Common financial advice is to pay yourself first; set aside your own savings before you pay any bills. Yet, what happens if you don’t have enough money to pay yourself first? What if you can’t set aside $100 or more each month? How can you continue to save for your goals whether they are establishing a $1,000 emergency fund as Dave Ramsey recommends, saving for a replacement car so you can avoid a car loan, saving for a down payment on a home or simply saving for a vacation?
My husband and I are temporarily in a tight financial situation; he is finishing his Ph.D. and I am staying home to take care of our three children while doing freelance work at night. While I expect our financial situation to improve in a few months when my husband graduates, we are now in the situation where we have little to save, yet we would like to begin to save for a down payment for a house. We have found unusual, creative ways to save. Utilizing these methods won’t get us to our 20% home down payment, but they offer a great way to start saving, and we will add to the savings when our income increases. If you are trying to save more, try some of these strategies:
- Save all of the $5 bills that you get. You are at the grocery store and you buy $33.22 worth of groceries; for your two twenties you give the cashier, you get back one single and one $5 bill. Put that $5 bill into savings. My husband and I have been doing this since June 1, and already, in less than three months, we have saved $175. That is a savings rate of approximately $60 a month. More importantly, that is $60 we didn’t think we had to save. Sometimes it is painful to put that money aside, but in the long term, it is worth it. Of course, this method works best if you routinely pay in cash.
- Save all of your change. This is a similar strategy to the $5 bill strategy, but it is a little less painful because you will be saving less overall. However, your savings will still add up quickly. My husband and I used this method a few years ago to save for a weekend vacation. We saved $300 in a year’s time.
- Save one dollar a day. Another blogger I read was told at her wedding that she and her husband should save one dollar a day. She and her husband did just that, and at their 10 year wedding anniversary, they had $3,650 saved, which they used on a 4 day second honeymoon. Talk about a painless way to save, but what a great reward at the end.
- Save the money you would have spent on an impulse purchase. Do you really want a pop when you are checking out at the grocery store, but you resist the urge? If so, take the $1.59 you would have spent and put it in your savings account. You would have wasted it on an unhealthy, impulse purchase; why not instead use it to your benefit and put it in your savings account?
- Have $5 or 10 automatically withdrawn from your pay check. Even if money is very tight, you can probably sacrifice $5 a week. If that is the case, arrange to have the equivalent of $5 a week automatically withdrawn from your paycheck and placed in your savings account. Over the course of a year, you will have saved between $260 and $520.
Of course, there are many ways to save when on a tight budget; you just need to get creative with how you do it. Also, don’t worry that the saving method you choose is not adding up quickly enough. Saving something is much better than saving nothing, and once you become disciplined to save money regularly, as your income increases, you can save more.
photo credit: Carly Jane1
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.
Hunter @ Financially Consumed says
I really like simple, effective strategies for saving. I especially like “saving every $5 bill”. Awesome, and I can see this adding up very fast.
Doctor Stock says
Excellent… I’ve seen and done some of those ideas before. But, there are a couple that I’ve not seen before. The $5 bill savings is a fabulous idea, even though I don’t use cash much… nevertheless, it would add up. I also like the reverse impulse buy option… thanks for the ideas.
I am always thinking of new ways to put money in secret stashes or try to come up with ways to make cash magically appear without robbing a bank. I love your $5 idea. I am going to try it this week. I’ll let you know how it goes.
We’ve done the saving change thing for a number of years now. It really does work! I’ll need to give the saving $5 tip a try.
Another suggestion is to save refund or rebate money that comes in. When you receive a check for a rebate, that’s usually money that’s not in your budget, so cash it & put it aside, or deposit it in your savings.
Same thing if you get a check for a refund on something that you were not expecting. For example, my doctor’s office insists that I pay a $20 copay for my basic exam, which ends up eventually being returned, as it’s covered by my insurance. By the time it comes in it’s just extra money, so it’s an easy way to save.
Harri @ TotallyMoney says
Love the tips! So simple and painless. I’m going to get on the £1 a day saving tip with my boyfriend.
Financial Excellence says
We also save our change. At the end of the year we donate our saved change to our favorite charity.
Brave New Life says
Ack! $3650 only bought a 4 day vacation!?!
These are all great ideas. I especially like the idea of automatic withdrawals. Turn it up a notch by increasing that amount every month or year.
Stock Market Information says
I actually do numbers 1, 2, and 4. My father does number 3, and actually has a big wad of $1 bills. I have a small wad of $5 bills.
I love these simple ideas that work.. I’m a cab driver and have been placing my $1 bills aside for the last eight months towards our vacation fund. It’s been painless and I’ve accumulated over $1800 so far to put with the money we normally budget for vacations. This will allow us to indulge in some of the things we normally can’t afford… I never considered $5 bills though.. sounds better.
Mr. Frugal says
I love these ideas. I wrote a post a few weeks back about substituting the feeling of finding money on the street when faced with an opportunity to spend. Instead of spending $1 on a snack you won’t really enjoy all that much, put that $1 back in your pocket and imagine you just picked it up off the street. Free money!
I’m going to try the ‘save all your $5 bills’ technique. Great stuff!
Choose Financial Freedom says
Here’s a way to teach your child how to save. Instead of buying a soft drink for your child at a restaurant, ask him if he wants a dollar instead.
This teaches your child a lesson in making choices and saving. In the end, it saves you money because usually a soft drink at a restaurant is more than a buck.
Mr. Frugal says
Choose Financial Freedom,
I’m with you in spirit. I think you would relate to this post:
Doctor Stock says
@ Chose Financial Freedom – AWESOME idea… I love it!