As featured in The Wall Street Journal, Money Magazine, and more!

From the category archives:

Saving

8 comments

Email this article Email this article
Print this article Print this article

Put Your Savings in Hyperdrive, Part 6: Make Your Raise Invisible

by Flexo on January 22, 2008

in Saving

This is the last installment of the series in which I offer a few suggestions for picking up the pace of your savings. For those not familiar with the concept of “hyperdrive,” the word refers to traveling faster than the speed of light, common in science fiction. This is the speed I would like my savings to accumulate, so I’ve compiled a few tips to help reach that pace.

In my company, there is a scheduled time that all employees receive information on their bonuses and annual pay increases — even if the answer is $0 to both. That time, coinciding with annual reviews, is coming shortly. This yearly event offers a great chance to accelerate savings. It comes down to how you handle the raise and bonus.

6. Make Your Raise Invisible. Your boss has just informed you that you will be receiving a raise of 3% and a bonus of $5,000, both taking effect in the next pay cycle. What is your first inclination? From talking with my coworkers, it seems to be common for the bonus and raise to be spent already. Anticipation of a pay increase seems to inspire spending ahead of time. Thus, it may make sense for many people to use the bonus and raise to pay off debt.

Since this is a series about saving, I am taking the position that no significant debt needs to be paid off. Your raise and bonus would go far to pay down high-interest credit card debt or a home equity loan. But if your goal is to maximize your savings, the raise and bonus can come in handy.

A general guideline is to increase your savings percentage by the percentage increase of your raise. That is, if you receive a 5% raise and you’ve been saving 10% of your income, increase your saving to 15% of your income. This means that your increase will be invisible to you and your budget.

Invisible raiseBefore-raise salary: $50,000
Before-raise 10% saving: $5,000
Left over: $45,000

After-raise salary: $52,500
After-raise 15% saving: $7,875
Left over: $44,625

This is an interesting number game. With this raise, you are earning $2,500 more than you were previously, but you are savings $2,875 more in the new year. By applying your raise increase percentage to your savings percentage, you’re actually saving a larger portion of your income. You are also reducing your left-over income after savings, but not by much (less than 1% of your new salary).

I’ve taken another approach in the past, focusing on retirement investments rather than straight rainy-day savings. I am not currently maximizing my 401(k) contributions, nor was I when I received my pay increase in prior years. When I received my raise each year, I increased my 401(k) contributions by the same percentage.

Whether you’re putting a larger percentage of your income in a high-yield savings account or a tax-advantaged high-yield fund, you’re making a good decision, but a larger deposit in your savings account will allow you to see your interest grow exponentially with each paycheck.

When it comes to the bonus, this is a no-brainer. As long as you don’t have debt, a lump sum deposit into your savings account can provide a boost towards your savings goal.

It’s quite possible, in an economic downturn or as a result of poor performance, that the raise offered by your employer is invisible itself. That’s a discouraging sign regardless of the reason. I’d suggest increasing savings, anyway, if possible. You’ll also be faces with increased prices. Your raise doesn’t need to match inflation, particularly if your expenses are lower than your income, but the government’s official inflation number is generally used as a benchmark for an “adequate” cost of living increase.

Most employees will receive some sort of increase this year. If you are one, you have the opportunity to get one step closer to hyperdrive by making that raise invisible.

{ 8 comments }



6 comments

Email this article Email this article
Print this article Print this article

Put Your Savings in Hyperdrive, Part 5: Hide Your Savings From Yourself

by Flexo on January 19, 2008

in Saving

Over the past week, I’ve been sharing some ideas for taking your savings to the next level. Try to take advantage of high-yield savings accounts while you sill can. With the economy in bad condition, it’s likely the Federal Reserve is going to lower the target interest rate, which will mean lower interest rates for savings accounts. Get the risk-free 5% interest rates while you still can. Compounding interest in these accounts is the acceleration that reaches “hyperdrive.”

