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I recently read in a magazine a plan to get your finances back in line and to save money at the same time. It is called the 50, 30, 20 plan.
The 50 part is 50% of your pay goes towards things you absolutely need such as food, medicine and electricity. The 30 is 30% of your pay goes towards things you want like a cell phone, cable television, and internet usage. The 20 is 20% of your pay goes towards savings.
I have begun to limit using what money we have left over from the "have to have" list and the "want list". I have started banking the 20% in my savings account. It is really easier than you think. Neither my husband nor I are paid an exorbitant amount each month, but we do spend money on things we do not need. Since the checks come in at different times, I have found it is easier to take the 20% off the top before I pay the bills. If push came to shove, I could always go into the savings account and take the money out.
There are many good aspects to this plan. It opens your eyes to see what you are really spending your money on and what you really do not need to spend your money on. Also the added benefit of having some savings really does make you rest a little more comfortable. After paying all the bills this month, I actually had money left over which is very unusual. I am looking forward to honestly see what I can delete in my billing and not really miss the loss. I have found it very useful and I hope you do as well. A little nest egg really can make a big difference.
By Gem from VA
I was taught the 10% rule and still do this to this day! No matter how much you make a week or bi-weekly, always put 10% of it in your savings account, "out of sight, out of mind". You will be surprised how much you can save and in such a short period of time.
By Toni K.
By Cheryl from Missouri
We also put ourselves on a tight budget. Any cash left over from the previous payday goes into my jug! You wouldn't believe how fast you can save.
Feel free to post your own ideas below.
I always keep a log of everything we spend and I always round up the total. For example: if I spent $1.25, I always round it up to $2.00. It sounds small, but after awhile, it really adds up. I never have too worry about being overdrawn.
Source: Dave Ramsey's Talk show
By Vickie from Norfolk, VA
My health has been getting worse for years. Not only have we lost my income, but the medical bills are through the ceiling. We spent everything that we had saved for our retirement, and were flat broke. To my husband's credit, he has never held it against me. He has stood by me through thick and thin.
I asked the Lord if He would support us if I put everything "extra" into savings. That would be rebates, pennies found on the street, aluminum cans, gifts, whatever. It turns out that there are a hundred ways to save a few cents or a few dollars.
For whatever reason, and I'll bet you know what I think, the money just started adding up. I exhibited homemade things in the fair, used coupons, cooked from my husband's garden, and did whatever I could to scrape up a dollar.
By the end of the year, we had accumulated $2,000. Since our normal annual income is around $9,000, that was a significant amount.
Of course, at the end of the year I fell and shattered my ankle, and that used up most of the savings. But I'm doing it again, and we're up to $1300 already this year.
To me, this just shows how easy it is to waste money. In the past, we had not had money left over. That year didn't have any miracle windfalls in it. We just didn't spend it when it came in.
I'm working on my fair projects today!
Coreen from Rupert, ID
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For years, we have had a leaky roof. Every summer my husband puts another coat of sealer on it (it's a mobile home) and every winter we put buckets under the leaks. I have determined that we will have a good roof before the snow flies! We have been saving with the "windfall" method.
I bought a heifer 18 months ago. By September she will be ready to calve, and we will hopefully sell her for about $1500. We are also selling our food concession.
Today I received a gift card to Walmart, earned on a website that has me look at ads and take surveys. It's for $50. I could just spend it on fun stuff, but this time I will use it on my grocery bill. Then I will take the $50 from my grocery money envelope and put it into savings.
Last week there was a great sale at Albertson's. Buy 5 Oscar Mayer products and get $4.00 back. The regularly $2.99 packages were marked $1.00 or 10 for $10.00. I bought twenty packages, five at a time. I spent $21.20, but I got back $16.00 to use on next orders. Naturally, I used my $4.00 off on the second order of $5.00. Ditto for the third and fourth orders. There was no limit. Our freezer has a good supply of deli ham for sandwiches and casseroles. I put my grocery money in an envelope. When I run out of money, I quit. BUT if I have some left over, I put it in savings for our new roof.
