Introduction – Reasons for the Savings Jar Club
Good savings and investment strategies can have a dramatic impact on the quality of anyone’s life. Also, this doesn’t have to mean depriving yourself of things that make life enjoyable. In fact, the opposite is true. By learning how to be a good saver and investor, you will probably end up being able to purchase more things that are meaningful to you AND save money for retirement and other big life events as well.
Savings goals and investing is very similar to the SparkPeople philosophy of losing weight - small steps done consistently over time lead to big results. So, I'm starting something small right here and hope that it will lead to something big over time - the Savings Jar Club.
For simplicity, please try to convert any other currencies to US dollars for now - if this grows, we might be able to build in a currency calculator too.
Here's how it works. Anyone can participate no matter where you live. Just hop in and set a goal, setup your "jar" however that works best for you, and then report regularly each time you save something.
With each post, include:
So, if you make a choice to not spend money on something you normally would buy - or you buy a less expensive version, you can also add that to the total. For example, if you buy a small coffee for $2 instead of a massive coffee for $5, then you can add $3 to the total.
3. Debt Payoff
For credit card debt or other debt payoff to be added, it should be debt you've had for more than one payment cycle - so not just typical monthly expenses that you put on your credit card. For example, if I go shopping and pay $250 and put that on my credit card, then when if I pay off that $250 on my credit card statement that month I shouldn't count that as debt payoff.
So, for example, if you have an ongoing $1,000 balance on a credit card and make a monthly payment of $150 which consists of a $50 minimum monthly payment and then a $100 extra payment I say you can add that $100 to our total and call it "debt payoff".
One of the things that motivates me to be a saver is realizing that a dollar isn't a dollar. You really have to think about what you could turn that dollar into in the future. This rule helps you make wiser spending decisions. That way you end up being able to buy more of what you really want/need AND save more for the long-term too.
Here are some different ideas to use as motivation:
This motivation can help turn savings into something fun and exciting - more fun than some of the mindless things we spend our money on that we think we need.
What tomorrow do you want to save for today?
It’s great to save money in a jar, but even better to get that money earning interest over a long time period. Eventually I’ll add more about investing in stocks, bonds, and other investments, but for now let’s at least get that cash into a savings account that pays a FAIR interest rate.
As a note, I DO think it’s a good idea to keep a stash of cash on hand for true emergencies. So, you could use some of your savings jar cash for this if you’d like.
If your current bank doesn’t pay a fair rate for savings accounts (most don’t), then I would seriously consider opening an online account with a bank. Here are 3 options I’ve heard good things about. All 3 are high quality trustworthy companies from what I read and hear. At the moment (Jan. 1, 2006), all pay around 4% for a standard savings account.
Q: Should I pay off credit card debt before starting to save?
A: Any debt with a high interest rates should be your highest priority to pay off before savings. At some point I'll put together some educational info showing how damaging this could be if it didn't get paid off. Honestly, this probably goes for any debt over 6 or 7% interest.
Next I’ll add more information about the power of compound interest to this document.
Chris "SparkGuy" Downie
Chris "SparkGuy" Downie