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Improve Your “Save-ability”

Budgeting! Just hearing the word makes some people break out in a cold sweat and run for the hills. But don’t worry… in this article I will show you some easy and relatively easy (and painless) ways to boost your savings.Savings, like anything else worthwhile, requires a bit of creativity and some self-discipline. Unfortunately, these days self-discipline seems like a dirty word to many people who grew up in the post 60’s era when the the theme was “if it feels good do it”. But, now as many of those people are getting closer to retirement they are realizing that they haven’t saved enough. So they may have enjoyed their youth but might be in for a miserable retirement if they don’t figure out how to start saving more, soon!

But believe it or not, if you sit down and really put your mind to it, you can come up with dozens of ways to give your savings a boost.

Here’s a few ideas to get you going:

Get a Jar

This seems a little silly but it is a good place to start for those who have no savings at all. Take an ordinary jar and put it on your nightstand and then put all of your spare change in it. Many people already do this but then raid the jar when they need extra change. But if it is going to be the beginning of a savings program you need to make it a one way process. Put money in but don’t take it out!

When the jar gets full, put the money in the bank in a long term savings program (see our article on the Jars method for more information). It is amazing but you won’t miss the money and people who thought they couldn’t save anything will find they have saved a couple of hundred dollars in a year. Now this isn’t enough to retire on… but it is a start.

Saving money is like a magnet… once you have a start the money begins to attract other money… and the bigger your magnet the more money it attracts. So if you don’t have any savings this is a good way to start your magnet.

Sock away your next raise

At the moment, you are used to living on your current salary but when most people get a raise they make the mistake of increasing their standard of living by the amount of their raise (or a little more). But what if you saved that raise and continued to live on your previous salary? You are already used to living on it so it won’t be an additional hardship. If you receive a 5 percent raise, and stick it into your savings, you won’t even miss it because you never had it!

The key to making this work is to have the money automatically put into the savings or retirement so you don’t have the opportunity to spend it (or even see it).

There are many stories of people with ordinary salaries who were able to retire millionaires simply by using this method. If you aren’t quite that motivated, you might try saving half and increasing your standard of living by the other half just so you don’t feel too deprived and then go out and binge and bust the budget. You have to be realistic about what you are going to be able to do in the long run.

Set Realistic Goals and realistic treats!

If you are used to “if it feels good do it” mentality going on an austerity budget will be extremely painful and probably won’t last long so don’t forget to reward yourself. When you’ve reached your savings goal treat yourself a bit. It doesn’t have to be an expensive treat just as long as and your family enjoys it!  For a small treat I will take my family to the local gas station where they have 25¢ ice cream bars. Total cost $1.00 for a family of four, but it is a nice treat for something different. Recently, I decided to go for a bigger treat at the local Ice Cream shop and almost had a heart attack when I paid $8.00 for four single scoop Ice Cream cones. Did we enjoy it eight times as much as the 25¢ ice cream bars?  I don’t think so! I think we will go back to the 25¢ ice cream bars.

A night at the movies might cost $50 or more when you add in $5 popcorn and $3 drinks. How about renting a video and popping your own corn instead?

Pay Cash

If you are running a credit card balance, pay cash for all new purchases until you have paid off your credit cards. Interest will eat you alive and rob your savings program… so pay cash or use a different credit card that you can pay off every month. See my article on how to save $1000 a year in Interest for more information.

The best way to pay off a debt is to schedule the payments through an automatic bill pay checking account. Just figure out how much you need to pay each month to pay it off and schedule the payments.  Once you have finished paying off a credit card debt or car loan, don’t just put the extra money back into your checking account, or it will just end up being wasted. Since the expense is already factored into your budget just change the destination to your long term savings or retirement program.

Live on One income

If you are married and have two incomes first check to see if you are actually getting ahead. Often one spouse is simply earning enough to pay for the extra expenses of working. Add up the cost of the additional car, day-care, extra clothing, etc and see if it is really worth working outside the home. Is it possible that one spouse could stay home (or work from home) and you would actually come out ahead?

If at all possible, adjust your standard of living so that you are living on one paycheck and save 80%, 90% or even 100% of the other paycheck. This can rapidly build your nest egg, and if the money is put directly into a retirement account or IRA it can drastically reduce the amount of taxes you owe. Technically, you may have to have both spouses contributing to their own retirement programs but the total should add up to the amount you have chosen.

An added benefit to this is if one spouse loses their job, you will be in a much better position to weather the storm since you are already used to living on one salary.

Trick Yourself

Make it harder for you to spend money. Some people freeze their credit cards in a block of ice. If you need them they are there but you have plenty of time to think about spending while they are thawing out.

Put off impulse purchases.  When I see something I might like to have in an advertisement or on the web I will put it off and “sleep on it” for a day or two (or even three).  Probably 70% or 80% of the time I realize I don’t really need it  after all and won’t end up getting it, easily saving big chunks of cash.

Make your cash harder to get to.

Move extra money from your checking account to your savings account. Move extra money from your savings account to a bank Certificate of Deposit (CD) or a brokerage account. Each move up the ladder has two benefits. 1) It makes the money earn more.  and 2) It has the added benefit of making it harder to spend. The money is still available for emergencies but you are less likely to blow it on worthless junk.

Pay Yourself Back

This is a good method for teaching yourself discipline because it so hard to do. Pay yourself back with interest. When you absolutely must withdraw money from your savings, perhaps for that emergency we just mentioned, be sure to pay yourself back… with interest!

You lost the interest by taking the money out so you need to return it just to break even. Schedule the payments to yourself just as if you were a lender and return the money to your savings. You have to pay everyone else interest, so why not pay yourself?

If you do all of these things you will be surprised how quickly your savings can grow.

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About Tim McMahon

Work by editor and author, Tim McMahon, has been featured in Bloomberg, CBS News, Wall Street Journal, Christian Science Monitor, Forbes, Washington Post, Drudge Report, The Atlantic, Business Insider, American Thinker, Lew Rockwell, Huffington Post, Rolling Stone, Oakland Press, Free Republic, Education World, Realty Trac, Reason, Coin News, and Council for Economic Education. Connect with Tim on Google+