@ConsumerKat: Congrants on the savings method, but you might want to wait until you are a bit older to get the eye surgery as your eyes are still evolving until you're about 30.

If you've already taken out cash to spend for X reason and you have some left over after X event, why not make yourself happy by putting the "extra" leftovers into the savings of your choosing?

I seriously do not understand why people are simply responding with "Well *I* have a budget" and "*I* automatically have savings deducted from my paycheck." That's great, dude; I do too. But I also recognize that I need to see myself save my "extra" cash and be proud of it. It's just an extra boost that can be worth hundreds in "found" money.

This whole argument reminds me of the professor who refused to believe that some people weren't book learners, that some people only really understood certain lessons when interacting directly with the professor and class. There's no ONE way to do things, folks.

Also, I resent your condescending implication that I or the OP aren't smart.

I'll use the example of a street fair, as I did in another post. If I'm going to a fair or wine taste fests or whatever, I generally take out a bit of cash, maybe $20 or so (Normally I hardly use cash, but you usually have to at these things. Also, let us assume that yes, I can, indeed, spare this $20.)

Say I buy a couple of small plates that add up to $13. I thus have $7 left in my purse. I know that for myself, I'm probably not going to make a special trip to the ATM or credit union just to deposit that $7. However, I know that if I leave it in my purse, it will essentially evaporate into goodness knows what. Vending machine. Panera Bread. Pinball. A health smoothie. That additional "just one thing" I might get in addition to my regular grocery store trip. I'd much rather skip that temptation and throw it into the save-change-and-checks jar and deposit a giant pile of cash at the credit union once I see that jar fill up and I get all proud of myself.

I should say that I'm not bad with spending. Once upon a time, I used to be, but that was years ago. My indulgences today are concerts, baseball games and random things at H&M. I build those into my mental budget, though, so they're not an issue. In addition, I do contribute quite a hefty amount into various retirement accounts and have a superb company match. And again, I usually do not have cash on me. In fact, I rarely go to the ATM just to make it harder on myself (my credit union and nearest ATMs are an annoying drive away). But I do LOVE the feeling of saving the money that I didn't fully spend. Yes, it technically gets recycled back into some savings or another. But that $7 leftover street fair money is $7 that I might have otherwise spent retardedly.

I don't save too quickly since I most use my CC for point (and pay off every month) for almost every transaction, but it does add up.

Another method I heard was that anytime you purchased something you didn't need (dinner out, go to the movies, etc) you take and additional 10% of that and sock it away. Think of it as a self-tax on luxuries, where everything not needed to subsist is a luxury :)

Only people that are awful with cash need to trick themselves :D

/not awful with cash
/too smart to trick myself

I realize I'm supposed to email an editor to correct the gaffe, but that headline makes my head hurt.

Buffalo buffalo buffalo Buffalo buffalo.

I'm curious about the non-cash-users: Do you not use it because ATM's are inconvenient? fear of theft? I guess I like to have some cash at all times because it makes me feel like a playa! haha.

@resonanteye: If you worked in a strip club you might have more $2s. I have "heard" that clubs are starting to use them more as "1"s have been hit by inflation. Or is this an urban myth?

Of course anytime, you tip with a bill with a "0" at the end of the number you tend to get better "service".

Gee, what did that take, like, two neurons to figure out? Sheesh.

When I was right out of college, I had a system that helped me manage my spending, if not actually save. It was simple. If I had to break a $5 to buy something, I mentally considered that thing to cost $5. If I had to break a $10, that item would cost $10.

Since it's 'easier' to spend the little bills (I need a coke *insert George*), they can disappear quickly. The larger bills being unbroken take on more value. I would hold on to $20s for a good long time, never wanting to break them for something small.

@u2acro: I think the "gimmick" feel comes from the fact that the 'savings' are not really savings in the conventional sense.

All you do with this method is cycle money through your wallet and back into the bank to retain an unpredictable amount of money. I find it more effective to monitor my spending habits month to month, set a 'budget' for daily spending, and save 25% of my income for investments and rainy days.

Here is an easy approach to controlling your savings:
1) Evaluate your living needs and determine how much you can set aside each month (10%, 15%, etc)
2) Restrict yourself to no more than one 'indulgence' per month (new shoes, video game) and do not allow your normal spending+savings+indulgence to exceed your income level for the month.
3) Limit yourself to one large purchase per year, where large purchases are defined as an item that will cause you to spend more money in a month than your earn for that month.... I use a 50% rule, where I will not touch 50% of my savings when shopping for my big item (such as a car).

Hopefully this approach will encourage any normal person to weigh the benefit of any impulse buys if they can carry the mindset that they only get one impulse buy a month.

@JN2: I think you are on to something here...

I have 24$. Which is not bad! At that rate I'll have about 60$ when I'm "done"!

What the $5 savings plan will do is force you to use your money intelligently - you won't be so inclined to spend that $3 on a mochaccino when all you have is a $10 bill, because then you'll be out $10! It has the ability, when implemented correctly, to lessen impulse spending.

I haven't had time to read the comments, but I need to mention this because IT IS ABSOLUTELY KEY.

This plan works best when combined with a percentage-based savings plan with your income. Yeah, I'm talking about the "25% long-term, 25% short-term, 40% living-term expenses, 10% spending money" plan, or whatever plan you subscribe to.

The trick is to only save the $5 bills that come from your SPENDING money. You end up saving all this extra money for investing/jet-skis/whatever THROUGH YOUR SPENDING MONEY.