But there is a challenge. In order to make the most of compounding interest, you can’t withdraw the money while it’s working for you. The more you don’t see or otherwise come into contact with your money, the less tempted you are to access and spend it. So here’s tip number five for putting savings in hyperdrive.

5. Hide Your Savings From Yourself

Once you have a positive approach to saving, including the prior hyperdrive suggestions of using a high-yield savings account and automating your savings, two clichés are important to remember: “Set it and forget it,” and “Out of sight, out of mind.”

While common sense says that the more attention you pay to something, the better off you are, I disagree in this case. More attention given to something that’s boring — interest accumulation, like watching grass grow — will sometimes create a frustration and a desire to do something more. Of course, investing for the long-term in the stock market will provide better returns, but for now, we’re just talking about short or medium-term saving. So if you have a tendency to fuss or futz, or if ATM access to your account introduces the desire to withdraw and spend your savings, cut off all but essential contact with that account.

I am not suggesting hiding money from your family. Hiding your money from yourself doesn’t mean you should keep accounts without your spouse’s knowledge.

1. Open a high-yield account at a new bank. Accounts at new banks are easy to forget about. By opening an account at a bank new to you, you haven’t created a habit of checking the balances online. Avoid starting this habit.

2. Sign up for paperless statements. Ensure you use an email address you don’t check often. This way you can access your tax forms and statements when you need to, but you don’t have a constant reminder.

3. Don’t include this account in your net worth. If you track your finances in software like Quicken, Microsoft Money, or Mint, leave this account out of your calculations. In Quicken, you can hide the accounts by clicking the “Customize” button at the bottom of the account sidebar. With the account hidden, you can still manage it within Quicken but keep it out of view and not include it in the totals. With Microsoft Money, Mint, and other software there is no “hide” function, so delete the account.

With your savings hidden away, your interest is free to accrue approaching light speed without interference.

Image credit: jpctalbot

{ 6 comments }

11 comments

Email this article Email this article
Print this article Print this article

Put Your Savings in Hyperdrive, Part 4: The Expensive Coffee-Related Drink Factor

by Flexo on January 17, 2008

in Saving

I’m on a quest to determine a number of financial moves that will accelerate savings beyond the typical snail’s pace. I’ve written so far about opening a high-yield account, keeping your change creatively, and automatic your savings. These are all basic concepts that can be applied in interesting ways with a little bit of attention.

Many people disagreed with me when I railed against The Latte® Factor, David Bach’s trademark catchphrase and program which prescribes dropping your expensive morning coffee drink and depositing the value of each day’s savings into some sort of magical account that will return 10% annually after taxes and fees for forty years and end up with close to $1,000,000 more than you would have otherwise.

I’ll address my issues with David Bach’s program below. Nevertheless, a system similar to David Bach’s suggestion has merits for some people, thus I have a fourth tip for putting your savings in hyperdrive.

4. The Expensive Coffee-Related Drink Factor.

Obviously, I don’t want to call it The Latte® Factor, which is a registered trademark and a signature selling point that drives millions of dollars in books in seminars. Since I don’t drink coffee, I’ll use the therm ECRD to refer to any habit that requires a frequent expense but is easily controlled or replaced by another, less expensive habit. The savings from the elimination or switch can be accumulated and deposited into a high-yield savings account.

coffee

Problems With The ECRD Factor

It is important to remember that all of this is pointless if one doesn’t make smart decisions about the larger issues in life. You can forgo the daily coffee from Dunkin Donuts, but if you still eat two doughnuts every day, you’re spending money on something that you may pay for in health care costs later on. You can switch from premium gasoline to regular gasoline, but if you buy new cars every three years, the savings from the gasoline are ten or a hundred times lost by the unnecessary expense of buying new cars so frequently.

The scenario David Bach paints — an after-interest, after-fee, after-tax increase of almost $1,000,000 in 40 years from dropping your daily latte is an extremely unlikely scenario, both mathematically and behaviorally. Bach makes some serious assumptions that don’t have much validity in the “real world.”

