As a society, we love the word “save.” It lets us feel like savvy, empowered shoppers. It lets us brag on our blogs about what good deals we got.
But what do we actually do with those savings? I’m sure some of you are beautifully organized and make sure money saved is money banked. And, frankly, I don’t like you. It’s nothing personal; I’m sure you’re wonderful people but… phooey on you.
I, on the other hand, have a mixed success rate. I did start banking the money we save using Amazon gift cards. But in other areas, not so much.
I talked about our big Hulu savings, and I was so proud of myself. Until a reader asked if I was banking the $92 savings each month. I was not.
This is what we in the biz term a “wake-up call.” Hope I didn’t get too technical there.
So, starting this month, $92 of my paycheck needs to go into our Capital One 360. savings account. No matter how many unexpected costs we get pummeled with, I want to officially save those Hulu savings.
But that got me thinking about how I really can do more. After all, we allegedly save all the time when we go shopping.
Of course, any PF blogger will tell you that most store savings are pure psychological manipulation. Most of us wouldn’t buy the items in question unless we could get a good deal, so it’s questionable whether we’re actually saving anything.
So maybe it’s not actual savings. But my brain likes to think that it is, so why not make use of that? Why not start banking money that I “saved” when I get back from the grocery or drugstore?
It would have the secondary benefit of curbing the “but it’s on sale” syndrome. Sometimes we buy items only because they’re on sale. None of us like to admit it, and sometimes we feel duped afterward. (Other times, it’s delicious Safeway cookies; and the only thing you regret there is how many you eat. Stupid Safeway make stupid, tasty cookies.)
Delectable snacks aside, having to bank the full price could be a great reminder to buy purposefully. To only make a purchase if I’m willing to pay the whole amount. If an item loses value because it’s full price, I probably didn’t want it that badly in the first place.
Of course, no plan is foolproof — especially if I’m the fool. There will be times when we buy a discounted item and don’t bank the remainder.
It could be an issue of how much we have in the bank, since I only get paid once a month. Or perhaps the savings are so large that it’s ludicrous to bank quite that much. I don’t know. As I’ve proven many, many times, I can only see far enough into the future to know that there are loopholes looming.
But at the very least, it adds yet another layer to the buying process. And when the answer is yes, at least our bank account will actually see the benefit of all those “savings.”
Donna Freedman says
As they say, "It's not savings unless you save it." Not that discounts in and of themselves aren't great; as you know, they can save the day, so to speak, when money is tight.
But people who shop-shop-shop and then say "Look how much I saved on this handbag/these tools/this vacation" get a little tight-jawed when you say, "Really? That's a lot of money to save. So where is it?"
Generally, it's been absorbed back into the shop-shop-shop budget. If I "save" $50 on that handbag this means another $50 to spend, right?
Catseye says
Abby, if you can bank even a fraction of the savings you get when you buy something at a discount, you're better than me! Please keep us up-to-date on your progress.
I'm still unemployed, so I'm looking for a bargain wherever I can find it. Whatever I "save" goes towards bills and expenses. I think too many working people have to do that these days.
Abigail says
Yeah, I’d say in your case, it’s best to keep those savings going to necessary items. And I don’t necessarily mean everyone has to put the savings into an account. It’s more about being aware of the money as “saved.” If you want to put that toward credit card debt, it’s great. Your situation means you’re well aware of how the savings being real, tangible money. It’s just that the money goes toward keeping yourself afloat. And one day when you’re able to breathe a little financially, I’m betting you’ll be very conscious of those savings.
Kay says
With all due respect, I have to say, that it depends on your idea of what savings are. One of the things I was reminded of a while ago was the fact that my stockpile is a form of emergency savings for me. Just because it's not cash in the bank doesn't mean I didn't keep the savings.
Granted, I don't buy things I don't need, and I don't buy things that aren't a good deal, but If I get an HBA product for free that I would use any way, that $1-$5 is freed up to buy the meat/cheese/veg that I also need, that I may not have been able to buy otherwise. Does the fact that it's not in the bank make the savings any less valid?
I keep a well stocked, well rotated pantry and can't tell you how much money I save when I don't have to buy meat at $5 a pound when I got it for less than $2 a pound. If you ask me where my savings are I would point you to my newly purchased freezer that continues to save me more money, much as interest in a bank account, or the new pair of glasses I just got. 😉
Abigail says
I think an emergency stockpile is a perfectly valid form of savings. And if you’re using those savings to build up food reserves, that’s definitely a form of a savings account. I guess the point is that all this money we’re saving shouldn’t bleed out into the rest of our budget where it’s spent on little things. I want my savings to go to something purposeful — from a pantry stock-up to a savings account.
