Everyone should have a goal to build savings. Whether you are saving an emergency fund or a travel fund or for your future, everyone should have a savings goal. But having a goal is just the first step, the next is to figure out how you are going to build your savings. If you don't have a plan to save, you probably won't save.
There are tons of different ways to grow your savings. You can save lots of money with the help of savings game where you manually save. Or there are also lots of ways to build savings digitally. But which is best for building savings?
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To figure this out, I'll explain each of the money saving strategies and then estimate how much it would save in a year. Of course, the results will be different for everyone, but by having an idea of how much can be saved, it might impact how you best like to save. I'll also use the total amount saved over the course of the year to help determine which method will help you build the most savings.
Manually saving puts all the responsibility of saving on your shoulders. Some people like having the control, which is why manually saving works best for them. Here are some different savings challenges to help you manually save.
1. 52-Week Savings Challenge
The 52-week challenge has you saving money every week. You save $1 the first week, $2 the second week, $3 the third week and so on until week 52 when you save $52.
If you stuck to the 52-Week Savings Challenge, you would save $1,378 in a year.
2. 5 Month Savings Game - Played Twice
This game starts with pennies in the first month. On day one you save 1 penny, on day two you save 2 pennies, and so on until the end of the month where you save about 30 pennies. Then the next month you move onto nickels, the third month is dimes, the fourth month quarters, and the fifth month is dollars. You never have to save more than $30 in one day.
After five months you will have saved $655.65. Playing the game twice, in 10 months you will have saved $1,311.30 with two more months left in the year to keep saving.
3. The $5 Bill Savings Plan
The plan is simple, every time you end up with a $5 bill instead of spending it you save it. How many $5 bills you end up with may vary depending on how often you use cash, but it can really add up. Marie Franklin of LePenzo Dot Com, saved up $36,000 over 12 years using this simple strategy.
Doing a little math and that add ups to an average of $3,000 per year.
4. The $2 Bill Savings Trick
J$ over at Budgets Are Sexy blogged about this one a while ago. Whenever you go to the bank, you buy all of the $2 bills they have, and you stash em away for savings. It works because $2 bills are cool and you won't want to spend them. (I can personally attest to this truth as I have a handful of them I've had since I was a kid). In just a month of doing this J$ managed to save $110.
If you managed to keep up that momentum for a year you'd end up with $1,320 saved.
5. The 12 Month Savings Challenge
Carrie from Careful Cents has been participating in the 12-month savings challenge for a few years. It works by saving $25 each month and adding $25 each month for six months, and then you walk the savings back. So month one you save $25. Month 2 you save $50. Month 6 you would save $150. Then in Month 7, you'd save $150 again, and month eight you would save $125 until in month 12 when you save $25.
Carrie and her husband have used this method to save $1,050 each year and use it for their Christmas travel fund.
Digitally saving is really just another way of saying automatic savings. It's trusting technology to do the heavy lifting of saving for you.
6. Spare Change/ Round Up Saving
I use Chime to build savings through spare change. When I set up my Chime bank account, I also signed up for their savings account. Every time I use my Chime debit card, Chime rounds up the purchase and sets the spare change aside into my savings account. They are also doing a 10% bonus on savings at the end of each week. In one week, I've saved about $5, with the bonus that is $5.50.
Over the course of the year, just by spending as I normally do I would save about $286.
7. Automatic Transfers or Deposits
You can build savings by having an automatic transfer or deposit to your savings account. When I worked gull time, I was able to have part of my paycheck direct deposited into my savings account. I would have $100 deposited to my savings account every time I got paid, which was every two weeks.
Over the course of a year, I was paid 26 times, which meant I saved $2,600.
8. Choose the Rules for When You Save
With Qapital you can set the terms for when you save. While it does offer a roundup savings option, it also allows rules like saving a certain amount when you hit a step goal. You could even set a rule to save when it rains, a literal rainy day fund. It is all goal oriented. I've just started saving with Qapital in May after Digit started charging and I've already saved over $2,000 for taxes and a vacation.
If that average holds up for the year, they will have saved $1,680 in a year.
Which Strategy is Best to Build Savings?
All of the manual savings strategies result in saving over $1,000 a year, but it also requires a lot more effort. You will have to take action to save all year long.
With digital savings, how much you save will depend on which method you use. You likely won't save as much with just the roundup savings, but if you combine it with any other digital savings method, you set it up once and will save as much as you would manually if not more.
Personally, I'm partial to automatic digital savings because otherwise, I'm likely to forget to set the money aside, also I hardly ever go to the bank and rarely use cash. But that is just me.
Whether manual or digital savings strategies will work best to build savings for you will depend on you. If you use cash regularly or are comfortable setting a reminder to transfer funds regularly, then manual savings will build the most savings for you. If you prefer saving to be a set it and forget it kind of experience, then digital savings will likely result in the most money saved.