January 10, 2013
By Rebecca White
FINRA Military Spouse Fellow
I don’t know about you, but when I research savings I find information on everything we should be doing: setting goals, budgeting, putting our savings on auto, cutting back on spending, clipping coupons, etc. Knowing what we should do and actually doing them, though, are two different things. So, which strategies will actually help us save? Here are seven simple ideas for saving. Hopefully one (or more!) will work for you.
1. That’s How Many Hours?
Every time you go to buy something ask yourself: “Is it worth it the hourly rate?” To calculate this rate divide your take home pay by the hours worked in that pay period. If your household has multiple incomes, use the lowest paying one. You want this to be easy math, so if you come up with $9.76, round up to $10.
Then when you’re spending money, use this trick to consider if it is worth the hourly rate you calculated. For instance: A $60 dinner would be 6 hours of work if you had calculated a rate of $10 an hour. Is just one dinner worth 6 hours of work?
2. List It
This is especially good for debt reduction. Take all your debts and list them. Post it on a wall or fridge and every month change the totals with a big red marker (while doing a little dance or yelling “heck yah”, whatever works for you). It’s a constant reminder of your progress.
3. A Picture’s Worth a Thousand Words
A lot of people find keeping a picture of their savings goal in their wallet or on a wall works really well as a motivational tool. If you keep it right on top of your credit/debit card you will have to see it every time you pull your card out.
4. Get Artsy
For the creative among us… Make an outline of your goal, say the floor plan of a house, and divide it into sections. Every time you save a certain amount, whether it’s $50 or $500, color in a section or add flooring, paint, furniture, etc. When the picture is complete, you have reached your goal.
5. The Heavy Hammer
This is for those times when you know you’re about to make a choice you really shouldn’t make. This can take many forms. For me it’s about family history. I think about my grandfather who was born the kind of poor most of us thankfully will never comprehend. At 13 he bought a rifle with money he earned selling seeds so he could hunt to feed his 11 younger siblings. At 15 he left home, he worked his way across the country breaking horses and finally joined the Marine Corps. He spent well over 20 years in the military, fought in two wars and sacrificed so his wife and children would have a better life. My parents, in turn, started off better than he did. But they struggled and sacrificed to provide a decent life, and a paid for college education, so we could have a better life than they did. So now, I in turn, use this to consider what’s more important, the kids’ college fund or a bigger house/apartment?
6. Stark (Brutal) Choices - Either/or, but not both
Phrase it appropriately and the choice will be clear.
“I can either have a bigger house or a college fund.”
“…cable or a data plan”
“…data plan or an emergency fund?”
“…cable or eat out on the weekends”
“…fun money or new computer”
You get the idea.
Some find inspiration in quotes. Whether it’s the new, “So many financial dreams are thwarted by the failure to act upon good intentions” (Suze Orman), the old, “If you would be wealthy, think of saving as well as getting” (Benjamin Franklin) or the sci-fi “Use the Force, Luke” (Star Wars) doesn’t matter. As long as it works for you.
For more information:
5 Resolutions to Get You Saving in the New Year
The Basics of Saving
Delayed Spending: Savings in Disguise