Getting disciplined about money can take many forms.
I love to read about the little tricks people use to force themselves to save money. Apparently I'm not the only one. I was sent a brief story from The Boston Globe that describes how Marie Franklin saves every five dollar bill she receives. She's been doing this for three years, and in that time she's managed to save $12,000. She writes:
This idea will only work if you are disciplined. When I decided to save my fives, I meant it, and I save every one. No exceptions. (OK, once on the Mass. Pike I gave the toll collector a 20 and he returned three fives and four ones. I panicked. This was my allowance for the week. I asked him to give me a ten and more ones instead.) Otherwise, if I get a five dollar bill back — at CVS, or Starbucks, or Marty's on Washington Street — I tuck it away, smiling.
When the fives pocket in my wallet reaches $50, I make a deposit in my credit union. When this account reaches $2,000, I buy a CD to earn higher interest. Also, it helps to pay with cash. You can't get a five back if you're always using credit cards.
Franklin writes that she's always been a saver, and this was just another way to maintain the habit.
Related >> Savings Strategies: Little Moves That Equal Big money
My wife, too, has always been a saver, and she uses a trick like this to accumulate extra money. For several years, Kris has been rounding every transaction up to the next dollar in her checkbook. If she spends $49.74 at the grocery store, she enters this in her checkbook as $50. If she spends $33.13 on gas, she enters it as $34. As a result, she saves an average of 50 cents every time she performs a transaction.
In 2-1/2 years, Kris saved an extra $500 using this method. That's enough to treat herself to something nice. (Bank of America offers a similar program called Keep the Change.)
There are many variations on these sorts of saving tricks. It's common for people save their pocket change in a jar, of course, but some save their dollar bills, too. Some find this sort of thing counterproductive, but others find that games like these offer motivation to save.
What is your motivation to save? What tricks have you employed that make saving fun and productive?
Here are some more posts about saving money and getting ahead:
- Which Online High-Yield Savings Account & Money Market Account is Best?
- Guide to Using Micro-Jobs to Boost Savings
- Savings Strategies: Little Moves That Equal Big Money
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.
I really like the $5 bill idea. Only problem is… I use my check card almost everywhere. If I have cash in my pocket I tend to spend it more easily. Still it’s worth giving a try. I know the next time I get a $5 bill I’ll be thinking of this idea!
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.).
When I quit smoking I decided to put all the cigarette money aside to save it. After one year I managed to save almost $1500 without even trying.
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!
I have been saving all of my coins in a money tin which I cannot access. When it fills up then I go and cash it in (but sometimes I will spend some of the money first). I like the idea of the fives better. Because you make more money. After all you need 100 lots of 5c coins to make up and $5 note…but only one $5.
I think I will begin to employ this principle and start saving some more.
I am a struggling entrepreneur so I need all of the cash I can get.
Also I heard a story from one lady who came into my work who used to save up all of her $1 coins every year. She would save them in a big tin and then at the end of the year she would cash them in and use them for christmas. It would pay for all the Christmas presents and her children didn’t have to go without. Cool ay?
There are so many ways to save that you have to employ at least one of them
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.
Twelve grand in three years from small change? That is amazing!
Seems to me the problem would be is that most of your change comes in $5 bills. It would mean you would either have to pay in ones or you’d have to buy things whose value is close to $10 or to $20; otherwise all your spending money would end up in savings and you wouldn’t have enough to buy necessities.
I like the idea of stashing the amount you save on recently kicked vices. Wouldn’t have to be just tobacco: could be alcohol, soda pop, or sugary Starbucks coffeeoids. Or all of the above…you’d soon be rich beyond your wildest dreams! ;-)
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!
I’ve been doing the $5 trick for about 6 months. The only time I’ve made an exception was once when I went to an ATM and asked for $40 and it gave me the entire amount in $5 bills.
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).
Just throwing change in a jar makes a big difference. I cashed in a year’s worth of change a few years ago and netted $180; I also cashed in another one elsewhere in the house for a total of $325.
It’s a pretty straightforward calculation. If you make a purchase a day, you will end up with some change. Suppose that change, between your various purchases, nets out to 50 cents per day. 365 days gets you $180! No effort involved.
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.
I generally try and pay only with notes. In Ireland, we have 1 and 2 euro coins so the smallest denomination I can pay with is a 5. This leads to about 200 – 250 euro (about 320 to 400 dollars) every four or five months.
Great idea. Each month we do something similar and it works!
This is a great tip. Now that I use cash more than my check card to control spending, this method could work wonders for my savings account.
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…
I saved $7000 in $5.00 bills in a year so its not unrealistic
I like the idea of saving as many of the low demonination notes as you get them – and getting a lovely surprise when all of it is added up.
