Saving money isn’t easy, especially around this time of year. But one of my favorite hacks to effortlessly save more is to create a “spend to save” rule. Every time you “save” money with a coupon or discount, actually save that money.
For example, let’s say you get a sweet discount on a PlayStation 4. It’s usually $299; you get it for $249. You saved fifty bucks, which is great, but here’s what usually happens: you get a coupon high. You do some quick mental math, you subtly convince yourself you have a credit of $50 in your budget, and you spend that fifty bucks on a pair of shoes you wouldn’t have otherwise purchased. Coupon highs are trippy, man.
To combat this, sock that money away before you have a chance to spend it. Whether you’re spending on groceries, Christmas gifts, or even the occasional toy for yourself, establishing your own “spend to save” rule can help you actually save the money you “save.”
Profit from Your Savings
Instead of thinking of a discount as free money to buy something else, think of it as a profit. How can this discount help your financial bottom line? One way to do this is to actually save the “amount saved” at the bottom of your grocery receipt. Daily Finance’s Hank Coleman explains:
My mother-in-law and father-in-law have a great system for their grocery loyalty cards. They take the amount listed on the bottom of their receipt that they saved with their loyalty card, and they put that in the savings account or piggy bank.
It’s money that you would’ve spent anyway if you had been shopping without your loyalty card. And it is a fast way to build up your savings without even realizing that you’re doing so.
You don’t have to limit this to your grocery receipt, either. Plenty of other stores include some kind of “total savings” at the bottom of receipts. You went to Bed, Bath & Beyond and used one of their infamous 20% off coupons? Awesome. Now transfer that amount from your checking to your savings.
It works for online shopping, too. When you buy something online at a discount, take note of the original price, then save the difference. If you actually save your “savings” throughout the year, chances are, you’ll have a nice little cushion when everything is said and done. And it was likely money you were going to spend anyway, so you won’t even miss it.
Granted, it might be hard to save that much when you’re buying a lot of stuff at once–the holidays, for example. All of the savings from those gifts can add up, and your budget is likely stretched thin around this time of year. But if you’re up for the challenge, it just means more money in your pocket.
A Better Way to “Treat Yo Self”
One tip I’ve come across for keeping your sanity around the holidays is to “treat yo self.” For every ten gifts you buy, one article suggested, buy one gift for yourself. Great tip for sanity, but not so great for an already thin budget.
Why not save your splurge instead and treat yo Future Self? Instead of buying yourself a Christmas gift, give yourself the gift of saving money. For every $100 you spend on gifts, save $10. Again, hard to do around this time of year, but that’s kind of the point. You’re safeguarding yourself from holiday overspending, and you’re encouraging yourself to save. It’s a win-win, and it’s a lot better than the usual holiday spending plan: max out your credit cards and pay them off later.
If you insist on a splurge, consider saving the same amount of the splurge. You want to gift yourself with a fancy $20 scented candle so your home can smell like applewood, whatever that is? Cool, but put $20 in your savings account, too.
Obviously, you don’t want to overspend on stuff you can’t afford, but in general, spending is inevitable. Broke as you may be, at some point, you have to buy groceries. And if you’re not broke, and you’re meeting your savings goals and on track for your retirement, what’s so bad about spending your money, anyway? It’s easy to just tell yourself not to spend so much, but in practice, it rarely works out that well. Rules, habits, and systems do. Setting up a few savings rules for your spending can be surprisingly helpful. You either second guess your purchases, which is a good thing, or you beef up your savings. Also a good thing.
I wonder if this would make me look for deals more often (I’m the worst when it comes to that. Half the time I don’t even remember to use Papa John’s coupon codes even though they literally are texted to me). Maybe if I felt like I tangibly saved the savings, I would actually look out for deals.
PS-Applewood is wood from an apple tree. My father in law smokes hamburgers with it, and it’s amazing (though I don’t know that I wan my house smelling like that).
Bahaha that makes sense.
Interesting! Yeah, it might just inspire you to save more so you can, uh, save more. 🙂 That’s a good point, and one I didn’t even think about.
I love the idea of treating yo Future Self. I’ve even heard the idea of giving a different name to your future self and picturing their life, so you make sure to take care of them just like you would a friend or family member. You could even add them right to your gift giving list! Hint: they like cash and you can give it to them through your saving and investing accounts.
Yep, that Future Self needs money!
Are you a fellow gaming nerd? This is the second post in a row you’ve mentioned Playstation. Do we need to hang out and have some Street Fighter battles? My wife would LOVE that!
and when I say love, I mean the complete opposite. 🙂
Since I don’t really like to buy anything fancy like a PS4 unless it’s on sale or used, I don’t have a spend to save rule for myself. I do however do something similar when it comes to windfalls. Any money receive that’s not part of our paychecks we make sure it goes to a specific purpose:
1. Cash Back Rewards – I have 5 cash back credit cards, that I rotate depending on what I’m buying. Every single penny in reward money is earmarked to go to my daughter’s education. This ends up being an extra $50 – $75 on top of what we already save each month since I put EVERYTHING on our cards.
2. Side Income – any other side income we receive from Craigslist, yard sales, odd jobs, Ebates, etc. go towards something in the future. This can be vacations, paying down the mortgage, or going towards maxing our Roth IRAs as quickly as possible. We’ll never turn yard sale money into a dinner out.
It’s unfortunate that most people see savings and immediately turn around and spend it on something else. Use it as an opportunity to get ahead!
Nice post Kristin!
I love this comment.
I love that you love that comment.
“Use it as an opportunity to get ahead” YES. Exactly! Great tips, thanks for adding, Vic.
And lol, I’m not much of a gamer anymore, though I did love Street Fighter. I kicked so much ass with Chun Li. Brian has a Playstation, but I’ve only played NBA 2K and, embarrassingly, Just Dance.
You know what’s more embarrassing than Just Dance? Buying a mic stand for Rock Band so I could sing and play guitar at the same time. Actually, that was pretty awesome. 😉
Hahaha. Hey, you gotta feel like a real rock star otherwise what’s the point?
Thanks for the article. I simply pay the quoted price. I need to work on haggling.
Cheers
MrRicket
Here’s an idea for really ramping up saving: About that $299 PlayStation 4 bought for $249–don’t buy it at all, then bank $249! That’s 5x more than $50. Then remind yourself how much you appreciated the PlayStation 3 when it was sparkly and new, and game on! 🙂
Haha true, not spending money at all will definitely save you more of it. Personally, I think it’s about finding a balance. I think it’s okay to spend money on things you love (even if it’s a new gaming console), but you want to strike the right balance between enjoying life now and saving enough money so you can enjoy it in the future, too.
Too many people spend and then justify there spending cause it was on sale. Heck I know plenty of these folks. If your budgeting properly then your saving first and spending second. the bottom line is you should save for the future and then enjoy whats left. Sorry but I think this is a crazy way to save cash.
The purpose is less about saving cash and more about counteracting the mental math you do when you inevitably get a discount on something. Saving is obviously about budgeting properly paying yourself first. But as you said, you enjoy what you have left after meeting your goals. The occasional splurge is just that–enjoying what you have left. So why not save even more when you enjoy what’s left?
Mindless spending on things you can’t afford is a totally different story.
Thank you for sharing this! A few of the people in various budgeting/personal finance groups I am in on Facebook have talked about doing something similar. I shared this post with them to help solidify their idea.
This would be a good way to add to a debt snowball extra payment or toss into savings! I am hoping to give it a try once our debt is paid off!
Yay! Thanks for sharing.