I've yet to find what to do with the extra money I'm accumulating, but I can guarantee that you'll have an enjoyable willpower test when all you have is $5 bills and your friends invite you to go to Pizza Hut off-campus. . .

*$5.99 in Hawaii

Damn you Subway!

During the year of my 21st birthday, every day that I had served (yeah yeah yeah, I was a waitress), I always put $5 away in my underwear drawer. Sure, I didn't get any interest while I had it, but I also didn't have the convenience of having it being able to overdraft into my checking account. By the time my 21st b-day rolled around in August, I had a nice hefty down payment for my Lasik Eye Surgery. Best thing I've ever done or saved for in my entire life.

1) Most ATMs don't give out $5 bills
2) Most ATMs have a transaction limit
3) Most financial institution have a daily ATM withdrawl limit.

;-)

I haven't had cash on hand in like a year. So this won't work for me.

Every time I need gas, I go to the ATM and use the fast cash option which gives you $60. I get $40 in gas and put the $20 away in an envelope. I save also by not paying the additional credit card fees at the gas station as well.

It's a willpower forced saving I suppose, but it is working.

@TPK: You are no fun.

So I've just ended up with a HUGE wad of fives; if I put these back into a savings account, am I really saving them, or just sort of recycling them?

I monitor my accounts very closely (graduated accounting, though not working as one). Every payday, I leave $400 plus my upcoming monthly payments (at this point, that's a $714.54 car payment and $22.60 pay-as-you-go phone payment) to last me until the next pay day (every two weeks). After a couple of of bigger purchases (about $2,000 total), I've saved almost $8,000 in 4 months.
It'll be a nice down payment on a house in 1-2 years...

I don't often carry cash, but when I do, I'm dangerous. Thus, if I'm going to a street fair or such, I'll take out, say, $20 for fun. After the fair, I might come home with $9. I immediately dump that $9 into the jar o' change and checks for later deposit into a savings account. It feels GOOD to see that little bit of money pile up, and it's POSITIVE REENFORCEMENT because I did not spend that money! I figure I already took it out of my account once, so it's already gone. Might as well "spend" it in a responsible way -- savings.

I mean, really, who WOULDN'T like to save a little extra in a way that won't hurt?

Another thing I do, is at the end of every day, I change in all of the singles I might have in my wallet/pockets/backpack/couch cushions for crisp new fives (or put singles in multiples of fives into the special savings envelope).

I have a separate high-interest online savings account where I keep my "fives" and have earned $2.66 in interest in just over two months.

And, yes, this is a gimmick, but it is a gimmick I use in addition to putting away almost 1/4 of my paycheck each week into savings and investments.

My wife does this, but in a weird Sopranos kind of way. She randomly puts $1 and $5 bills in various places in the house. For instance, there's probably $20 in various bills in one drawer in the dining room hutch, $10 in her nightstand drawer, $25 in one of her dresser drawers, etc. Every time I go looking for a random paper or doohickey I find loose bills.

I asked her once if she conciously put these there, and she said they just happen to get put there when she finds them in her pocket. One day, I swear to God I'm going to find stacks of $20 bills in an unused compost bin in the backyard.

Maybe this whole idea should be retitled "How to Fool Yourself with Jedi Mind Tricks!"?

Yeah this is fun! It keeps me a bit less free-spending, and I've piled up a couple of hundred bucks. Trying to decide how to apply it.

I've saved maybe 85 to $100 or so. I don't know exactly how much and I won't be finding out for a long time. That box stays sealed up until I can't fit any more bills into it.

I've been doing this for a few months now and I've already saved almost $200. And I also do the automatic withdraw for 401K and Savings.

When I have to break a $20 it does make me think if I really need something that is less than $5 knowing that if I do, I'll have to put at least $5 of it away.

I don't think it's so much of a savings mechanism as a way to make you stop and think about what you're about to purchase.

@PercyChuggs: Or one awesome 85 foot sub! :D

Sometimes I'll also supplement it at the end of a day by removing all bills smaller than $20 from my wallet.

Those automatic things are great but what has really helped me boost up my savings was my second job waiting tables I got about 6 weeks ago, I already have an extra $4200 in the bank in only 6 weeks thanks to that job.

@dmuth: Interesting, but do you know whether you actually spent less money than you otherwise would have, or did you just spend it in a different pattern?

And God forbid you buy something for $3.50 and get back 3 $5 bills!

only problem is, i tend to hit that up more often than i should, so i have another 5% going into a CU account i have had since i was 14 - i don't have checks or a debit card or any other way to access that money (aside from getting in my car & driving 350 miles round-trip during the work week).

I find the title misleading as "Reader Saves $427 By Saving Save Every $5 Bill". How do you save $7 by saving only $5 bills?? Maybe it should be changed to "Reader Saves $427 By Saving Save Every bill $5 Or Under"?

Personally, I transfer $500 a month to my saving. Money there is only used for major purchases... such as, a new fridge...

I'm not clear on how this would help you in the long run ... I feel like I'd just run out of cash faster and need to go back to the ATM for more $20s that I'd eventually get back in change for $5s which I would put aside and then run out of cash again cause I'd put them aside.

Maybe this is a total no-brainer, but I do do the "out of sight, out of mind" thing myself, except not with cash. I just have a recurring transfer set up in my online banking so every payday a certain amount is automatically transferred to my savings. And then I DON'T TOUCH IT.

uhh yeah maybe if you just put away like 10% of your paycheck each payperiod you could save a ton that way to..

weird how you save when you save your money haha