  • You probably won’t earn 10% in an account for forty years after taxes and fees.
  • To invest in an account that earns even 8% over forty years, you will lose a lot of your money due to transaction fees. A $4 transaction fee, like the one charged by ShareBuilder, on a $150/month investment is a 2.7% fee right off the top. That’s not a wise investment.
  • Without your daily dose of caffeine, you may miss out on career opportunities while asleep at your desk. This sounds like a stretch, but if you quit cold turkey, you could see adverse effects in your productivity and you may miss an opportunity without knowing it.
  • It’s also quite possible that you enjoy your latte, understand the consequences and future savings you are giving up, and have decided your enjoyment is worth the potential loss.

So The ECRD Factor can have mixed results when you deal with variables in the real world. Don’t expect the kind of wonderful returns David Bach promises, but the frequent expense reduction or elimination that forms the basis of this tip can be a significant part of your saving strategy if the rest of your financial decisions are sound.

Making The ECRD Factor Work

What’s your ECRD? It’s probably best to pick something to which you do not have a physical addiction without appropriate support. While I would always suggest eliminating an addiction to heroin or alcohol, there are more immediate concerns in these cases than saving money, namely staying alive and healthy. It’s best to choose a daily expense that can be eliminated or replaced immediately without any significant withdrawal symptoms. The daily coffee-related drink might be a good candidate, particularly if you buy such drink from an expensive store like Starbucks. The good news is you won’t go through withdrawal if you simply replace the expensive drink with your own freshly brewed concoction.

And if you eliminate the drink entirely over the span of a few weeks, or replace it with water, you will get used to the change in chemicals in your brain within a few weeks.

Caffeine isn’t the only option. A coworker of mine has stopped buying lunch every day, opting to bring in a homemade sandwich instead. If not lunch, I know someone who used to eat out at an expensive steak restaurant every week. If you work in New York City, there’s the temptation to go out to the bar for happy hour with your coworkers. Do you smoke? Slowly cutting back will improve your health and save you thousands of dollars even before interest.

How about the news stand in the morning? If you pick up a newspaper on the way to the office to read on the train, consider this your ECRD. Replace the newspaper with a free news podcast if you already own an mp3 player. If you really like the newspaper, consider subscribing. You’ll save quite a bit off the newsstand price. The difference in price is your ECRD.

Apply Your Savings and Earn Positive Returns

If these are habits, cutting back (without affecting your networking experiences) and intentionally depositing the money you save will add up over the long term. It doesn’t have to be perfect. The three previous hyperdrive tips come in handy here. If you’re used to spending $4.50 in cash every morning for your latte and are ready to eliminate the drink entirely, put that $4.50 in your coin jar before you leave for work for later deposit into a high-yield savings account. Not a cash user? If you spend about $100 for your chosen ECRD a month, set up an automatic transfer from your checking to savings account for that amount. If your bank allows you to create separate goal-related accounts, like ING Direct’s subaccounts, create one specifically for your ECRD savings and transfer your monthly savings there.

Your high-yield savings account is not earning the 10% promised by David Bach. Forget about that rate and use the money saved for short-term goals. The more you save, the more you’ll also have available for long-term goals like retirement and legacy. So keep making good decisions all around — especially on the bigger expenses like real estate, vehicles, and education — and these seemingly small savings will add up over time. It starts off slowly, but compounding interest is the key to putting you savings in hyperdrive.

Image credit: Drab Makyo

{ 11 comments }

3 comments

Email this article Email this article
Print this article Print this article

Put Your Savings in Hyperdrive, Part 3: Automate Your Savings

by Flexo on January 16, 2008

in Saving

If you’ve ever run from one point to another, you’re probably aware that there is a limit to your speed. With “analog” equipment like the bones, muscles, joints and tendons in your legs and feet, there are physical limitations that prevent you from going too fast. Don’t worry. Thanks to recent inventions, it’s quite easy to get around this problem. Bicycles and cars allow your muscles to exert much less effort while resulting in faster movement. Sometimes machines and computers are required to break through limitations.

