The Mental Trick To Cut Spending And Boost Saving

November 8, 2018

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A recent survey found 21% of Americans have nothing saved in their banking accounts and another 10% have less than $5,000 tucked away for a rainy day. But there's a fairly simple mind trick you can use to sock away some cash for emergencies, retirement or a down payment on a house. Every time you make a purchase that isn't essential, such as a White Mocha Frappuccino, with an espresso shot, you match the cost and add it to your savings. So if you spend $10 for a Saturday matinee at the movies, transfer a matching $10 into your savings account. This does a couple of things. It doubles the cost of non-essential products or activities, which may make you think twice before spending and more importantly, it will give you a nudge to automatically add to your savings at the same time you have discretionary spending money.  However financial experts say you shouldn't use this trick at the expense of cutting back on paying down debt, such as a high interest credit card. And if matching the exact amount every time you spend is too much at the moment, try rounding up to your savings.  Apps like Acorns and Qapital, allow you to literally invest or save your spare change when you buy something — for instance, if you spend $14.60 at lunch, the app would "roll up" to a round number ($15) and deposit the extra $.40 into an account of your choice.

SOURCE: Apartment Therapy

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