Save by rounding up your spending
This money saving technique has become very popular in the last few days since more and more banks are offering it to all their clients when they make purchases with their credit/debit cards.
The concept is very simple. Over the course of a day you’ll probably make several purchases, a coffee for $2.5 in the morning, lunch for $12.75, a magazine to read on your commute back home for $4.9, some groceries before going home for the day $32.15… total spending for the day $52.3.
Now what if instead of $2.5 you had to pay $3 for the coffee, instead of $12.75 you had to pay $13 for lunch, $5 for the magazine and $33 for the groceries? If that had been the case your total spending for the day would have been $54. Not a big difference, right?
Well that’s exactly what you have to do to save money using this technique. Round up your spending and save the difference between the rounded-up amount and what you actually spent.
How much can you save by rounding up your spending?
In the above example you would have saved $1.7 for the day, which might not seem like much, but it will add up over time. Saving $1.7 per day, every day, means you’ll save:
- $51 per month
- $612 per year
Literally without even realizing or changing any of your habits.
Some day’s you’ll save more and others you’ll save less depending on how many transactions you make per day and the amount of each one. If your transactions are all $X.99 you might only save a few cents that day, but if they are $X.29 you’ll probably manage to get a few dollars. There is really no way of knowing, so the best you can do is try for a month and see how much you average, that will allow you to predict more accurately how much you’ll be able to save over longer periods of time.
Tweaking this saving technique
You can easily tweak this money saving technique to increase your savings by rounding up in 5’s instead of 1’s.
If you were rounding up in 5’s in the above example you would have to round up the $2.5 coffee to $5, the $12.75 lunch to $15, the magazine would remain at $5 and the groceries would be $35. In this case your total rounded-up spending would be $60, which means you would be saving $7.7.
Saving $7.7 on average every day means that over time you would save:
- $231 per month
- $2772 per year
As you can see rounding up in 5’s changes the number completely, so be carefully and don’t jump into it without giving it some thought. Start by rounding up in 1’s and only go up to 5’s once and if you feel comfortable with rounding up in 1’s.