Teresa says
Abigail, great post. Donna , good point above.
Since the beginning of this year I have been "saving" the points I have on a credit card I have from a grocery store that gives " points =cash " to use in the store. This store is primarily grocery but also household, electronics ,clothing seasonal plants etc).
I have had some major expenses, but did not put "daily" shopping on till August, paid cash up till then for most purchases.
October 1st I had just over $1700.00 saved. It is my ( emergency stash at home) I use it as my ATM. I have it earmarked towards a trip for my family.
I have been using it as a teaching tool for my young adult children so they can see when I do score points I skimmed the money out of my grocery budget to use somewhere else .
One daughter who just started her first job and who responsibly uses this credit card (paying off each month and having budgets for expenses) realized when I started explaining my points saving , she had $200.00 worth of points.
Abigail says
Wow! That’s quite an incentive for me to get started on this project. I’m really impressed that your daughter is mature enough to use her credit wisely and to also make room for savings.
Karen @MSEnthusiast says
Dead on Abigail! Cutting spending and actually putting the money that you saved away are two different things. When I was younger and would bargain shop, I realized I got more for my money but wasn't saving it. Good wake up call post. I'm going to ship money to my retirement acct right now.
Abigail says
Ah, I do love bargain shopping! I actually picked up three shirts at Goodwill the other day because the consignment store I wanted was closed. I have to remember that I can shop at thrift stores now that I’ve lost some weight. When I was a 16-18, most of the stuff in my size was pretty awful. Glad this post boosted your retirement savings.
mrs short says
I think we're one of those couples you'd say "phooey" too. When we ditched cable, we put the $70/month savings right into our savings. What's worse (NOT) is that when we pay off a car, we continue to make a "car payment" into our savings – towards a down payment on the next car. It's something my mom instilled in my long ago. As a result, we can *almost* pay cash for hubby's next car. I had a really good teacher – my mom saved her raises for the last – oh-I-don't -know-how-many-years – and retired at 57 from a mid-level school administrator job (read: not a doctor. I grew up very middle class). I think it's because of this type of savings that we don't keep track of the smaller (but not insignficiant, of course!) savings at the grocery store, etc.
Abigail says
Well then phooey but also go you! We are actually doing the same thing as you for a car. Ours is far more recent, but we’re putting $300 a month into the account. It’s pretty exciting to already have $1,500.
As for banking raises, I’m definitely going to be doing that again this year. Last year, I upped our retirement contributions by $200 a month and increased our house payment by $200 a month. This year, if I get a raise, we’ll do another $100 on the mortgage and another $100-200 for retirement. Once we’ve got the house paid off, we just have to remember to bank that.
spiffi says
Not a bad idea – it's kind of like the bank programs that "round up" your transactions and put the extra amount into your savings account for you.
I might try taking my grocery store receipts – they helpfully print out "you saved $" at the bottom, and move that amount into savings each week – it's not a big enough amount that it would leave me short, but it's enough that it would probably buy me a christmas present or two at the end of the year!
Abigail says
Actually, the grocery store “savings” is what prompted me to think about it. And, yes, it’s pretty similar to the round-up plans… except this one won’t cause you to overdraft accidentally. That’s the main reason I really hate those plans.
Kat says
For me, setting up savings was hard, because I do have that ADHD thing of needing a physical interaction, and needing some form of immediate satisfaction. Ultimately, I ended up creating multiple places for the savings to go.
5% goes to charity- and not just for tax reasons. I work with enough local rescue groups (hence the 6 cats, dog, and now betta fish), and one of them is SNIP clinic- bring in a feral cat, and it will get long term shots, fixed, defleaed, etc. for 10 bucks That 5%? Means that I know I can cover any animal that someone comes in with, it helps purchase vaccines and the pouches we need to sterilize our instruments. Finally, it means we can purchase more warming discs (which we use when the animals are coming out of anesthesia)- they're expensive, and we need so many of them. The need grows each clinic that we hold, and keeping up with that demand gets hard.
