Getting a steep discount on clothing or paying less for groceries is impressive, but the savviest spenders also figure out a way to put that money in the bank. It’s not easy: According to a recent survey conducted by Bankrate.com, 55 percent of women and 45 percent of men have less than three months’ worth of emergency savings. So how can a frugal shopper turn their shopping savings into real savings? Use this tips from experts to save more:
1. Make a game out of it.
Jason Vitug of Phroogal.com (and a U.S. News contributor to this blog) explains how some people just need a reminder to actually put the savings away. He uses a method called ” bargain savings,” which means turning shopping into a savings event. Vitug explains that the goal is to keep yourself from buying things you don’t really need and resist the urge of spending on impulse or bargains.
In an effort to beef up real savings while shopping, Vitug advises others to do the same. He suggests taking the savings amount from the purchase and depositing it into a savings account. For example, if you buy shoes that are on sale for $30, down from an original price of $75, you deposit the difference in your account. He adds that if you don’t have the money to transfer into the savings account, then you may need to reexamine your shopping habits and make sure you aren’t just purchasing something because it was a bargain.
2. Game the system.
Set a budgeted amount and plan to pay in cash. Try to purposely get what you need without spending all of the money. Put a certain amount in a separate pocket or location that you’ll remember. So then you automatically try to make do with the smaller amount. The amount that isn’t spent can be deposited into an emergency fund. See if you can make this a habit in an effort to put money away for a long term goal.
3. Make smart spending equate to smart investing.
Barbara Friedberg, publisher and portfolio manager of BarbaraFriedbergPersonalFinance.com, also recommends putting savings toward bigger goals by taking advantage of investment accounts. “Take any savings from smart spending and have it automatically deposited into an investment account. For example, if you know through your couponing and smart shopping that you save about $40 per week, don’t let those savings languish in your checking account, only to be spent on something else.” Instead, she recommends setting up an automatic $40 weekly or $160 monthly transfer into an investment account at a discount broker. She points out that once the money is coming into the account, you can use it to buy a diversified stock index fund.
For shorter term needs, she also suggests having your savings automatically transferred to an account at the U.S. Treasury at treasurydirect.gov to purchase safe, inflation-protected Government I Bonds. (Just know that you can’t withdraw the money for the first year after deposit).
4. Invest in a newer pre-owned car.
Buying a car can take up a big portion of your budget. Before heading out to purchase a car, consider how much car you can afford. Make sure you still have enough money to invest before this purchase eats up a large part of your income. Jeff Rose, a certified financial planner, refuses to buy new cars. He explains how for this last two car purchases, he looked for a 1-year-old car with around 10,000 miles or less that still had the warranty. “That extra savings is automatically applied to our retirement savings. This can increase your chances of having enough money to still invest and save over time,” he says.
5. Reward yourself and save.
If you use your credit cards wisely, they can work to your advantage. “You can save more by using a rewards credit card when you’re shopping. This way, you’ll get cash back or miles when you make purchases,” says Beverly Harzog, a credit card expert and author of, “Confessions of a Credit Card Junkie.” She adds that this approach can backfire if you carry a balance or spend more than you meant to just to get the rewards. She advises to track your spending and only use rewards cards for purchases you needed to make anyway.
6. Clarity is key.
Todd Tresidder of FinancialMentor.com explains that it’s essential to create a clear savings goal that you’re working toward and make the goal realistic to achieve. He points out that each day your small savings decisions take you one step closer to your big goal. To make this real for you, just take the amount you think you will be able to save each day or week using these tips and enter it into a compound interest calculator with the savings interval set at “daily” so you can see how your money grows over time.
You’ll be shocked at how small amounts saved each day compound into huge amounts over time. It defies intuition, and it will make your savings goal real by converting all of these small daily actions into a big, life-changing goal. It will keep you motivated.
There’s more to saving than simply spending less money while shopping. Translate smart spending into smart savings. Being equipped with the ideas mentioned can not only help you spend less, but it can help you free up extra money to put away toward saving goals.
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6 Ways Smart Spenders Save More Cash originally appeared on usnews.com