Saving Money – With Just A Little Change

We’ve all seen the experts’ advice on saving money, but not everyone has the financial ability to set aside 25% of every paycheck for contribution to a savings account that will remain untouched.  So how does the average middle class family save money for retirement, college tuition, emergencies, vacations, birthdays, and anything else that may come along?

The most important thing is to make saving money a priority in your budget.  You can start out small and work up from there.  Here are a couple of suggestions for starting out with just a little change (pun was actually intended here):

1.) Save ALL of your coins.  Every time you pay with cash and receive coin change, drop the change into a “savings jar” at home.  Once it fills, take it to a Cash for Coins exchange machine and then deposit the cash into a savings account.

If you don’t have a savings account…OPEN one!  Make sure it’s a free account with no monthly balance requirements.  These don’t have the greatest interest rates, but remember: you’re starting off small, and can eventually move up from there.

When banks offer a cash bonus for opening a checking account and/or savings account, that’s the time to open!  Most offer a $25-$100 bonus for opening the account, and then another $25-$50 for keeping the account open for 6 months.  This is a great way to build up your savings account when you’re starting out with small amounts of money totaling less than $500…and it’s free money, so regardless of your total saving dollars, open an account.  There is absolutely no harm in having multiple savings accounts.  If you have a difficult time keeping track of multiple accounts, close a couple out after the waiting period, and keep the one(s) that offer the greatest benefits.

Don’t have enough money to open a savings account?  I bet you do!  Banks usually require $50-$100 to open a savings account, but you can withdraw the cash the same day, either at the actual bank or from an ATM machine.  (After you’ve opened your account, forget this withdrawal convenience!)

2.) Operate your checkbook generously.  There are multiple columns in a check register, and you can use them for more than their intended purpose.  NEVER subtract the exact amount of a purchase in the balance section.  Log the exact amount of the purchase in the debit column, but round up to the nearest dollar when entering the amount in the balance column.  In yet a third column, keep track of the “savings” accrued for each purchase.  As you get to the end of each checkbook register page, total up your savings for the page and carry over to the next page.  This will give you a little extra cushion, until you’ve accrued enough to transfer the “saved” amount into your savings account.

Banks are now starting to integrate this system automatically, and one of the largest banks to do so is Bank of America.  They’ve started a Keep the Change program that rounds each purchase price to the nearest dollar and automatically transfers the difference to your savings account. 

If you can conveniently conduct your financial business with Bank of America, or already do, sign up for this program!  Not only do they automatically transfer change into your savings…they also MATCH every penny for the first 3 months AND continue matching 5% every year.

3.) Operate your budget generously.  If you budget $250 for the electric bill every month, and this month’s bill is only $200, take 10%-25% of the difference and deposit it into a savings account.  You’ll still enjoy a little extra cash for the month, but save money at the same time.  If the difference is only $5, apply the same logic…those small dollars add up quickly!