10% goes to mad money- this is the money that means I don't beat myself if I decide to indulge in a pedicure, or just buy the new OPI polish because I like the name. By restricting my crazy or indulgent purchases to this fund? I save money because it is finite, and it makes me really think about what's going to make me happy.
25% goes to emergency savings- car repairs, plumber, etc. Consistently taking out of any savings I come across (we're even talking the number at the bottom of the grocery receipt) means this fund builds up fast. Right now, I'm about 2 months away from affording the next major issue I need to pay for- the removal of 3 redwoods, and about 4 grand of jack hammering out and replacing an improperly installed pipe that said redwoods infiltrated. I could call the crews now, but for something I can delay, I always wait until this fund has twice as much as any quote I get. Because Murphy was an optimist.
50% goes into long term savings- retirement fund, house remodel, what have you. This is split into a 401k, and a money market account.
Last 10% is my gift / date night fund- Christmas, birthdays, anniversaries, once a month date nights, sending the boyfriend out to see a movie with his friend after he's had to deal with my medical issues.
As to where my savings come from- 25% of my paycheck goes to savings (I would love to do 30, but housing in the Bay Area is INSANE). Any savings from changes I make to my lifestyle- ditching cable, savings at the grocery stores, discounts via groupon, etc. Any raise I get is split- 50% to savings, 50% goes towards buying more insurance.
By dividing it up so ridgedly, having a built in way to treat myself, and a way to cover various expenses- it makes the savings real in my mind, it makes the accounts something to work towards. By putting rules in place that govern those accounts, I don't obsess, and I don't lose sleep over them at night. Balancing neuroatypical needs with smart money habits was a process. Fortunately, I got practice early. The minute my mother realized my issues, she bought me multiple piggy banks, she signed me up for extra tutoring in classes, and she had her financial adviser and tax accountant take me through everything. Absolutely everything I needed to know about dealing with my illnesses and money. Those extra steps? Saved my ass on multiple occasions.
Abigail says
Whew, that’s thorough! But I know just how much rigidity ADD/ADHD can require. And it can really help to not have money in front of you to be tempted by.
I think it’s great that you set aside money for charities and help critters. And it’s a good thing to have a separate date night and a mad money account. (Whenever I say mad money, though, I think of Don Draper.) We should start a date night. If we don’t spend it, it can go into savings.
I’m really glad that your mom helped get you squared away early. After a certain point, it’s just so much more difficult. I met Tim when we were 28, and it took him years to really start clicking with the idea of not spending. He’s come a looooong way, but at times it was maddening. I’m sure it wasn’t any fun for him, either.
Kat says
I'm realizing how much it saved me more and more every day. She didn't like the idea of hopping a 14 year old (no hyperactive component, and female- I slipped through the cracks until my math teacher finally realized my obsession with reading in his class was hyper focus) on speed, especially given my depression, so she went out and found people who were firm in using behavior modifications and structure to deal with ADD. For the next four years it felt like I was being tortured, but it got me set up to handle a world that wasn't set up for the way my brain works. A huge breakthrough for me was reading books by Dr. Hartman- who views ADHD as the remnants of hunter gatherer mindsets. Instead of treating it as a screw up, he started looking at what worked for the ADD brain, and how you could make small modifications in interactions that lead to big results. Between the absolute structure and scheduling my mom's specialists drilled into me, and the habits I implemented after reading those books (breaking jobs into segments I could handle, learning how to engage my hyper focus at will, etc) I was able to work to go through college, etc.
I didn't realize how big of a difference it made until I met my fiancé. His parents slapped him on Adderal, and did nothing else. His parents and I have our own set of issues, but I still maintain that a kindergarten teacher should know way better than this. So now he's hitting the age where his doctors don't want to prescribe Adderal anymore, and he has no coping mechanisms. His way of dealing with money is to hand me his pay check and have me do the splitting, and rationing- because he's not to the point where he can do it, and it isn't like a kid running out of allowance. As it is, we've had to put him on an allowance and have him practice with it. Getting the house clean required me sitting down and writing out absolutely everything so we could figure out how to break it down for him when I'm not able to clean. It started with getting things into his daily routine- like the dishes. It also meant we looked at alternatives for the stuff he couldn't integrate as easily (hence the robots). Watching him build this from the ground up has made me so grateful for what I went through, and has lead to me buying copies of the books that helped me, and giving them to every friend who's kid has gotten diagnosed with ADHD.
