband doesn’t raid them to buy cigarettes. Yes, they’re silly tricks, and the amounts are nowhere near my regular savings, but these are habits that have carried over for a while and I’m comfortable with them).

My husband and I, married with no children, recently bought the children’s piggy bank called the Money Savvy Pig. Yes, really.

We are actually enjoying the four segments- save, spend, donate & invest. We get joy out of using a cash-based system now and putting all the extra coins into the bank. It’s amazing how quickly that money can build up. We deposit it into high-yield savings as soon as it gets full. We plan to make our annual charity contributions based on the money we’ve accumulated in our little piggy bank. :)

I don’t think of it as “tricking” myself into saving money, simply as another way to reward myself. It’s just gravy, if you get what I mean.

Great idea. Each month we do something similar and it works!

Hrm…saving $12000 in three years in $5 bills…
That’s 2400 * $5, which is 2.2 $5 bills per day over three years.
That sounds a little unrealistic…

Okay – I get the award for most bizarre. I cast a little silver spell now and then(yes, I’m a witch). One of the spell components is dimes. So I’m in the habit of tossing my dimes into a bowl to save for the spell. Used to be when the period of the spell was over I spent the dimes on something fun. Nowadays, I’m tossing them into another container – they are my RV savings. Yeah, so it’s like $2 a month – right now I’m concentrating on getting rid of debt and building an emergency fund. But meanwhile – I’m putting a bit back for my RV. Seeing that little bowl of dimes is also an affirmation that we are abundant enough to set aside money rather than needing every last dime to live on ;)

Pay yourself first and you don’t need to waste your time and energy with these little “tricks”.

Not to take the wind out of the sails on here, but this seems like both an arbitrary and inconsistent way to save.

Sure it sounds cool, save each type of bill, and watch the money grow, but I think a better way is to set aside a specific amount each month BEFORE you get spending cash, then you retain control, not the clerk handing back cash.

What if one month you don’t get any fives back. Or what if you get all fives, like the example in the op. Inconsistent and out of your control are not cool when it comes to saving.

I think you should maintain control over all aspects of your financial lives, including how, when, and where you save. Leaving even a portion of it to chance or luck is shortchanging (no pun) yourself.

Back when I wasn’t saving on my own, I worked for a company that reimbursed us for gas. It was deposited monthly without any notification. Instead of trying to track it down, I just ignored it and let it accrue. After 2 years I had over $2000 extra in my account (we did a lot of driving :-).

Now days I take all the silver change from my pocket and put it in a opaque jar on a book case. After a couple years, I take it to the bank and deposit it. I can get four to five hundred that way.

Ben

I really like this idea. I take advantage of the Wachovia “Way2Save” savings plan. Each time you swipe your card, $1 is transferred to your high interest (5%) savings account. You can also elect to have up to $100 per month transferred into this account from your checking account.

This is a brilliant idea…I love it!!! Just shot my wife an email with a link to the post to say we should try it. Of course, I just used a $5 bill to buy lunch before reading the post:)

Keep up the great bits of advice.

Enh. Why do people decry this as inconsistent or a bad idea? Much like eating a balanced diet, little ‘money hacks’ like this are a fun part of a healthy financial life. Saving your spare change, rounding up, etc., should take the place of paying yourself first or stocking your emergency fund. If you can make saving money interesting or fun, then more power to you. If the author of this article managed to save $12k by being conscious of where her spare change was going, then fantastic!

Next step up should be investing your money in a low-cost all-market index fund so you can actually grow your wealth over time. CD’s ultimately return you ZERO after taxes and inflation. Provided you don’t need the cash for anything in the next 10 years there is no other place for it that makes any sense than the equity markets.

I do something similar… When I was a waitress at a diner, one of my coworkers saves all the change for his college tuition. Makes enough in change that it covers a class or two and some books every semester. He only counts the note tips in his budget (and budgets for the entire tuition bill in case he’s short though he never actually has enough income for that).

I took that idea and the one about rounding up in your registry/saving change from cash spent and put them both together… nbut after a couple months of that I realized HEY! I’m screwing up my financing!