With opportunities like this, there will be money for savings. Two friends in construction have offered to give us bids and possibly trade their labor for our food concession. There are lots of possibilities. If we get our new roof this year, next year we hope to add solar panels. Wahoo!
Savings Bonds are now paying over 3% for the next few months. The only catch, they change interest rates every May and Nov. and you must hold them 5 years or pay 3 months of interest.
By Jon from Reedsburg, WI
I recently got my annual raise and have been putting it into savings. If I don't use it, it's like I never got it. A friend of mine read somewhere (not sure where) that a person has been living on the same salary for 10 years by doing this. So yes, it can be done!
Our bank offers a "Keep the Change" program. A painless way to save $. Every time you use your debit card, the bank rounds it up to the next higher dollar. Works great, and it goes directly into your savings account.
By Eileen-E from Northern, CA
If you have money in an ordinary statement or passbook savings account, you are probably getting about 3% less then if you put in CD's (certificate of deposits). CD's range from 6 month to years so get one that fits your needs and you'll be making more money each month in interest.
By Carol from Massachusetts
Always put money aside out of your paycheck away in a separate account to save for rainy days. Even the poorest of people can afford 5% especially if they do that from their first paycheck. I recommend 10%, but for someone making $200 a week, $20 is a lot of money. $10 is more doable in those situations.
By Becky from Essex, MD
Make saving a fixed part of your budget. Determine a reasonable amount of money each month and have it automatically deposited into a savings account. Deposit the money into a federally insured online savings account and you can earn as much as 5% on your money.
Before I retired, I used to use what was called a "Bohemian" savings plan. Why Bohemian, I don't know. It involved, if you get paid on a Friday, for instance, you would put your check in the bank or enter the deposit in your checkbook on Saturday the first week. You would do this on Sunday the second week, and so on. By the time you get to Friday again, you have 2 paychecks. Easy to do too!
Source: A Chicago newspaper about 45 years ago.
By Shrink from Redlands, CA
You can save a lot of money if you recently paid off a vehicle. Put the money you would have paid for the car payment in a savings account every month. If you've spent a couple years making the payment anyway, a couple more can't hurt. And you'd be surprised at how quickly it adds up!
Editor's Note: You also can reduce your car insurance coverage and save quite a bit of money.
I recently realized I need to save the pre tax savings on our medical savings account. They do an auto deduction every two weeks out of my husband's check which is $40 , which is about 9.20 savings for his check. I will start saving this on his first check of the new year on the 13th, from here on out.
Also, I plan on saving the medical money as it is used (like getting prescriptions filled) and will save that in a special account. At the end of the year, we will have $1,040 in that new account. Whenever we are out shopping or dining out, I bank the discounts that we get. My Smartypig vacation account is 30% funded now for the trip next summer because of all my found savings.
I've never been a saver and am just now getting the hang of it at my ancient age, lol. My new mantra is "save what you saved or else you have dropped the ball". Good luck and happy saving.
By Lori from near Memphis
Today is pay day and it's time to dole out the allowances. Remember those youthful days of the weekly allowance? Whoever said you can't be young again? Today on allowance day I have two envelopes - one for me and one for my husband.
It started when we balanced the checkbook one month and noticed how many withdrawals were made with our debit cards. With the convenience of debit cards comes their nomenclature - debit. It's easy to produce the card when the mood strikes, and it's dangerous. Not only does it make balancing a checkbook more of a task, but it allows instant access to your cash - all of it. By doing the math my husband and I realized that each of us was spending nearly $200 a month on unessential items.
Self restraint is difficult. Instead of relying upon the debit card, we allotted a weekly allowance to ourselves. Each week I would make a trip to the bank and withdraw exactly how much we needed. Bills still came out of the checkbook, as did groceries and other necessary purchases such as gas. Like the allowances of our youth, our adult ones were to be used for non-essential items.
Initially, we kept the budget tight. We budgeted our weekly needs and allowed only a small portion of money for spending. Then, on top of that we added $10 to the total. That $10 was our weekly allowance. Anything that didn't qualify as a necessity was to be paid for using the $10, and neither one of us could comment on how the other spent his/her money.