Abigail says
Yep, once I read Hartmann, I understood a little better what Tim was going through. And it helped him to start seeing it as less of a disorder and more of a difference. I recommend his books to anyone who wants to better understand ADD. I also like that he talks about how to use ADD traits to be successful in this world.
Guest says
My DH hasn't had a pay raise in 6+ years (he works for the county). In the meantime, the cost of gasoline has gone up-up-up and is now holding steady at $4.25 per gallon in our town. He carpools. Our sons take the bus. I rarely drive, and when I do, it's in town so I only fill my tank about once per month to six weeks. Grocery prices have also gone up-up-up in the past 6 years, so when I've spent (say) $48 on sale items and my receipt says I saved $46, it's only an indication that if it isn't on sale, I'm not purchasing it. Period. Because the grocery stores cycle sales, I can wait for one. I have to. It isn't to beef up a bank account (pun intended), it's to be able to afford eating and living on a 6 years frozen income with ever increasing prices of everything. In other words, I shop, buy and "save" the way I do simply in order to stretch an already thin budget.
Abigail says
Ugh. Sounds tough. In cases like yours, there aren’t a lot of options to put money away. In fact, the money can’t stray too far at all because it’ll be needed soon enough. I’m well aware just how lucky we are to be in a place where I can worry about increasing our savings, rather than worrying about covering grocery bills.
I really hope your husband gets paid at least a bigger fraction of what he’s worth soon. In the meantime, I really admire your ability to persevere. I know from past experience that this kind of thing just wears you down.
Guest says
Another way we use savings to live… after a sleep study, I found out I have severe apnea and need a CPAP machine (paid for by insurance), and that meant I needed a small bedside table to put the machine on. I scoured the internet and discovered a night table at Kohl's online, originally $199.99, on sale for $60, minus $10 coupon code, minus $30 in accumulated Kohl's Cash and another $15 in Kohl's Rewards, bringing the total price to $5. I'd have paid more than $5 at a yard sale! Provided, of course, I could find a table at one. When we need clothes, etc. I do the same thing, and I *wait* for the right sale or clearance with additional percent off. Even if it means putting off the purchase for several weeks. You can't do that sometimes (such as when an appliance blows out), but for most things you can. Did I put the $194.99 savings from the table into the bank? No, because I'd never have purchased it for full price. I might have bought it for $50, but that would have meant $45 less in the grocery/household budget for the week. You're doing fine from my point of view, Abbey!
Abigail says
I agree: If you’d never pay that high a price normally, it doesn’t make sense to put such a big amount aside. But I’m hoping that, in a similar situation, I’ll be able to maybe the $10 from the coupon aside. Time will tell, I guess.
debtblag says
This is a great point. For example, I didn't have cable from 2005 through 2012 (when I got two roommates who insisted on it). You could say that I saved $10,000 over that time, but that's a pretty silly way to look at it.
On the other hand, I find that banking savings is a great strategy for avoiding impulse buys. If I see something shiny in the store that I think I absolutely have to have right now, I ask myself if I'd like that more than I'd like $10 less in student loan debt. Then, I almost immediately make a payment on my loans so that I can't get that shiny thing. Works out pretty great 🙂
Abigail says
Yep, $10 less debt can be surprisingly tempting — enough to overrule some impulse purchases, for sure. And I think there is definitely a difference between “saving” money on something you didn’t want to buy and saving by finding cheaper alternatives, or even going without. I guess we all just need to keep the distinction in our heads. I still need to save the $92 a month, though.
Punkinpye says
Abby, don't be so hard on yourself for not actively banking your savings. I have followed your blog for a good while. Like you, I have a disablility and run into a myriad of medical expenses. Also like you, life doesn't stop happening just because you have a disability and all the extra expenses that come with it. I followed your blogs and seen all the unexpected medical expenses, repairs, and emergencies that pop up. Mine is the same way. It seems like every month we have to spend anywhere from $500 to $1000 on home repairs, car repairs, or unforseen medical expenses. The way I see it, the savings I get couponing, using rewards, and practicing frugality allows us to have an emergency fund that allows us to pay for these expenses in cash in addition to tithing and saving 10% off the top in a retirement fund. We also put money in a Christmas fund so we can pay cash for everything when the holidays roll around. If you can put aside extra money out of what you save on shopping, then great. But it seems to me that you're already banking a lot of it which has allowed you to meet a lot of financial emergencies.