I wasn’t adding in my change from tips into my cash income. But the change from purchases made with the cash tips I WAS counting also went in the same change jar… and then got added to my income as tip money when it went to the bank (about $70/month). Problem was, all my purchase-change was getting double-counted as income. Maybe $10 a month or so. Not a lot but enough to screw up my income estimates (not to mention increasing the amount spent in each category that I spend cash in)!

I started using quicken a couple months ago and I figured out how to fix my problem (besides using separate jars, which I would still manage to screw up). When I enter the data from purchases into my cash registery in quicken, I also have a “change” account that is hidden and not in my toolbar. I can enter the full dollar amount as I have been, but use the split function to put the exact amount spent into the proper category and put the change into the other registry. That keeps my expenses neat and tidy, and when I go to put my jar in the bank, I can subtract the “change” from the full amount and I have my change-tips amount for the month. No double counting income.

Sounds a lot more complicated than it is (and no it doesn’t beat paying yourself first–I do that too).

Another testament to the benefits of saving change:

When I was in college, I bartended 5 nights a week to pay for school and rent. At the end of each shift, I’d end up with a tip jar half full of change. The servers and other bartenders usually didn’t want to lug home an apronful of change after a long night, so they’d just toss their coins in my tip jar on their way out. I would deposit the cash and payroll checks to pay rent and bills, and I’d put the change in a large bin at home. Every Sunday, I’d wrap change while I watched “Sex and the City.” This became a weekly ritual. Over two years, I paid off over $6000 in credit card debt using the “change fund.” Even though I’m now paid through direct deposit, my husband and I still save all our change in a large jar. When the jar is full, we wrap the change and use it to make an extra payment on our car loan.

Like Eric, I don’t really see the point of this sort of thing. There is only one way to save, and that is to spend less than you earn. Whether the money is saved as five dollar bills or change or just money left in your account at the end of the month makes no difference, your savings is the net result of your income less expenses.

The only way this sort of thing works is if it causes you to reduce your spending (or, I guess, if you write about it and increase your income). Otherwise it’s just unnecessary overhead. If you save a five dollar bill, but don’t reduce your spending, that just means you have to take an extra five dollars out of the bank in order to put it back later. Similarly, spending change is only bad if you spend it on things you wouldn’t’ve bought anyway.

It’s great that she’s managed to save $12,000 over three years with this “trick”. However, I saved over $25,000 last year with a combination of automatic withdrawals and saving all windfalls and money that’s left over at the end of the month. Doing it via five dollar bills wouldn’t increase my savings, but it would require a lot more trips to the bank.

I like Bank of America’s Keep the Change saving program. They round up the charge and deposit the difference in a savings account for me:$2-$20 a month. As a result I automatically round every purchase up when I record it which makes for simplified bookkeeping.
They match a percentage or have the past two years in addition to paltry savings rate and that’s a nice bonus.

I always used to save my nickels and dimes and roll them up so I could deposit them into my chequing account. However, since I started funneling budget surpluses toward my student loan debt, I now do the same with rolled-up change.

My last haul was five dollars in dimes, two dollars in nickels, and ten dollars in pennies. Mind you, a lot of those pennies were stashed by my mom, but they still helped.

Recently, my apartment building changed its laundry machines; they don’t accept coins anymore. I used to set loonies (one-dollar coins) and quarters aside for my loads; now that I don’t need them anymore, I stash my quarters so that I can roll them up and deposit them. I just need one more so that I can haul ten dollars to the bank. ;-)

I totally disagree, at the end of the day you have what you have, it’s the way you allocate your funds is the key. To say it’s money you never had is a faulse economy.

That’s what I learned when I was a kid. Saved up several thousand dollars from loads of odd jobs and by the time I was 16 I had enough to pay for my pilot’s license. We’re not talking the 1950’s either, late 90’s.

After reading many of the comments, I think some people are missing the point of this kind of saving. I already have a 401(k), an IRA, an emergency fund, and another savings account that are funded monthly. These are things that should be taken care of like you take care of your rent or car payment. Saving your 5’s or coins is mostly for discretionary spending. It’s fun to see how much you can save by just stashing a little here and there. I would have just spent that money somewhere if I hadn’t stashed it, but now it has multiplied in my drawer and can be used to buy something I really want or I can use it to increase one of my savings accounts. Either way, I’m ahead.

