The holidays are over and it’s time to get started on that new year’s resolution about getting your finances in order and beefing up your savings account. Whether you’re saving for retirement, setting up an emergency fund or stockpiling some cash for a special purchase, here are some offbeat plans that will actually make saving money kind of fun.
1. The 52-Week Savings Plan
This is a simple, painless plan for those who suffer from severe savings phobia. After all, who can’t free up a spare buck a week?
The plan calls for savers to set aside a single dollar the first week, two dollars the second week, three dollars the third week, and so on for an entire year — 52 weeks. As you can see from this chart, by the end of the year you’ll have a cool $1,378 in savings, not including any interest or other earnings on the money you bank every week.
At the end of 52 weeks, you’ll also have conditioned yourself to set aside $50+ each week in savings, which, if you continued to do every week for the next year, would give you a truly impressive $2,500+ in additional savings.
2. Save Your Age, Plus Two Zeros
Here’s an easy way to remember how much to set aside for retirement every year — provided you can remember how old you are. This plan is from my book How to Retire the Cheapskate Way and was dubbed by AARP “The world’s easiest retirement plan.”
The goal is to save your age, plus two zeros, every year throughout your career. So, when you’re 21, you set aside $2,100 in retirement saving, the next year, $2,200, and so on. Because the increase each year is so minimal, you won’t feel a pinch from setting a mere $100 more annually, particularly since your salary will likely grow throughout your career.
After a 40-year career, factoring in, say, a 5 percent annual rate of return (that’s only about half of the historic average rate of return from the U.S. stock market), you’ll have a nest egg of nearly $500,000 by the time you retire.
Photo credit: Will Clayton
Related article: 17 Best Ways to Save Money Every Day, From the Experts
3. $4-a-Gallon Savings Club
When gas prices hit the $4-per-gallon mark, we all complain about it, but we find ways to drive less and fit the extra cost into our household budgets. But when gas prices drop back down, we return to our wasteful driving habits, and the extra amount we’ve been spending on gas disappears into thin air.
So, join the $4-a-Gallon Savings Club, and start paying yourself the difference between $4 and whatever you’re actually paying per gallon at the pump. I did this faithfully throughout 2013 — stashing the extra cash in an envelope every time I filled up — and ended the year with a bankroll of more than $700. Plus, when gas does reach $4 a gallon, it doesn’t pinch my pocketbook since I’ve been “paying” that much all along.
Photo credit: futureatlas.com
4. Transfer Weight from Your Waistline to Your Wallet
Losing weight and getting your finances in order are two common new year’s resolutions. Why not combine the two, and bank the cash you’re saving by eating less?
One of my “Miser Advisers” — fellow cheapskates who share with me their frugal tricks and tips via my website www.UltimateCheapskate.com — did just that and added more than $1,500 to her savings account last year while she dropped more than 32 pounds.
Key to her success on both fronts: Overcoming an addiction to high-calorie/high-cost red velvet cake from the corner deli. Try the same savings strategy when giving up any vice — smoking, drinking, lottery tickets, etc. — and double down on the benefits of breaking a bad habit.
Photo credit: the Italian voice
5. The $5 Bill Savings Plan
This is a fun — albeit not very mathematically precise — system for saving, with an element of chance determining how much you actually set aside. The idea is simple: Whenever a $5 bill comes into your possession, you save it rather than spend it. Gaming the system by asking to receive (or not receive) change from purchases in five dollar denominations is strictly prohibited, hence the element of chance.
I tried it once for a few months and socked away about $50 per month in five-spots. If you rarely pay in cash, check with your bank to see if they offer a “round it up” feature on their debit cards, where every time you make a purchase using the card, the bank automatically rounds up the amount to the next higher dollar amount and transfers that difference to your savings account.
Regardless of how you save in 2014, the important thing is to start saving now and make it part of your financial routine. Happy new year and stay cheap!