The first week was rough. Since our allowances were so small, it forced us to save two weeks for something we really wanted. Although I tried to argue that the collectable for sale on eBay was a necessity because I may never see it again, my husband didn't cave nor did he "advance" me next week's funds. If it sold for $10, I could buy it; anything over that amount was off limits.
Although a few of our friends worried that we were in financial crisis, the allowances put a new value on items. Was I heartbroken that I hadn't purchased that collectible for sale? Not at all. In fact, I learned that if I saved part of my allowance each week I had a large amount of "fun money" by the end of the month. It got to the point where I could look in my wallet and actually see money in there.
In the end the allowance did its job. We realized how foolish we were with our money. Now, I'm not so strict with the allowance as I had been a few months ago because I don't see the kind of crazy spending I sawbefore we tried it. Our mothers and fathers knew this years ago: allowances teach responsibility.
Don't spend your overtime money. Any and all extra money made should go into a separate account (savings account or investment). Saving your overtime money or extra earned money will add up very fast over the years! You will be amazed.
Every day that I don't buy a lottery ticket I put $2 in an envelope and do the same with coffee at work, where I used to buy one or two cups a day. At the end of the month I either put what I've accumulated into savings or against a debt I owe. It's easier to see the savings this way
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We finally are to a point where we have budgetted well enough to have some money to put in savings. About 100 dollars a month. What would be a good long term investment? Thanks, Alice.
Look in to an ING Orange savings account at ing.com. The current interest rate is 2.35%, I believe. We switched to one of those and have enjoyed watching our savings grow more than it did at our regular bank. We also like it becuase 2.35% is equal to the rate on many CD's, but our money is never tied up. The Orange account is linked to our checking account so we can put money in easily over the internet. We could also transfer it to checking easily in case of an emergency.
I also think that IRA's are a good idea-- the earlier you start saving for retirement, the better! We split our savings each month between the Orange account and our IRA's.
becare ful about 401 ks i have heard stories from friends about the company going out of business and they loose their 401 k funds
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For a great savings rate, buy Series I Savings Bonds.
The Pros: You will earn over 5% interest, they are insured by the US Government and you can buy them for as little as $50. You only pay fed tax on the interest.
The Cons: You must hold for a year, and if you cash them in within 5 years you lose 3 months interest. The interest rate changes every May and November.
For more information visit:
By Jon from Reedsburg, WI
Our government now limits the amount of savings bonds that we can purchase. Found this website that will answer a lot of people's questions.
My husband and I have always invested in U.S. Savings Bonds. Some of us are old enough to remember the advertising posters, "BUY WAR BONDS."
Buying U.S. Savings Bonds financially pays our men and women in uniform. We don't bother risking our life savings in the stock market that's why we buy bonds every year.
A cautionary note:
It is indeed good to invest a portion of your money in US savings bonds (I do) because they do have good interest terms and are insured but be wise and do not put all of your eggs in one basket ... Invest in other safe investment strategies as well and consider doing some homework about converting a portion of money in to euros, etc, (no, that is not unpatriotic in today's world wide trade market) ...
Even though our bonds and banks are federally insured, if our US current downward spiral continues it is possible that cashing in on those bonds could be held up for several months after maturity of the bond because the money will simply not be available when you might expect, want or need it most ...
Take heed of the current conditions in California where tax payers in that state are receiving California tax over-payment IOU's/roll over credit towards the next tax year rather than an immediate refund check ...
Thank you for posting this I think I will get some.
Whoa, not so fast on buying I bonds. Interest rates change every 6 months on I bonds. As of Nov 1st, they are paying 3.36% ( a GREAT rate) but the rate announced May 1st was ZERO due to deflation! They are generally a good deal but checkk the rates 1st!
Bonds used to be a good deal. No longer is that true. You are better off putting a few bucks in a credit union money market fund. The more you save the higher the interest rate.
The credit union account is even better than my savings bank account which is only at .25%.
The credit union account is also protected the same as the bank. (11/20/2009)