Why do we find the act of saving money so hard? In a world where everything can be done online, it takes almost zero effort to type a few numbers, click the mouse a few times, and transfer money to your savings account.
It’s sad but true that some of us need the physical act of saving money to be even more effortless than that. One way to accomplish this goal is to use the round-up method. It isn’t new, maybe you’ve heard of it, or even tried it.
Here’s how it works.
Save Money by Rounding Up
Each time you make a purchase, and enter it into your checking account register, you simply round up the amount to the nearest dollar. Bank of America has implemented something similar with their “Keep The Change” program, as has Acorns with their “Invest Spare Change” motto.
Saving money using this method has several positives. It makes the math much easier for keeping track of your account balance, and literally takes no effort since it’s just altering transactions you have to account for anyway.
But there are drawbacks as well. You’ll reconcile your checking account to the penny very infrequently (when you want to “withdraw” your savings), thus you could make a mistake and have no idea for a long period of time. Finally, you don’t know how much you have saved until you fully reconcile your account each month.
Stash Hundreds of Dollars a Year
How much would an average person really save using this method? It’s very easy, and fun, to round up to the next whole dollar, but does it really work?
I decided to do an experiment. During the last month, I analyzed my checking account activity and came up with the following analysis:
- During this time period I had 105 transactions
- If I rounded each purchase to the nearest dollar, I would have saved $35.85
- Based on this and roughly saving the same amount each month, I would save $430.20 in a year!
While not a huge sum of money, the rounding up technique is a nifty way to stash away a little bit of your hard-earned cash.
And if you consistently do it over a 12-month period, you could save several hundred dollars. That could go towards next year’s holiday budget, or gifts for birthdays throughout the year. It could be used to beef up your emergency fund, or to build a vacation fund.
If you’re looking for more ways to easily save more money this year, try the round-up technique. You may find it to be a fun and easy method to implement.
Have you ever used the round-up method to save money? Do you have any other unconventional techniques to save more money this year?