As you might imagine, saving money follows the same concepts. Picking up your paycheck from your mailbox, endorsing the back, and bringing it to your bank is like walking from one point to another. (Even if you drive to the bank, for the purpose of this metaphor, you’re a walker.) Once the teller confirms your identity and the validity of the check, he or she might give you the sum of the check in cash. Perhaps you cash only a portion of your check — the money you’ll need for the upcoming week — and deposit the rest into your checking or savings account at the bank. Congratulations, you’re now moving at 25 miles per hour.

You’ll still need better equipment to make the jump to hyperspace.

3. Automate Your Savings. With your savings on autopilot, you have less to worry about. While you’re not looking, money is transferred to your bank account — a high-yield savings account is best but a checking account may be a necessary intermediary — and begins earning interest. There is no need to waste gasoline on trips to the bank. There are several parts to automating your savings.


Direct Deposit

Direct Deposit is one of the most positive developments in saving. Rather than cashing your pay check and depositing only what is left over, you can instruct your employer to transfer your after tax salary each payday directly into your checking or savings account. Large companies usually make this an option when you first accept the job. Otherwise, you may need to get in touch with your human resources department. Smaller companies may not offer this feature, but it wouldn’t hurt to suggest to those whose make these decision that the company implement the service.

There are a number of benefits. Most immediately, you don’t have to worry about finding time for traveling to your bank. You reduce the risk of losing your paycheck in transit. In most cases when you receive your funds via Direct Deposit, the money is made available to you on the date the check is deposited rather than being subject to a holding period as you would be for other deposits. Direct Deposit also allows you to split your paycheck among a number of accounts, so you can immediately designate a portion for savings and begin earning interest on the day of deposit.

What are the drawbacks of Direct Deposit? If you still use cash for transactions throughout the week, you’ll need a way to get the cash out of the bank. These withdrawals should be done from checking accounts rather than savings accounts. Savings accounts are limited to six withdrawals or outgoing transfers per month — so most of your transactions should take place in a checking account. You can use an ATM card to get the cash you need. You should be the last entity to touch your money — let the interbank technology take care of as much of these transactions as possible.

Automatic Transfers

In most cases, your paycheck is best deposited into a checking account, and from there, you can set up automatic transfers into savings and cash withdrawals. The best high-yield savings accounts can be linked to your checking account. This will let you transfer money directly within the same bank or from one bank to another without writing checks. For example, if you choose to open accounts at ING Direct, you could set up a link to your local checking account into which your paycheck is Directly Deposited.

You can then create automatic savings plans, instructions to periodically transfer money from your checking account to the high-interest savings account. Set it and forget it. While I am citing ING Direct as an example, they are not the only bank that allows customers to create automatic periodic deposits. Find a bank you like and review the options they offer.

With all your money moving behind the scenes, from your employer to your checking account to your savings, you are earning interest without knowing it. When the money is not passing through your hands, there’s less temptation to spend it right away. More money ends up in your savings, accruing interest for the future. Effectively, each time you feel you need cash, there is an obstacle of going to the bank or ATM. Some may decide that the expense is not worth the hassle and simply leave the money in savings.

Automation allows more of your money to find its way to your savings account quicker and remain there, earning interest.

Image credit: PPDIGITAL

{ 3 comments }

11 comments

Email this article Email this article
Print this article Print this article

Put Your Savings in Hyperdrive, Part 2: Keep Your Change

by Flexo on January 15, 2008

in Saving

Whether you’re trying to establish an emergency fund or putting money away to take your dream vacation, you can reach your goal faster by putting your savings in hyperdrive. Unfortunately, scientists have not yet perfected time travel. When they do, saving for retirement might only entail traveling back to the 18th century to deposit $1,000 in a national bank and popping back to the present to reap the rewards of three hundred years of accumulated interest.

Until modern technology catches up to science fiction, savers are relegated to more traditional forms of accelerating their income from interest. Yesterday, I wrote about opening a high-yield savings account, a set-it-and-forget-it task. The next suggestion involves creating a daily habit.

