Saturday, February 6, 2016

September Financial Fitness Challenge—Indulge in a Savings Binge

Month after month, paycheck after paycheck, you tell yourself you really have to buckle down and save some money—just as soon as you pay off your credit card bill, or replace the tires on the car, or take care of that long-postponed dental work.

It is a challenge to save money when life relentlessly presents these and other financial challenges.

Saving isn't fun. At least, the way most of us approach it isn't fun.

Your financial fitness challenge this month is to turn that hangdog thinking around and go on a bender—a mind-bender that turns around your ideas about savings. Your challenge is to become a successful saver by making saving rewarding.

I want it now

Modern consumer culture surrounds us with constant messages that happiness is a byproduct of acquiring things. It's easy to become so hooked on instant gratification that it can be hard to turn our attention to the deeper gratification that comes with buying a house or a newer car, or saving for education or retirement.

Sometimes all you need to get started on a savings program is proof that you can do it. A savings binge can help. It provides some fast gratification of its own in building a modest stash of cash in just a few weeks.

For at least two weeks question every spending choice you confront. Do you need those new shoes? Can you skip eating out this weekend? Put aside the money you'd spend and watch your savings binge pay off in a growing pile of savings.

Make it a family game to out-save each other—really challenge yourselves so you can enjoy the payoff of succeeding at saving money. Success breeds success.

You can be a successful, lazy saver if you use automation.

Another benefit to the savings bender is that you can stop, and resume again, whenever you want. Set a short-term goal and you'll find it easier to forgo spending small amounts so you can add them to your savings stash.

Make a lazy habit

Maybe you haven't gotten serious about a savings program because it's too much work. Here's a secret—don't do any work at all.

Set up direct deposit of your paycheck to your checking account, if you don't already use that service. Then set up automated transfers from savings to checking. Start with a low percentage to make it fairly painless. Kick it up a notch or two after a few months. If you're in the savings binge mode, kick it up even more and keep it there for at least a few months.

You're building savings and demonstrating to yourself that—contrary to your old assumptions—you can save money.

Stop, drop, and roll

Once you get the saving habit fired up, use the stop, drop, and roll technique. (It's not what you think.)

If you have an expense that comes to a stop—say, you pay off a credit card or the baby outgrows needing diapers—convert that expense to savings. So, stop the original payment, drop the amount a bit so you increase your spendable cash with some of it, and roll the rest into your savings account.

If you've been spending $70 a month for disposable diapers and the baby graduates to toddler undies, drop that payment to $50 a month, roll it into savings, and be $600 ahead in a year. That could be money you decide to divert for a specific goal, say, your toddler's college fund.

When you're on a savings bender you can stop, and resume again, whenever you want.

If you've been paying $400 a month for a loan and the payments come to a stop, drop the amount to maybe $300, and roll that much into savings each month with automated transfers. In one year you'll have saved $3,600.

Financial Fitness Challenge

Your credit union personal finance professionals bring you this website and other tools to help you make the most of your money. The Financial Fitness Challenge continues to look at ways you can make better financial habits no matter what condition the economy is in.

Susan Tiffany, CCUFC

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