“Hacking your brain,” is a way of describing psychological tricks to help you save money. Funny, your grandma used to teach you the same things. Only thing is, technology has changed many of those trick-yourself money-saving games.
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Then:
Soda Can Savings
Gents, when you empty your pants pockets for the evening, put all coins in an empty pop can (harder to open than a piggy bank), and never leave the house with change in your pockets. Ladies’ version: empty your purse of all change each night into a soda can. Typical savings could amount to a year’s IRA or Roth contribution.
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Who Carries Change???
Today, there are apps for that, allowing you to connect your credit and/or debit cards, rounding up purchases to the nearest dollar and putting the “change” into an investment account.
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Rounding Up The Checking Account
Every time you write a check (or even pay a bill electronically) record it as the next highest figure in round dollars, recording a tab of $9.69 as $10 debited from the account balance on your records. Each month, when you balance your records (you do that, don’t you?), there will be extra dollars in the account. Whenever those extra dollars amount to $100 or more, transfer the money into savings or use them to make an extra payment on a credit card or mortgage. The “graduate” version of this system rounds up payments to the nearest $5 increment. The whole point? Getting more dollars into paying down debt or into saving for the future.
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Rounding Up The App
While Apple Pay, Android Pay, and even Venmo may be taking over a chunk of the checking account marketplace, the check is still quite prevalent in the business economy. In any event, it’s the bookkeeping that gets rounded up, not the payment. What’s more, some round-up savings apps will transfer the excess amounts to a savings or investment account.
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Ghost Check Register Deductions
Every time you use a credit card, record the transaction on your check register, deducting the amount from your balance. You might use an asterisk or other code, or simply write “Visa” or “Mastercard” in place of a check number. The point—drive home the subliminal message to yourself: “I am spending real money here,” not just playing with plastic. Follow the ghosting system, and there will always be enough money in the checking account to pay off the credit card bill at the end of the period.
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Who Does Paperwork?
There are web- and phone-based expense tracker apps to keep you aware and prepared. Some not only track but categorize every purchase on a linked credit or debit account.
Then and now:
Simultaneously Adding And Subtracting
What if you have outstanding credit card debt? Would it be better to save or devote every extra dollar to getting rid of high-interest debt? The answer is both. Starting with the most expensive credit card (highest interest rate and fees), make additional payments every month—or every couple of months, using the dollars from rounding up, while continuing contributions (especially to pre-tax, employer-matched plans).
Then and now:
Rule Of 72
One handy arithmetic device that never goes out of style is the Rule of 72, which measures how long it takes either money or prices to double in value. While inflation has been extremely low lately, the biggest long-term retirement planning mistake is underestimating future costs of living. When it comes to credit card debt, the Rule of 72 can function as a Fear Factor.
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Although technology has changed the way we keep track of our money, Grandma was right about a lot of things. You may be able to fool yourself a lot of the time, but, in the long run, “mind games” help keep you “on the money”!