Sunday, December 30, 2007

Sherryl's tips for saving money in the new year

Yesterday I wrote about new year's resolutions, but one I didn't mention was the good intention we all have to save a few more dollars. With the economy uncertain, gas prices rising and all those holiday bills rolling in, now's the perfect time to think about your own personal savings plan for 2008.

But how on earth do you save anything with routine costs mounting? It's not easy, but I think back to when I was a kid. Both of my parents worked. As I recall, my mother was paid weekly, my father every two weeks. What I do remember clearly were the envelopes -- plain, old-fashioned white ones. Each of them was labeled for rent, phone, food, whatever. When checks were cashed, money went into the appropriate envelopes, assuring that the cash was there when the bills were due. As far as I know, no one ever slipped money out of those envelopes for other purposes.

That system seems antiquated today, when paychecks are often direct-deposited into checking accounts, but in reality it assured that money was set aside for necessities. Once it's in the general pot of a checking account, it's much easier to spend it on other things and suddenly come up short when the rent or mortgage payment is due.

I was reminded of my mom's system not too long ago when talking with a friend, who uses a similar system, not for paying the regular bills, but to save for special items. She has cans hidden away in her house with cash designated for the annual family vacation, new carpeting and, last year, for a surprise birthday party for her husband. Each week she stuffs a bit of cash into each of those cans. It's whatever she has leftover from her household spending money. Sometimes it's a set amount, sometimes loose change, sometimes it's the amount equal to what she spent for cigarettes before she quit smoking. For her it's somewhere between a game she plays with herself and a quest to build up those dollars. However she motivates herself, I do know she's been paying for a trip to North Carolina's Outer Banks each year for some time now by using this system. Her husband's party was a huge, catered backyard barbeque, all paid for by money saved in a can. And that new carpet has been installed without busting the family's monthly budget.

So, if there's something you've been longing to do, but can't seem to find the money to do it or if there's a decorating project you'd like to do, a new big-screen TV you've been wanting, think about getting a couple of special piggy banks, cans or envelopes and tucking a few dollars each week or even each day into those. Make sure your kids have no idea those secret stashes exist or at least hide them where they're not readily accessible. I seem to recall a couple of episodes on "7th Heaven" when the kids got into mom's savings in the kitchen cupboard or their baby brothers' piggy banks.

Obviously these savings plans won't make up for not saving something on a regular basis for retirement or college or a rainy day, but they do work for the little things you really want, but have always assumed you couldn't afford. Even if you begin with the loose change that's been tossed on the dresser at night or been dumped into the bottom of your purse, it will eventually add up.

Get your kids started saving for their special desires, too. Nothing will help them to understand the value of money quicker than having to save up before they get that expensive toy or video game. If they receive an allowance or earn money cutting grass for the neighbors, encourage them to put a little aside so they can buy something they've been begging you to buy for them. Don't give in -- at least not always -- to the desire to make life better for your kids than you had it. The lessons you learned if you had to struggle a bit probably made you a better, more responsible adult when it comes to financial matters.

The bottom line as you head into the new year, though, is to resolve to save for the future. Maybe it will only be a bit of loose change at first, but when you see how that can add up to buy something special down the road, I bet you'll catch the savings "fever" and start stashing those little cans all over your house, too.

If you have a savings system that you swear by, please share it with us. Or if you have a story about how a secret stash bailed you out of a financial tight spot, let us know about that as well.

Sherryl Woods

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