Establishing good money management early in a relationship is key to a successful financial future. Building emergency and retirement savings is challenging when you are starting out, especially if you have student loans and mortgage payments. One of the easiest ways to save money easily is rounding up. If you start using simple tips like this to jump-start your family savings plan -- you'll thank yourselves for it later.
Round Up on Withdrawals
Debit purchases have virtually replaced carrying cash in today's society. A basic method of saving is to enroll in an automatic savings program through your bank. The program rounds up debit purchases to the nearest dollar and transfers the extra amount to a savings account. Some programs, such as Bank of America's Keep the Change Program, match your savings for the first three months of enrollment. Rounding up cash withdrawals requires a little more work. At the end of each day, empty your purse or pockets of the change remaining from your most recent cash withdrawal. At the end of each week, deposit the money into a savings account for emergency savings or transfer them to your retirement fund.
Round Up on Mortgage Payments
Rounding up your mortgage payments increases the amount of money applied to your mortgage principal. Every extra dollar paid toward your principal reduces it. A lower principal or mortgage amount means less interest paid over time, and this can make a significant difference in the total mortgage costs over the life of the loan. This is most effective when you round up every mortgage payment. As some lenders charge a prepayment penalty for extra payments, review the fine print of your mortgage to ensure that you won't incur charges for rounding up your monthly payments.
Round Up on Credit Card Payments
Credit cards charge some of the highest interest rates. If you carry a balance on a credit card -- as well as any loan or line of credit -- rounding up your payment helps reduce the credit card balance more quickly than if you make only the minimum payment. Another way to save money by rounding up with credit cards is to keep a record of all card purchases and round them up by a dollar each. At the end of the month, total the rounded-up purchases and apply this amount as a payment to the card. Doing this will pay down the credit card debt faster and save you even more money.
Round Up on Balancing Checks
Similar to the automatic round-up of cash withdrawals and debit purchases, rounding up when balancing your checking account is a painless way to save money. For example, ensuring $150 is available in a checking account to cover a check written for $148 leaves you with $2 once the check clears. This money can be added to short- or long-term savings or kept in the checking account as a slush fund or entertainment fund. While saving for the future is important, today's fun is better financed with money you have than with high-interest credit cards.
References
Writer Bio
A former financial adviser with more than a decade of experience in personal finance and small business banking, Sarita Harbour is a professional writer specializing in personal finance, small business, technology, and content marketing techniques. Her writing appears online at sites such as Yahoo! Homes and Bob Vila. Harbour holds a bachelor's degree in psychology and computer science from the University of Guelph and the Personal Financial Planning designation from the Institute of Canadian Bankers.