But, if you’re keeping this as an easy-access cash stash at home while it builds up wouldn’t it just be a huge temptation to dip into it from time to time?
I like the idea of the Italian TerraMundi pots – there is only a hole in the top for putting money into, when full the pot is smashed to get at the cash (and buy another pot!).
The plain ones do not stand out as an obvious target for burglars or (a-hem) not-to-be-trusted visitors to your home. At just 6-7 inches in height they can easily be ‘transferred’ to pockets and bags etc.
They now produce pots with specific objective goals, ie., New Home, Wedding Fund, Ferrari Fund, Shoe Fund (?!)
http://www.shopcreator.com/mall/infopageviewer.cfm/Terramundi2/HISTORY
I put a slip of paper with the date on with the first coin so it’ll be interesting to see how long it takes. Nowhere near full though ;-o.
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 ;)
Ha.. I’ll chip in my two cents worth here:
http://weblog.ceicher.com/archives/2003/05/how_to_be_rich.html
Pay yourself first and you don’t need to waste your time and energy with these little “tricks”.
i agree w/ eric.. i use my debit card 90% of the time.. only time i have cash on me is when there’s a particular food spot that i go to that only takes cash
it’s a cool idea though.. why not make it $10 bills instead of $5? =)
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.
I personally like the “Keep the Change” program that Bank of America offers me. Every time we use our debit card to buy a Starbucks coffee (or any other little purchase), we get money deposited into our savings. If the coffee costs $4.53, then Bank of America rounds up the purchase to $5.00 but puts $.47 into our savings. They even match a certain amount in the beginning.
It’s a no brainer forced savings. Great for people with little self-discipline… hey, I’m working on it… or for people who never carry around any cash.
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
THese tips remind me of those that put the alarm clock ahead 15 minutes to make sure they get up on time. While some will say, just set you alarm differently, I say whatever works for you!
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 great idea. Although I also don’t use cash that frequently, any cool idea helps. I like to keep changing it up to keep saving money “fun”. I will definitely try this one!
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.
I’ve always been a saver. When I was a kid I saved my lunch money and allowance. When I got married, I started stashing the change from my husband’s pocket. Now, whenever I find I have cash in my purse…a 5 or 10 or 20…I stick it my a drawer. One year I paid for Christmas this way. Another year, we went on a cruise. I’m never tempted to get into it. Once it’s in the drawer, it doesn’t exist until ready for deposit!
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!
Amanda, I checked out that Money Savvy Pig. It’s a great idea. However, it’s a shame you can’t designate which “fatter” part of the pig you’d like to save more for. I thought the donation part was too big for me and the save part too small. Cute idea though.
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 almost never use cash. My system works great for me: I’ve divided our monthly bills into “First Paycheck” and “Second Paycheck”. Every payday, I sit down and pay all the bills assigned to that paycheck, leave a small amount of spending money in the checking account, and transfer every remaining cent into our ING savings account. Then we simply cannot overspend because the money isn’t in the checking account, and we have peace of mind knowing that all the bills are covered. Since our 401k contributions come out before the paycheck, we end up paying ourselves first AND last!
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).
J.D. — Scotiabank has a program called Bank the Rest that does this for you for all purchases made on your debit card:
http://www.scotiabank.com/cda/content/0,1608,CID12190_LIDen,00.html (NOTE: _not_ an affiliate link)
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.
@ Beth number 31…
Beth, even though all compartments are the same size, you choose how much you want to put in. For example, our save position is a lot more filled than our spend portion right now.
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 enjoyed this post. A few years ago my uncle was able to make the downpayment for his kitchen renovation from cash he saved whenever he broke a $20 bill. His method was to save ones, fives and tens of the same serial letter till he reached a stack of 50.
I thought it was funny and teased him about being Type A until one day the lightbulb went on in my own head. I now save ones and use them for pampering, etc. I also save quarters for laundry and dimes for things like library fines. Nickels and pennies I donate to an organization.
I find this a fun way of adding to my savings. I used to be a heavy debit card user and now that I’m trying the envelope system, so I have more cash. I think I’ll take a look at saving fives.
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 have to agree with Troy @22. Saving willy-nilly like this is nice and certainly better than not saving at all, but it’s a good indication that the person doesn’t have a savings goal. You’re likely to make much better progress if you have a clear goal in mind.
Step 1: Figure out what you want to save for.
Step 2: Figure out how much money you’ll need, and when you’ll need it.
Step 3: Set aside as much money every month as you need to reach your goal on time.
