If you're always worrying about money, then it will be near impossible to achieve "total mind and body fitness", which as you know, is what we are all about here at FitBuff.com.
You know how your cable and/or phone bills seem to come about 31 times a month, instead of just once? Every time you open the mail there's a $100 Comcast bill (or insert your cable company) and a $60 Verizon bill (or insert your carrier). Well, unfortunately, Comcast and Verizon, along with all of their brother and sister companies, aren't really concerned about your financial woes. They just want you to keep paying for their modern "essential" services, and if you don't, then you will be missing the latest episode of Lost and have no phone service to call anyone to find out what happened!
To keep that awful tragedy from occurring, I have devised a plan to take care of these bills, without having to bring in "Joey the Shady Cable 'Repair' Man" to rig your system. I'll confess, my method isn't actually "free" per se (you should have guessed after seeing "legally" in the title), but I promise it will feel almost as painless.
What You Will Need:
1. A credit/debit card (you can do the same thing with cash, but it's more cumbersome, and plus it's 2007, get with the plastic old-timer)
2. An online banking account (if you don't already have one, chances are that your bank offers one for free)
I got the idea after seeing a Bank of America commercial for a new credit card called "Keep the Change". What it does is every time you make a purchase with the card, it automatically rounds up to the nearest dollar and transfers the remaining change into your savings account. For example, if you buy a magazine (a health and fitness magazine right? not the ones in the plastic bag) for $5.62, then the card would charge the $5.62 to your checking account and then transfer $0.38 to your savings account. Doesn't sound like much, but trust me, you'd be amazed how fast it adds up. I thought this was an excellent idea and feature, but if you're like me, it's not enough to start cancelling and reapplying for new credit cards. So instead, I integrated the same strategy into a method of my own that I can use with my current card.
I go through my entire day as I normally would, making nearly all my purchases with my debit card. I rarely use cash at all, and my debit card withdraws the money directly from my checking account. I have my checking account and savings account both set up for online banking. So, at the end of the day, while I'm going through emails, etc. before bed, I quickly login to my online bank account, round down to the nearest $10, and transfer that amount to my savings account. For example, if I've gone through the day, and when I get home I have $708.37 in my checking account, I transfer $8.37 into my savings account. If there is less than a $5 increment, like $702.89, I usually round all the way down to $690.00 and transfer $12.89. Obviously, you can adjust these numbers and what you round down to based on your budget and spending habits. You may want to only round down to the nearest $5 or all the way to the nearest $20.
Either way, it's a way to transfer small amounts of money that you will never even miss on a regular basis. At the end of the month, I usually have about $100-$250 that I have transferred using this method. That's money that I never missed or even realized was gone. If you are still using cash for the majority of your purchases, you could still incorporate this idea into the old-fashioned piggy bank method, but this is primarily for the emerging tech-savvy "plastic-only" online bankers. It's so much faster, more convenient, and safer over here – come over to our side!
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I tried something similar to this method once and after a few weeks I realized that I was spending more money than I normally did every day just so I would have something to tuck away in the evening. Finally I decided to set a monthly savings goal that was withdrawn from my account weekly.
I'm all for anything that encourages people to save but I would caution people to not to use this method of saving as another excuse to spend.
Thanks for the comment Finance Finals. I can see how that would be a problem if you were basing the amount to be saved on every individual transaction, similar to the way the BoA card automatically saves the change after each purchase. But, with this method, there should not be any pressure to spend, because you decide at the end of the day how much to transfer, regardless of how many purchases you made that day.
I would assume that almost everyone makes some type of purchase every day, but even if you never left the house, you could still transfer $5-10, depending on the amount you decided would fit your specific budget.
The key is to be consistent and smart about choosing what your daily transfer limit will be. Mine is ~$10. Someone else's may be $5, and another's may be $20. It's up to you to decide on an amount and stick to it. You should only have to change your saving habits, not your spending habits.
Why don't you round to the nearest $100 instead and then you could buy a solid gold dunce hat for that pointed noggin of yours.