2. Keep your change. At first glance, focusing on your daily pocket change may seem like a lot of effort with too little payoff. For example, I’ve seen people who are so focused on picking up pennies from the ground by keeping their eyes down that they miss the dollar bills right in front of their faces. That’s a prime example of being penny wise, pound foolish.

Nevertheless, I’ve also seen coin jars add significantly to savings. A coworker of mine emptied her jar recently and counted $500 from the past year. This type of savings may not be worthy of your retirement plan, but it can mean the difference between renting an economy car and a convertible on vacation. A mason jar may not support your children’s education, but it might pay for internet service for a year so your kids can research their assignments online. This is significant, and the beauty is in the simplicity.

The concept is simple, but the execution is not as easy as it used to be. Back when dimes were 90% silver, cash was king. Almost all everyday transactions were handled with cash. Inflation from the last 50 years hadn’t yet eroded the value of coinage, so when you dropped your coins in a jar at the end of the day, you knew it was worthwhile.

Now, fewer transactions are handled by cash, and you have less change in your pocket when you arrive home. The change you do have has decreasing purchasing value, as well. Keeping your change in the 21st century now takes more than filling a piggy bank with your coins.

That’s not to be overlooked however. The only material needed is a jar or piggy bank, and the best placement is near your front door, perhaps right next to the spot where you leave your keys when you walk in at the end of the day. It’s quite simple to make this a habit: check your pocket or purse as you put down your keys or hang up your coat. Perhaps you won’t have anything most of the time, but it’s a habit worth creating anyway.

Once a month, or more frequently if you desire, bring the coins in the jar to your bank to deposit into your savings. If your bank has a free change counting machine this process may be easier. My girlfriend enjoys rolling coins into wraps so I don’t deny her the fun. Don’t forget that this deposited accumulated change will do much more for you in a high-yield savings account than in the standard account offered by your local bank.

Unfortunately, with the decreasing use of cash, the “analog” coin jar may not be enough. In a world where debit cards and credit cards rule financial transactions, a high-tech piggy bank equivalent may make the difference. One example was corporate-sponsored. A few years ago, Bank of America created the “Keep the Change” account offering.

Every purchase you make with the debit card is rounded up to the nearest whole dollar. When the debit card is used to make a purchase, the amount deducted from your checking account is the rounded up number. For example, if at item is purchased for $15.25, $16.00 is deducted from the account.

Of that $16.00, the difference due to rounding, $0.75, is transferred directly into your Bank of America savings account, where presumably it will earn some interest. Of the remaining $15.25, Bank of America keeps about $0.25, a standard merchant transaction fee, and the merchant receives the remaining amount, approximately $15.00.

Similarly, One from American Express is a credit card that will deposit 1% of your purchases (plus a $50 bonus after your first purchase) into a high-yield savings account.

There’s no reason for this type of cumulative saving to be tied to certain debit cards, debit cards, bank accounts. While they make it easy for you, it would be worthwhile to use all of your credit and debit card accounts as well as a better-paying savings account.

If you’re ready to put your savings in hyperdrive, then you must already track your account balances and activity in software like Microsoft Money, Quicken, or any number of web-based offerings. You’ve also presumably followed yesterday’s suggestion of opening a high-yield savings account. On a weekly basis, take a look at all your debit card and credit card transactions. Round each expenditure up to the nearest dollar. Total the excess amounts and transfer the sum from your checking account to a special high-yield savings account earmarked for whichever goal on which you happen to be focusing.

This process may be too involved for daily attention. If you review your financial activity every few days, keep a spreadsheet going with the tally and transfer the sum of the remainders to your high-yield savings once a week or once a month. The idea is to create a habit at a rate that works best for you, and everyone has different preferences.

Do what’s best for you, but don’t ignore the power of doing more with your change — and letting your extra change do more for you.

