We focus on frugal living and saving dollars, but what happens to the $2.50 that I save on groceries or the $50 that I saved on car repairs?
Does anyone have suggestions on how to direct that savings into a usable form? I suspect that I often save a few dollars at the grocery store and later spend it on some other frivolous activity or item. I sure could use some help with this.
I used to do the same thing...save 15-20 dollars at the grocery store on coupons and the like and then wonder in two days where the "saved money" went to.
I decided the only way to save the "saved money" was to open a savings account at the bank for it. As soon as I got home and put the groceries away I would take out my checkbook and write a check for the amount of money that I saved. I would then put the money in it's own special account at the bank. It may take a few checks before you have enough to open an account....but it's worth it.
I started doing this one year in January and by summer I had enough for summer camp for the kids and a couple of really nice dinners out for Mom and Dad while the kids were away. After that I started saving for Christmas presents.
If you saved the money doing all the work of looking for, cutting out and redeeming the coupons then you deserve to save the savings.
Here's three ideas you can use to save your "saved" money. I've been doing this for 4 years now and the money really accumulates. The crucial step is to designate your savings for something specific and be consistent in actually putting the money in the envelope or container.
Idea 1: When you go shopping and use coupons or turn back bottles and cans for refunds (5 cents each in NY State) earmark that money for something specific. When I get home from the supermarket I look at my receipt for the amount that was deducted for the coupons I have and doubled coupons. I take that amount and my bottle refund money and put it in an envelope earmarked for a specific purpose. Some weeks it's only $2, but even at $2 a week you have $104 at the end of a year. I usually round up this money. If I save $1.55 with coupons, I put in $2 in the envelope.
Idea 2: my grocery store has a Bonus card. This money goes into another envelope earmarked for a specific purpose. This can be quite a bit each week. I usually budget $80 a week for food. Let's say the bill comes to $90 and the bonus card saves me $20, I don't put the $20 in the envelope because that would be over my food budget for the week. I only put in the $10 that brings me up to $80. ($90 spent minus $20 savings = $70 actually spent so I put the $10 in the envelope.) My grocery store keeps a running total of how much a shopper saves by using the bonus card. My total is $472 right now. I've only started using this game recently, so I only have about $100 in this envelope.
Idea 3: SAVE YOUR CHANGE! Anytime you purchase something, save the change in a jar or canister but earmark this money for something specific. This may sound crazy, but I can save $300 a year by doing this.
I found that if you have a specific goal for the money, it's easier to put the money aside. A goal can be anything from a new coffee pot to dinner out at a fancy restaurant to a vacation. I use my "saved" money to buy birthday and Christmas gifts for my 3 granddaughters.
I once witnessed a woman at the grocery pay for her groceries before the cashier took off her coupons. She then had the cashier scan the coupons, and give her the money saved back in cash. She said this is the way they save for vacations. She wanted her children to know the value of using coupons. I thought that was a great idea!
We use the envelope system of budgeting. When we have saved a few dollars, they either remain in the envelope to be added to the next week's allotment. Or, you can sweep them into another envelope, marked "Extra." When you have enough in the "Extra" envelope, you can either add it to your regular credit card payment or other debt repayment, or you can put it in savings or buy a certificate of deposit, etc.
We also do this with any money left over in the checking account after paying bills. That way it doesn't "disappear" on mysterious purchases. Some envelope accounts we let build up, e.g., "home" and "clothes", because the purchases from them are unpredictable, but others, like "groceries" that have a weekly outlay, gets the Extra swept out of them.
Put your savings directly into a jar marked for something special, such as "Night Out" or "Vacation". You'll be surprised at how quickly it all adds up. It's very important, though, to label the jar; otherwise you're liable to take more out than you put in. Having a specific goal keeps you on track.
I learned this on the cheapskate monthly forum. I take a 46 oz. tomato juice can (I use two cans and make quick tomato vegetable noodle soup) which has the little holes for pouring and rinse it out. Then I take a hammer and a screwdriver and pound out a slot in the center just big enough for money. All of my change, dollar bills, and occasionally bigger bills go into it.
When I write a check I always write it for a little over and keep the change. I almost never spend a dollar bill or any change. It all goes into the can.
In order to get out the money you have to open the can with a can opener which makes you think twice. I just keep starting new cans. I set a goal of what to save for (the Ringling Brothers Barnum and Bailey circus for instance for the whole family). Once or twice a year we open the cans and my daughter and I count out the money with her wrapping up the coins.
Well, it was time for circus tickets recently and we opened the cans. I had gotten into them in January for one of my goals so it's only been about 6 months. To our amazement we had about $617 in there. We were able to get circus tickets as well as some appliances I've been wanting.
When we paid off a car, I kept on deducting the payment from the checkbook balance. By the time my husband noticed that we "should" have some extra money, I had over a thousand dollars in the bank - it just didn't show up in the checkbook. We do this with every savings (any money I could have spent but found a way to spend less) and I call it the "Ghost" Fund (because it's invisible). Coupons at the store? Drop the savings in the ghost fund. Pop a balloon and win ten percent off your purchase? Eight dollars into the ghost fund. Bargain down the price of an A/C service call? Put the savings away.
It takes three extra minutes of bookkeeping to balance the checkbook each month, but I keep a running tab of the ghost fund on each page of my register, and that makes it easier. The benefits come quickly, too. That first thousand dollars keeps our balance high enough that we are not subject to the $15/month service fee on the checking account. Where else can you get a $180/year return on a $1000 investment these days? We never worry about bouncing a check, because we carry that thousand dollar minimum balance. And, when a crisis comes, we can pay for it without credit.
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