Personal Finance: Tips for Painless Savings
ALEX CHADWICK, host:
From NPR News, it's DAY TO DAY.
Shopping is fun. But what about the joys of saving? You know that great feeling you get when you skip the mall, skip the online store, skip it all - put the though into your nice, safe savings account? Yeah. I've never had that feeling either, but maybe if we can't make saving actually fun, at least we can make it painless.
Here with some tips is Michelle Singletary, our regular personal finance guru. Hi, Michelle. Maybe saving is fun for you.
MICHELLE SINGLETARY: Oh, I love saving. That's like my favorite pastime.
(Soundbite of laughter)
SINGLETARY: It's a great way to build for your future. And everybody ought to enjoy saving. And clearly, there are companies out there who are creating programs to help people save. You spend and then you save.
CHADWICK: Bank of America has this heavily advertised new program that it calls Keep the Change. What is that?
SINGLETARY: Basically, when you use your debit card and make a purchase - say the purchase is for $7.25 - they will round it up to $8 and the difference they'll deposit it into your savings account and then match it for the first three months. After that, they match it up to five percent - up to 2.50. So in other words, it's sort of a forced savings for every time you use your debit card.
CHADWICK: How about these rewards from credit card companies that give you a cash back for purchases? Is that a good way to save extra money?
SINGLETARY: You know, I always say you should just save to save. That's the best way. You've never really save when you spend, but if you are not a saver, this is not your thing, then a reward card can work for you. But you have to be very careful and read the fine print. If there is an annual fee or a lot of other restrictions, it could end up costing you more than the cash back.
CHADWICK: You're trying to save money you aren't really saving. How about unique ways, maybe, that you have found to save money over the years?
SINGLETARY: I have always saved automatically. From the very fist job that I got, I went up to the benefits office and immediately had a certain percentage of my paycheck automatically deposited into a bank account. And here's where I do it a little different. I make sure it's a bank where it's nowhere near where I live. And I don't get an ATM card with it. So it makes it harder for me to go and get my money.
And secondly, whenever I've had a car loan - don't have them anymore, but when I did - when I finished paying off the car, I continued to make car payments to myself. And I keep my cars until they push me off the road. So by the time it's time for me to get another car, I've got a great amount of money saved up either towards the down payment for that car or to pay for cash outright.
CHADWICK: So finished paying for the car, keep setting that money aside because you - what the heck? You're already used it, so won't miss the money. And then when it's time to get the new car, there you are.
SINGLETARY: You'll be surprise how that money adds up. And next time, you can pay cash for your car.
CHADWICK: Truly painless savings with a the great reward. Michelle Singletary, our regular guest on matters of personal finance and the author of “Your Money and Your Man: How You And Prince Charming Can Spend Well and Live Rich.”
Michelle, thank you again.
SINGLETARY: You're welcome.
CHADWICK: And listeners, if you have more questions about savings, or other money matters for Michelle, please write us. To send a letter, just go to our Web site, NPR.org. Click on the Contact Us link found at the top of every page, be sure to include Michelle in your subject line, and lots of you do. She gets mail here. She does answer your letters, so write in.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.