The Surprising Power of a Dollar Saved
As I've mentioned on this blog before, I've been saving up to marry my amazing fiancee, Ana. As a frugal guy, saving has never really been a challenge for me, but then again, I've never tried to save the amount of money I'll need to get married. So, naturally I've been looking for new, great ways to save.
My business partner recently told me about a habit he had started a few months ago. Instead of using a credit card or debit card, he went on a cash-only budget. He would only spend bills in denominations of $5 or higher. Any change or singles he came across would automatically be put into a jar and completely forgotten about.
At first, I thought my friend was absolutely nuts. I had a couple of major issues with this strategy right off the bat. First, he's using a cash-only budget, which I've never really been a fan of. I prefer to use credit cards and debit cards for the purchases I make.
There are a few reasons why. First, I'm a nut when it comes to tracking money. I like to be able to categorize my purchases and figure out where I can trim the fat. Credit cards and debit cards both come with monthly statements and online banking that makes tracking much easier. If I were to go to an all cash budget, it would make tracking much more difficult.
The second main reason is protection. Aside from the fact that if you get mugged with a credit card, you don't have to hesitate to give it up, credit cards come with awesome purchase and fraud protection. Your debit card most likely offers the same types of protection when you run transactions as credit.
Also, we're talking about saving relatively small amounts -- dollar bills and change. Since I don't shop often, I didn't think that this approach would be a viable way to save the large amount of money that I needed to come up with. Can dollar bills and change really add up to big bucks?
Despite my misgivings, I decided to give it a try anyway. I don't like the idea of cash budgeting, but if I did cash budgeting for a week, it would give me an opportunity to see what my business partner saw in this strategy. So, even though I didn't see much validity in the ability to save a ton by squirreling away dollar bills and change, I planned for cash budgeting for a week and went for it.
%VIRTUAL-article-sponsoredlinks%Instead of using credit cards or debit cards, every single purchase I made over the course of that week, no matter how big, or how small, was made in cash. When I got change back, I took the $5 bills and higher and put them in my wallet. The rest of the change went into my pocket and stayed separated from the money I would spend. At the end of each day, I emptied my pockets, took a second to fold the bills up nice and small so they didn't take up too much room in my piggy bank and stored the bills and loose change in my piggy bank.
So, was it a good saving strategy? Drum roll please ... Much to my surprise, this savings method is actually amazingly effective. Although I have my general savings transfers that automatically happen, this week alone Ana and I have saved more than $50 extra toward our wedding! The reason I say more than $50 is because I actually have no idea how much money we saved. We pulled out the singles and there were $57 of them. Then we looked at the change and decided to keep that part a mystery! Nonetheless, saving an extra fifty bucks a week in a household that already does quite a bit to save and be frugal is no small feat.
As a self-proclaimed frugal person, I pride myself in coming up with creative ways to save a buck. I also make it a point to always try a way to save, even if it seems absolutely ridiculous. This experiment just goes to show that thinking outside the box can put rocket propellers on your savings plan.
Joshua Rodriguez is a blogger for Smarter Investor and Frugal Shopper. Feel free to follow him on Twitter, circle him on Google Plus, like him on Facebook, or connect with him on LinkedIn.