There’s no doubt about it: saving money is hard work. Even if you try to save, it’s not uncommon to get to the end of the month with nothing left. And those funds you have sitting in that traditional savings account? Don’t expect them to grow astronomically, because interest rates are at an all-time low.
The smarter solution: incorporate money moves that will trick you into stashing away your hard-earned funds before you know it.
My favourite money-saving tricks
• Envelope system
Stop swiping and start pulling out the green. To implement the envelope system, you’ll need to come up with a plan for your money and allocate it to the appropriate envelope.
Say, for example, your monthly budget allots $200 for groceries, $50 for entertainment, and $100 for savings. You’ll need to stash those amounts away in envelopes as soon as the funds hit your hand. Once the money’s gone from the envelopes, you have to wait until the next pay period to access additional funds.
• Automatic deposits
Not disciplined enough to follow the envelope system? Visit your payroll office to automatically have a certain amount from each check deposited into an alternative account. It’s best to go with an online account that’s not easily accessible to eliminate the urge to make withdrawals. As an added bonus, online banks usually offer a higher return on your funds because of the lower costs of operating solely online.
• Save your raises
Received a pay raise recently? Kudos to you, but don’t run off and accumulate more expenses — especially if you’ve lived comfortably on your existing income. Instead, deposit the excess income into your emergency fund and watch how quickly it grows. A pay increase shouldn’t automatically equate to a lifestyle change, especially if you’re having a difficult time saving money. Even the smallest amounts, such as $20 each week, can add up rather quickly.
• Stash away windfalls
How about those irregular sources of income, such as work bonuses and income tax refunds, that sometimes provide a slight boost to your cushion? Instead of blowing the money on an expensive vacation or shopping spree, deposit it into an interest-earning account. But if you have a more demanding obligation that needs your attention, don’t hesitate to use your windfall wisely.
• Keep the change
Each time you spend money, set the change aside and watch it grow. Once the month ends, tally up all your deposits from both your checking account (which can be kept on a spreadsheet), and your Ziploc bags. The amount you’ve accumulated may surprise you. Another note: this should be done after you’ve stashed away your set amount each pay period — just in case your variable expenditures for the month are much lower than expected.
• Pay debts that no longer exist
While you may be a bit confused by the title, following this tip is a no-brainer. Once you’ve finally paid off those credit cards or auto loans, continue making payments as if you still owe on them — but instead of paying your lender, put the payments into your bank account. This will help you quickly boost your savings rather than find other things to spend money on. Let’s say you’re accustomed to forking over $500 each month for auto loans and credit cards. If you continue to “pay” these loans for a year after they’ve been paid off, you’ll have an extra $6,000 in your savings account.