Image credit: sciondriver

{ 11 comments }

8 comments

Email this article Email this article
Print this article Print this article

Put Your Savings in Hyperdrive, Part 1: Open a High-Yield Account

by Flexo on January 14, 2008

in Saving

Hyperdrive, also known as warp speed or a number of other terms in science fiction, refers to traveling faster than light. While theoretically impossible for objects due to the special theory of relativity, moving at this incredible pace is possible for your money. While you have a savings account earning continuous interest, you are becoming slightly richer not every second, not every microsecond, but every infinitesimal portion of time. That’s fast.

If your money is earning 0.25% yearly interest in a standard brick-and-mortar savings account, you are not making the most of your money. For no more risk you can be earning up to 20 times as much. Savings, whether in a high-yield account or not, is among the safest of all investments. Here is the first tip for putting savings into hyperdrive. Keep in mind that the terms “savings account” and “money market account” (not “money market fund”) are interchangeable.

1. Open a high-yield savings account. Many banks are getting away with murder. They know that most customers are fine letting their money sit without looking for better alternatives. Comfortability plays a role.

hyperdriveIf you’ve been with a bank for 15 years, you feel comfortable with them and are less inclined to feel the need to shop around. This is acceptable behavior as long as you understand that you could be missing out on significant interest income. Take a look at this list of high-yield savings accounts or look for the lists on BankRate.com.

Many of the banks that pay the highest interest do not have brick-and-mortar branches. These branches are expensive to run. Without having to manage branches, banks can theoretically save more income and pass that savings onto account holders in the form of interest.

There is no reason to feel nervous about opening an account with a bank that only exists online. As long as they are insured by the FDIC — and all the banks listed here are — you have the same protections you have with a traditional bank. Also, you’re safer sending your information over a secure, encrypted internet connection than you are traveling to a branch with your money.

Opening a high-yield savings account is a no-brainer. With a $10,000 balance at the beginning of the year and no further deposits, a savings account with an annual percentage yield (APY) of 4.5% earns $450 in interest, $425 more than the typical savings account offering 0.25% APY.

{ 8 comments }

2 comments

Email this article Email this article
Print this article Print this article

Cashed In Series EE Bonds

by Sasha on December 31, 2007

in Saving

In the interest of further consolidating my finances, this past week I cashed in a small collection of 1988 series EE bonds which I’d kept hidden away ever since. All had reached and surpassed their maturity dates long ago, so they were worth their face value and then some.

Here’s what mine were worth, which should give you an idea of what to expect if you’ve got some series EE bonds of that vintage hidden away as well:

1 $500 bond = $684.00
1 $100 bond = $131.52
3 $50 bonds = $68.40 each

All in all, I had $1,020.72 in cash, which I put directly into my savings account to reinvest. This does mean I’ll have to account for $645.72 in interest when I do my 2007 taxes, but I’ve got lots of charitable donations this year to offset this so I think it’ll be okay.

I might have saved cashing these until after I retired to gain a better tax advantage, but was eager to consolidate these gift monies into the rest of my savings to better leverage them for other, more immediate investments.

Do you own bonds? What’s your savings bond strategy?

{ 2 comments }

24 comments

Email this article Email this article
Print this article Print this article

10 Easy Ways to Save Money Without Much Effort

by Flexo on November 16, 2007

in Saving

The holiday season is approaching, so I know I’ll be spending more money. I have even begun planning a vacation for early 2008, and I want to make sure I can afford it. Additionally, I am projecting that my side business will make less money in the future and not allow for the career transition from full-time cube dweller/half-time blogger to full-time blogger that I have been considering for the past year.

I’ve spent more this year than ever before, as evidenced by fancy new gadgets I now own, previously delayed for years until my finances supported such endeavors. I’m wary about the future, so it’s time to turn my eye back to savings. I’ll start with 10 easy ways to save more money without much effort. Some of these I do, some I don’t yet.

1. Automate your savings. Direct deposit is the first step. Your money goes right into the bank. Rather than having to make a decision about “how much to deposit,” you’re making a decision about “how much to withdraw.” Immediately, you’re likely to end up with less cash in hand and more in the bank. The second step is to automatically move money from your direct deposit account (usually checking) to savings that shouldn’t be touched. Try a few of these high-yield savings accounts out. They’ll be happy to set up automatic withdrawals.