I also save my change. Here in Canada we have loonies and twonies (1/2$ coins).

I actually keep track of how much I’ve saved and put away for each demonination. So far for the year I’ve saved 197.50$ (those loonies and twonies really help me out here)

All the negative nancies posting here are killing my buzz!

To mwarden @42: “something nice” could be anything. Why does it automatically have to be something you think is “bad” or something unneeded? Maybe I prioritized my spending plan and the cutoff was the top two items on the list, but after saving some loose change I find that I have enough to take care of the top three instead. Does that make #3 on the list bad or unneeded? Of course not. Maybe my definition of “something nice” is a college class I couldn’t justify earlier, or maybe “something nice” is an extra trip to see family. Think positive!

To Anne @41: someone says they’re going to save every $5 bill and you say they don’t have a goal? You’re being silly. Saving every $5 bill or whatever is a goal!! As I pointed out above, maybe you have your spending plan under control and are doing well but there’s something you wanted to add to your plan but couldn’t justify. This “found money” could be used for that.

I think too many people are too uptight about being perfectly exact. To say that you have to have every last dollar mapped out and planned for is silly. Rigidity is exactly what makes all plans fail. Plans, especially spending plans, have to be flexible. I think being able to “find” money in every day transactions and save that money is a positive thing, not a negative.

I have high interest savings accounts, pension, investments – but I also have one of those money bank tins that you have to use a tin opener to open. Myself and my husband throw all our €1 and €2 coins in there – and every year we save a couple of thousand euro – it’s a big tin!

Point is, if we didn’t do that we would just spend the money on rubbish – but instead it’s saved and we use it for something worthwhile.

@Johnzilla: I guess we just have to disagree. I don’t think that saving money is a goal in and of itself. Having money is a means to an end, not an end in itself. If, like the woman who saved $12,000, you just save and save and save just to watch it pile up and you don’t let yourself spend it, what have you really accomplished?

Aleks (38)- the point of saving pennies and small bills is to stop purchasing little things which add up over time. If I have a small bill or change, I’m much more likely to pick up a soda or magazine than if I had to break a large bill to do it. Obviously you need to earn more than you spend in order to save, we all know that. But most people have some left over after paying the bills and buying the food, most people end up buying unnecessary stuff every month. Not having small notes and change in your wallet all the time really helps. Yes, we should have more self discipline but this method is better than squandering everything every month. I find it helps me a lot. I love counting out a few hundred dollars in change that I would have spent on silly things.

“I think it is important to note that change in a jar or excess monies in a checking account (as long as it isn’t a high balance reward checking account) are LOSING MONEY at the rate of inflation. I don’t agree that this is a saving technique. If you gave me a dollar and a year later I gave you back 96 cents, would you consider that a savings technique?”

Only if you leave it in the jar in the long term. The lady in the article deposited the money once she had a certain amount, which would probably be at least once a month. It was money she would have otherwise spent, so it’s not as if it would have been in a savings account.

I used something like this to get my Canon camera. I bought it last fall. To start, I planned the purchase the prior spring. I started tossing any left-over change at the end of every day into an inverted 100 ct. CDR container. I told myself that when the container was full, I would buy. Meanwhile, my friend at work said that Coinstar machines will give you an Amazon gift certificate without taking any fee! So when the container was full in the fall, I cashed in at a Coinstar machine and went on Amazon to buy the camera. The change covered almost half the cost! Since then, I have implemented an even stronger saving plan. I still save my change, but I also sock away any money left over from my cash budget for the week. This motivates to save on a day-to-day basis. I use this money to fund my tech spending without impacting our family budget. I am very careful with tech spending now, since I know it will take months to fill the fund again.

Cheers,

-Adam

cheepereeter, your post is not backed up by facts. I’ve seen this claim made on several blogs, and Rush Limbaugh spent over a week making the same false claim. Someone then called him out on it, and he denied ever making this claim about the Democrats wanting to “take accounts from people” etc. Perhaps you can provide us all a link to go read this claim of yours?