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Boost Your Savings© Sound Mind Investing | December 2008
BOOST YOUR SAVINGS BY CHANGING A HABITThere is an aspect to your spending that you may never have thought of (and may not be able to get out of your mind once we put it there). Have you ever stopped to consider the potential "future value" of the money you spend today? That is, if you were to save it rather than spend it, what would it be worth as you near retirement, say in 20 years? For example, let's say you spend $7 each workday for lunch on the job. What if you decided to fast just once a week and save that $7 rather than spend it? You continue to do this once a week for 20 years. Invest it at 8% in your Roth IRA and it would grow to (drum roll) $17,959! Surprised? We thought so. Now, start applying that same logic to other adjustments you can make in your lifestyle. What if you could save $60 a month in gas and parking if you were to carpool or take the bus? You might be more inclined to endure the extra hassle when you realized you were going to have an extra $35,523 waiting for you down the road. And if you buy a latte everyday at Starbucks, that's a whopping $71,834 up in foam. Do all three — skip one lunch a week, carpool, and give up Starbucks — and you've got an extra $125,000! Think about it. BOOST YOUR SAVINGS BY ELIMINATING IMPULSE BUYINGYou have to begin looking on impulse purchases as one of your most formidable foes in the battle to save more. Impulse purchases usually violate the following rules for wise shopping: shopping around for the best buys, keeping tight control on the use of your credit card, buying only what you really need, buying what's practical, and checking carefully for quality. Larry Burkett once suggested maintaining an "impulse list" that works like this:
Larry used this system, and wrote: I rarely buy anything on impulse. Do you know why? Because long before I have found two more prices on the first item, I find two more items I would rather have. BOOST YOUR SAVINGS BY SURRENDERING TO AUTOMATIONWhen it comes to saving, it's easy to rationalize putting it off until the next paycheck. So, it often helps to have some of your money put aside automatically before you have the opportunity to spend it. Here's one way — use your local bank checking account for all salary and investment income deposits. Then, instruct your money fund organization to have a certain dollar amount (you decide how much) automatically transferred from your local bank to your money market mutual fund once or twice a month. Most funds typically accept transfers of $50 and up on either a weekly, bi-weekly, or monthly basis. It's easy, convenient, and offers some useful discipline. (For more on automating your savings, see chapter 5 of The Sound Mind Investing Handbook, from which this article has been adapted.)
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