<strong>By Cherie Lowe</strong>
An emergency fund, a new car, a vacation, a down payment … perhaps in the new year, you’ve set a new savings goal.
So many of us long to pay cash for big ticket items and stash away cash for a rainy day. However, it’s easy to feel like we simply can’t save. After all, at the end of the month you barely have anything left in your account. How can you be expected to make pennies multiply into hundreds, let alone thousands of dollars. If that goal of being a better saver always seems just out of reach, I have good news.
You CAN save. Yes, it might take some intentionality. Yes it could require some sacrifice. But I am willing to bet the goal isn’t quite as illusive as you think it to be. And you might be able to begin the process of socking away money without even “feeling” it. Here’s how.
<h4>Start with small percentage</h4>
Whether you’re aiming to beef up your retirement account or save for a short-term goal like a weekend away with your spouse or a snazzy Apple watch, you need to begin your efforts in small increments. Even as little as 1 percent of your paycheck adds up over time. Resist the urge to bite off more than you can chew and save too much too quickly. Slow, small and steady wins the race.
<h4>Move money from your checking account</h4>
If I’ve said it once, I’ve said it hundreds of times, if you leave any extra cash in your checking account, it will grow legs and walk to Target. Or Home Depot or JOANN Fabric or if you’re my husband, DSW — that fella sure loves a new pair of shoes. Leaving your 1 percent savings in your checking account will lead to its sudden disappearance.
As soon as you deposit your check, transfer money to a savings account. If your bank allows, set up another account easily accessed through an online interface. Over the years, we’ve added a number of different accounts. As your savings muscles grow, you may want to do the same. Consider setting up separate savings accounts for an emergency fund, Christmas, vacation, household repairs and car repairs and replacement.
If you’ve never saved money before. It’s wise to begin with one account though. Establish an emergency fund with between $1,000 to $2,000 because it’s never a question of if something bad will happen but when.
<h4>Automate the process</h4>
Afraid you won’t remember or have the self-discipline to transfer that percentage into your separate account? Consider automating your process. I know, I know. This idea sounds incredibly complex and beyond your pay grade, but I promise it’s not.
In fact, it may be as simple as calling your bank and requesting a regular transfer from your checking account to your savings account. You might even be able to get the job done simply by logging on to your bank account online without any help.
The more quickly you move that money out of your “hands” and into a safe spot, the more likely you’ll hang on to it for savings purposes. The longer you let it stay in your account, the more likely you’ll spend it. So if you can make the process automatic, you’ll increase your likelihood of reaching your savings goals.
<h4>Up your odds with apps</h4>
No matter the problem or challenge, it seems there’s always an app for that. If you want to go all smart phone on your savings goals, you’ll find a number of fantastic fits to help you get the job done.
<ul>
<li><strong>Digit:</strong> When you link Digit to your checking account, it automatically begins to deduct what you’re not spending and depositing into another account. Note: The app is free for the first 100 days and then charges you $2.99/month. So unless you’re saving $50/month it might not be worth it.</li>
<li><strong>Qapital:</strong> This fun, free app helps you visualize your goals and get serious about saving. You can choose your own rules for the app. When you link it to your bank account, then it transfers money from specific transactions into an FDIC insured account. For example, you might have Qapital round up when you purchase gas for your car and place the extra amount in an account to help you buy a new set of wheels. Or you could set a rule that when you come in under budget at the grocery store, money goes into your vacation account. You can even customize the app to save $10 every time you go to the gym. The sky’s the limit with this app that makes saving more like a game and less like drudgery.</li>
<li><strong>Acorns:</strong> Similar to Qapital, Acorns rounds up your transactions to help you begin saving. But instead of placing the funds in a savings account, Acorns invests your extra dough, helping you earn cash, too. There is a catch. You’ll pay $1/month if your account is under $5,000. Once you hit that goal, you’ll pay a fee of 0.25% of your account balance. But it might be a good option for college students because they can get up to four years of the app for free. You choose the risk level of your investment — from conservative to more aggressive funds. And some partner companies such as Airbnb or Blue Apron put a percentage of your purchase made with linked cards into your account, too.</li>
</ul>
There’s a high risk, high reward element to this app though. You might make money you wouldn’t if your funds were simply sitting in a savings account. However, if the markets dip, you could lose money, too. Also keep in mind you’ll have to wait a day or two to be able to access your funds. They’re not available immediately like they are in a savings account.
Saving money isn’t the impossible dream. You might discover it’s less painful that you previously thought. Get smart in 2018 and begin funding your goals and aspirations. You’ll be glad you did.
<em>Greenwood resident Cherie Lowe and her husband paid off $127,000 in debt in four years and now live debt-free every day with their two kids. She is the author of “Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After.” Send questions, column ideas and comments to [email protected]</em>
