It can sometimes seem as if some people are natural, born savers, while others simply aren’t. If you’re not one of them, it’s possible to become one by changing a few tactics and by committing to making it happen.
How can you start saving money even if you’ve never been a saver in the past?
Make Use of Payroll Direct Deposit – Start Small and Work Your Way Up
Payroll direct deposits are a non-savers best friend. You can have money direct deposited from your paycheck into your savings account without you ever knowing it’s happening. Most people are well aware of this tactic in regard to depositing money into checking accounts. But you can have money direct deposited into as many accounts as your employer will allow. Some have no limit on the number of accounts at all while others may cap it at, say, three. If they do, make sure that one of the three is a savings account.
You don’t have to go crazy here, and risk leaving yourself short money to pay your regular bills. Start with a small amount, like $10 per pay period, that way you don’t notice it. Wait a couple of months, then increase it to $20.
One of the best tactics for increasing your payroll deposits into savings is by directing the amount of your annual pay increase into your savings account. Let’s say that you earn $3,500 per month, and your employer gives you a 2% raise on your next review. This will result in a pay increase of $70 per month.
Allowing that something around 30% of it will go for income taxes, that will leave you with about $50 of additional net income each month. Instead of having the money deposited in your checking account, have it direct deposited into your savings.
If you are already depositing $20 per month in your savings account, and you now increase that by the net amount of your pay increase, you will then be up to $70 per month. On an annual basis, that means you’ll be putting $840 into your savings account each year.
If you repeat that strategy with each annual raise, after a few years you will have accumulated thousands of dollars in your savings account – while you’ll hardly know that it’s happening.
Direct Deposit Your Income Tax Refund Into Savings
According to the IRS, the average amount of a federal income tax refund is roughly $3,000. If you currently have no money, depositing your refund into savings will add a chunk of money that will fast-forward your savings efforts.
Sometimes the best use of a cash windfall is simply to keep it in the bank earning interest. Though you won’t be using it to buy something you might enjoy, the peace you’ll feel from having money in the bank will almost certainly be worth more than anything you can buy with the refund.
Just as is the case with direct deposits out of your paycheck, it’s best to have your tax refund direct deposited into your savings account from the IRS. You can do this simply by providing the bank routing number and your savings account number at the bottom of page 2 of IRS Form 1040 – just above your signature. Complete that information, and the money will go directly into your savings account, removing the temptation to spend it on something else.
Set Up a Cash Cookie Jar
While this sounds incredibly old school, it can nonetheless be highly effective. The idea is that you have some sort of container somewhere in your house where you can drop extra cash when it’s available. It could be a glass bowl, a cardboard box, or yes, even a cookie jar. But if you drop $10 or $20 in cash into the container a couple of times a week, you’ll be amazed at how quickly it builds up.
The key to the strategy is that you’re using small amounts of money, that won’t have a material effect of your monthly budget. And for some people, the visual aspect of being able to see money accumulate helps to motivate them to save even more.
Try and see if it will work for you.
Sell Your Stuff Periodically
Most of us have stuff in our homes collecting dust because we’re sure that no one else will buy it. Don’t be so sure! As the saying goes, one man’s junk is another man’s treasure.
And that really is true. That item that you think is nothing more than a piece of junk could be exactly what someone else is looking for, and willing to pay for.
If you have large items, like furniture or appliances, that you’d like to get rid of, put an ad on Craigslist. There’s no charge for placing such ads, and you can just write a simple ad and attach one or two photos. I’m guessing that you will sell at least half the stuff you put up for sale on the site.
Another good way to convert your junk into cash is by having a garage sale a couple of times each year. We do that in my family, and pick up an extra $150 on average for each garage sale. If you do this twice each year, that’s $300 of found money that you can put into savings.
Earn Some Extra Money When and Where You Can
This isn’t nearly as complicated as most people think it is. You’ll have to use your imagination here, to develop some possibilities that will suit your abilities and preferences, but here’s a list to help you get started:
- Cutting a lawn or two in your neighborhood
- Helping someone clean out their garage
- Helping someone straighten out their budget
- Taking advantage of a customer referral fee at work
- Taking advantage of a new employee referral fee at work
- Offering to help a small, local business with a task that you are qualified to do (cleaning up the back office files, customer follow-up, inventory, etc)
- Tutoring a student in a subject where you are knowledgeable
Figure out one or two jobs you would be willing to perform, and plan on doing it once or twice each month. If you can pick up $50 each time you do, doing it twice each month will bring in an extra $100. In a years’ time, that will be $1,200 going into your savings account.
Use two or three of these strategies to help you get started saving money. Once you get into the habit, it will eventually start to become easier for you, and even natural. And as the money begins to build up in your savings account, you’ll start to get really motivated.
But the first, most difficult step, is always getting started – do you think you can do it?