Abigail says
Yeah, we’ve been very lucky over the last three years to get into a place where we can actually save. Rewards programs have definitely been life savers — and now they’re money savers, so that’s nice.
I try not to be too hard on myself, but I also know that, based on what we’re bringing in, the savings account should be growing faster. As you said, though, unexpected expenses love me almost as much as mosquitoes do. Some days it’s not just a struggle to save, but also one to keep sane.
lake livin' says
Oh my gosh, I was the reader! This is as close to feeling famous as I'll ever get! 🙂 Great job, Abby. I don't bank coupon/sales savings (groceries, etc), but whenever a monthly bill gets reduced or goes away, I either send that amount each month to our emergency fund or use it to pay extra on our mortgage. For example, when we paid our car off a year and a half ago (could've paid cash, but took the loan since it was only 0.9% for 3 years – and even then we paid it off in 18 months because I couldn't stand having a loan), I took the amount of the car payment and added it to the mortgage. Ditto for a disability insurance policy I canceled (was paying for a policy that no longer applied since I'm now a SAHM), DirecTV savings, etc. It all adds up very quickly. We also have a couple of rental properties and I also save the amount of the net profit on those.
Abigail says
Yeah, one of the things I need to do is to start shunting the extra rent money (that is, over and above the electricity bill) into savings each month. So many things to automate, so little time.
I hope you have a much better 15 minutes of fame than this, but thanks for the inspiration — from me and from our savings account!
@StaplerConfesh says
I save a lot of money by using coupons and taking advantage of sales, but I found that it only increased the amount that I bought, because I had a monthly budget. So, if I saved $25 on an item for our home, that meant I had $25 more to spend. It was a cycle that wasn't getting us anywhere towards paying down our incredible debt load.
So, we started emptying our checking account at the beginning of the month after we knew how much money we would need to pay bills that month. By making debt paydown our first priority, and taking no prisoners (eg, keeping $$ in the bank), we were able to translate our savings into debt payoff. We do have an emergency fund, and another savings account, so we knew we wouldn't be up a creek if something drastically expensive happened.
Abigail says
Yep, “savings” can easily translate into rationales for buying more. It’s a dangerous thing. As someone who gets paid just once a month, I absolutely hate plotting out all the expenses; but I do my best to dump everything that isn’t needed into savings. I think for me, though, it’ll be important to bank these small amounts in addition to that. As they say, out of sight out of mind.
Ro in San Diego says
I am also in the habit of emptying my checking account into savings at the beginning of each pay period to ensure we're only living on the income coming in for those 2 weeks. Then I use a spreadsheet to estimate our bills pretty closely. I have an amount for my husband and I to spend – a slush fund. After everything is taken into account, I put the left over amount into savings on payday. This really helps build our savings balance. I use a rewards credit card most of the month for purchases, any gift cards, debit cards for "bargains". This system works pretty well for us.
Abigail says
Yeah, I try to empty the account once the paycheck comes. But planning for a month at a time can be dicey, so it’s always questionable whether I’ll have anything to set aside. Still, it sounds like that process works for you, which is ultimately the most important thing about a savings plan.
Ro in San Diego says
Even though I use a lot of coupons/rebates/groupons I don't bank my additional savings. I figure by banking leftover money on payday and depositing money leftover from our payday bill payment is a good enough discipline for savings. Banking any more may be a good idea, but it's not ideal for me since I don't spend very much to begin with.
Erica says
Guilty! I actually never save “savings” and didn’t even think about it until I clicked the link in another post, to this one.
I see it more as staying within my budget. I choose the amount I can afford to save every month in my 401k and then live on the rest. I have a certain amount I pay for, say, groceries. So I buy stuff on sale and with coupons to not go over the amount allotted. I look at how much I saved at the bottom of the receipt and smile, but never think to put it in an account! I see it as needing savings to stay within budget. Whatever is left for the week I use to go out to dinner. Once I hit my budget for the week, No more spending.
It’s probably not the best system, but it works for me. It gives me a chance to build in some “fun money” if I stay within my budget. And I always put savings first.
Abigail says
That’s a good way to look at it too. If you prefer to see it as part of the budget or as separate savings, what matters is that it works for you. But for a lot of people — especially me — it’s swell to see the savings account balance rise at the end of each month when that money might otherwise have gotten sucked up by day-to-day stuff.