Coin jar2. Collect your excess coins. I enjoy looking through circulating coins, if by chance I discover a rare specimen such as a silver quarter. No, it doesn’t happen often; most of the good stuff has been removed from circulation by other collectors or knowledgeable bank tellers. But while I’m saving my daily change in a glass jar, I’m also saving myself from spending that money. Every so often, I roll the coins with free sleeves from the bank and take them in for deposit.

3. Use goal jars. You’ve seen those jars in country shops. They are short, wide-mouthed clay pottery or stoneware jars with cork tops. On the outside of the jars, they are labeled using varying levels of wit. In these jars, you can set aside money you’d like to budget for “retirement,” “kids’ education,” “dreams,” or the “Harley fund.”

4. Form a budget and stick to it sometimes. A budget is probably the most depressing part of personal finance — and that’s why I avoid it. If my income dips so low that it approaches my ever-increasing expenses, I’m going to have to reconsider my approach. I see budgets as guidelines, and I believe they shouldn’t be inflexible. Sometimes, to enjoy life while we can, we have to make sacrifices in one category to pay for another. Budgeting discourages that; budgeting discourages living. Nevertheless, start budgeting, and you’ll start saving. The idea here is to budget without much effort, so don’t go crazy.

5. Eliminate or reduce a hobby or subscription. Hobbies can be expensive. Just ask anyone with a Faberge egg compulsion. Going to several Major League Baseball games a year can be expensive, as well. I see no need to eliminate these experiences completely, but cutting back will save some money and free your time for other, less expensive things. Also, canceling Netflix, magazines, extra cable channels, or your spring water delivery service can net you a few dollars each month without effort. Most people won’t miss these things once they are gone for a few months.

The first five tips focused on reducing spending, but there is another, equally important, method of saving more money. It may be more difficult for some, but by earning more money, you can save more money.

6. Sell stuff on eBay or Amazon Marketplace. If you were thinking of having a yard sale, think again. By selling your unwanted items online, you’ll reach a much wider audience, including more of those who appreciate what you have to offer. They will pay more for many things than would drivers by. Many people who troll garage sales now do so only to look for bargains in items that could be sold immediately online for money. You might as well be the one earning extra on the sale. Selling and shipping has never been easier; you can by and print postage from the comfort of your own home, and the post office will pick up your package for delivery from your location.

7. Start a new hobby. Wait, didn’t we just suggest eliminating hobbies? Well, there are hobbies that actually make money. These are the activities that generally turn into microbusinesses. Do you like playing with computer hardware? Become a low-cost alternative to the big box tech support. Create crafts that you can sell at art shows. If you like pets, become a pet-sitter or walker.

8. Ask for a raise. Sometimes it’s that simple. Of course, if you are successful with this request, any additional income you receive should be assigned directly from direct deposit to your savings account or investment like 401(k). Also, you should be prepared with work-related justification of why you deserve such a raise. Just wanting to save more money won’t cut it.

9. Get a second job in retail. Especially with the holidays approaching, retailers are looking to staff up with art-time help. You’d have to determine whether a $9 to $12 per hour job is a good use of your time, but if you wouldn’t be using that time to do anything else, it may be worthwhile.

10. Consult. Better than working in retail, market yourself as a consultant in whatever field you are an expert (steering clear of any non-compete agreements you might have signed with your current employer). If it makes sense to set your own consulting hours, you could earn ten to twenty times as much as the retail job — and maybe more.

It seems the methods for earning money tend to take more effort than saving money. This is why most people will tell you that it’s not what you earn but what you spend. In fact, it’s both. Earning more will be more of an obstacle for most people while saving more is easily controllable. I say do both.

Image credit: jay d

{ 24 comments }

Page 4 of 22« First···« Later Articles23456Earlier Articles »···Last »