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The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food. She blogs at Mom’s Plans, where she shares her family’s journey to healthier living and paying down debt.
A new year starts us all off on a new page, so to speak. January finds us full of optimism and ready to accomplish our goals. If you resolved to save more money in 2013, you may not know where to start, especially if money is tight.
However, there are some simple strategies that are very popular right now that can help you save money painlessly.
Here are some ways you might want to try:
1. Save a dollar a week.
That is right. Just one dollar. Then, each additional week, you add a dollar to the amount you are saving. Week one, you save $1. Week two, you save $2. Week three, you save $3. By the last week of 2013, you are saving $52.
It doesn’t sound like a lot, does it? Well, at the end of the year following this savings method, you will have saved $1,378! That is enough to fully fund a Dave Ramsey advocated $1,000 emergency fund. If you are 29 and put that money in a Roth IRA making 7% interest a year and never add any additional money, by age 65, it would have grown to $15,742!
If the only thing you put in your Roth IRA from 29 to 65 is the savings you create from $1 a week, you would have invested $49,608, but your Roth balance would have grown to $219,567.
Clearly, this can be a powerful savings strategy for those who feel they don’t have enough money to save on a regular basis.
2. Save your $5 bills.
This is my favorite savings technique because the savings add up quickly. This strategy is best for someone who pays cash for most of their purchases. Every time you get $5 back, save it and add it to your bank account.
We are paying down debt and on a cash only budget. Using this strategy last year when we were saving to go to one of my husband’s conferences, we saved almost $600 in 4 months. Yes, it is painful when the smallest bill you have is a $20 for a small purchase and the cashier gives you back 3 $5 bills, but it does increase your savings.
I just modified my spending category to deduct the amount I was saving. For instance, if I had $400 for groceries in the budget, and over the course of the month I got back a grand total of $35 in $5 bills when I was buying groceries, I deducted that money from my grocery budget and then had $365 for groceries and $35 for savings. Another nice part of this savings strategy is that it tends to make you think twice before spending money on little purchases.
3. Save your age.
If you are bit more comfortable financially and up for a bigger savings challenge, AARP recommends saving your age. To follow this method, simply take your age and add two zeros. That is how much you should save per year for your retirement. So, if you are 33, you should save $3,300 this year. Next year when you are 34, you should save $3,400. Of course, the earlier you start with this savings method, the better.
If you can’t yet afford to save your age plus two zeros, another option is to save your age every week. The same 33 year old, under this method would save $1,716 over the course of a year. Next year, he would save $34 a week, or $1,768.
If you have resolved to save more this year, there is a savings method for you. The trick is to find the method that works best for you and that you are likely to stick with. To make it even easier on yourself, try having the money automatically deducted from your paycheck and put in the bank. Then you don’t even need to think about the effort to save money. (This option works best for savings method #3.)
How about you all? What is your favorite “trick” to save money?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/o5com/5126344583/sizes/m/in/photostream/