The fact that the author of the piece doesn’t have a clear goal is telling: “People always ask me what I am going to do with the money in my fives accounts. I have no idea. I’m having too much fun watching it grow to want to spend it.” Saving and investing should have a purpose.
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 agree!!!! Some people think I’m strange and my boss disagrees that it is “extra” money saved but I have an extra $1400 in $5 notes that I didn’t have 8 months ago so I think that speaks for itself!
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.
Nice idea, however it demands carry cash all the time, which is something I never do. I use my checkcard for virtually everything. However, I do save loose change whenever I find myself with change in my pockets. Not too long ago, I found myself short on funds 2 days before payday, and I was unwilling to dip into my emergency funds, so I pulled out the plastic gallon where all my loose change goes, and emptied it into the local change machine. I walked away with $250.
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.
My budget already includes a regular chunk of money geared towards savings, but I have my own little trick that works pretty well for me. Each week, I withdraw a set dollar amount which covers my personal expenses. (i.e. lunches, sundries, etc.) Whatever is left over goes into a small coffee can. Some weeks it’s only a dollar or two, while other weeks it’s twenty or more. Right now, I use the can money as ‘fun money’, but I have used it in the past to save up for specific needs. It inspires me to be careful with my spending each week, as I enjoy the weeks I can put a bigger bill in the can.
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 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?
Call this what it is: it’s a way to curb spending. If you hide money from yourself, you can’t spend it. The person with the $5 bill idea says that her method takes incredible discipline. If she has incredible discipline, WHY DOES SHE NEED THE METHOD?
“In 2-1/2 years, Kris saved an extra $500 using this method. That’s enough to treat herself to something nice.”
All due respect, but why is she “treating herself to something nice”? That sounds like code for spending money she doesn’t need to spend. That sounds like the problem, not the solution to a problem.
I also save my change. Here in Canada we have loonies and twonies (1/2$ 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)
This article is silly. Why $5 bills? If can discipline yourself, you can save every buck, every coin, and every ten. Why not save it all?
She can afford to pay $7,500 every month (highly impressive) but only $12,000 in three years? Hello? That’s $15,000 in two months, but only $12,000 in 36 months?
If your attitude is right “Don’t buy what you don’t need” “Don’t buy what you don’t have money for”, you can do just as good (if not better) than her. Saving based on bills is silly, save every buck you have, every penny you have and it’ll add up quickly.
$12,000 in 3 years is nothing more than $4,000 a year, $11 a calendar day, or $17 a working day. I know people living on minimum wage who can save this much (in other words, people who find her saving strategy surprising is just plain stupid).
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.
To Johnzilla @52: Perhaps you are right, and “buying something nice” meant buying something highly practical and necessary. That isn’t at all how I read it, and my point is that saving money for the purpose of buying something that doesn’t need to be bought is the way to forever stay in the mode of having to scrimp and save. The cliche “it takes money to make money” is tired, but true. “Something nice” for me right now would be a digital camera. I have the cash for it, no problem. But do I need it? I don’t have a camera. I’m missing memories. I could justify spending $200 bucks on one. Or I can take advantage of the cheap stock market prices and invest that into my retirement or taxable account instead.
I don’t need a digital camera; I could justify buying it, but I don’t need it.
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.
I know Bank of America does the rounding up if you use your debit card, and deposits it into your savings account. It is called “Keep the Change”. My wife and I have been doing that for several years now and have saved hundreds as well. It is great!
—-
Austin Hike and Bike
@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?
Yes, B of A has keep the change but what they don’t tell you is that if, by virtue of the “extra” money they transfer to savings on your behalf, you go into overdraft, they charge you a fee of around $20! So much for saving money! There should be a loophole where if it would put you in the red, the transaction doesn’t occur but no, they are the people who paved the way with the $3 ATM fee!
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.
Claire, even if the money is being deposited in a bank, it is still losing value, unless the interest rate is significantly greater than the rate of inflation (remember, interest is taxed, too). You pay a huge price for liquidity, and I still say that people are way too conservative with the amount of liquid cash they need at their disposal. Who the heck needs $20k in a savings account? When you consider that you can ALWAYS withdraw your contributions to a Roth IRA at no penalty and no tax (because it’s already been taxed before you contributed), then there’s really no reason to have more than a few thousand sitting in a savings account losing value. Your Roth IRA can double as a second level emergency fund.
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
be careful with you IRAs 401Ks and other tax deferred savings accounts the democrats have a plan in progress to take those accounts from people and create a guaranteed government savings account for retirement.
Keep an eye on political news and make sure you can get that money out fast in some cases it can take 2 months to get your money from a 401k
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?
Most people aren’t disciplined enough to do this