Two Money Tricks

Most of the time we know what we have to do to save money. The problem is lack of knowledge, it's lack of discipline. When the money's in our checking account, we spend it. That's what it's there for, isn't it? Sometimes we just have to trick ourselves into saving.

Kiplinger.com recently posted an article on Ten Financial Tricks and Treats. Here's two of them that I've either found helpful or plan to try:

1. Use cash for all your expenses. Right now, I try to minimize the amount of cash I use and use a credit card for most expenses. I reason that it's easier to track since I can download my credit card transactions right into Quicken and I also get a 1% rebate from my credit card company. The problem is that it makes it harder to stick to a set amount each month. Next month I plan on taking out the amount of cash I need for the month (not including things I'd normally pay by check or online such as cell phone bills, utility bills, etc.) and not using my credit card. I'm sure it will help me make my spending more conscious. Right now, it's too easy to just put it on the card and not realize how much it adds up until I get the monthly statement.

2. Save regularly for recurring expenses, too. I do a pretty good job of "paying myself first" by having my paycheck broken up into two direct deposits, one for savings at my brokerage account, the other for monthly spending in my checking account. The problem is when I receive bills like my semi-annual car insurance bills. I sometimes have to cheat a little bit by "borrowing" from savings. The problem is that I don't always get around to paying myself back (good thing I don't report myself to a credit bureau). To avoid this, I'm going to add up such expenses for a year, divide it by 12 and set aside that amount in a separate account each month. I'm also setting aside a set amount each month in a separate account for our next car purchase in about 4 years. Otherwise, I'll find it's too easy to blow any savings from scrimping by going over budget on that next trim level.

None of these steps are really necessary if you can just set a budget and stick to it. For those of us who can't commit to that 100%, at least there's tricks that can help us overcome our shortfalls and help us on our way.