Yahoo Finance 6 Old-Fashioned Ways To Save Money
Technology introduces more ways than ever before to save your money at high interest rates in online banks, invest in everything from fractional real estate shares to cryptocurrency and even earn money back on your purchases through apps like Rakuten.
Learn: 6 Things the Middle Class Should Sell To Build Their Savings
Explore: How To Get $340 Per Year in Cash Back on Gas and Other Things You Already Buy
But some of the best ways to save money have been tried and tested over centuries. You might call these “old-fashioned,” but we prefer to look at them as proven and simple.
1. Track Your Expenses
You’ve probably heard the business adage, “You can’t improve what you don’t measure.” Tracking your expenses is one proven way to stick to your budget, understand why your money is going, and even spot new ways to save.
In his bestselling book The Compound Effect, author Darren Hardy suggested, “For the next three weeks, choose to carry around your own small notepad (or large one if that’s more enticing) and write down every single thing.”
You can also use digital budgeting software, or take notes on your phone, but the physical act of tracking your spending with a pen and paper will make you more mindful.
Before an unnecessary purchase, Hardy wrote, you’ll start to ask, “Do I really want that candy bar? I’m gonna have to haul out my notebook and write it down, and I’ll feel a little sheepish.”
2. Use the Envelope Budgeting Method
Popularized by Dave Ramsey, the envelope budgeting method simplifies your discretionary spending. Once you’ve paid all your fixed expenses for the month, including your rent or mortgage, car payment, and insurance and utilities, divide the money that remains into envelopes for discretionary spending categories. These can include groceries, dining out, clothing, entertainment and household needs.
“The idea is that once the envelope is empty, you don’t spend any more in that category until it’s time to replenish the next month,” Amy Lins, vice president of enterprise learning at Money Management International, a nonprofit credit counseling agency, told Fortune.com.
3. Stash Your Spare Change In a Piggy Bank
The envelope budget method may seem old-fashioned, but it works because it gives us a visual, physical reminder of how much money we have.
Similarly, stowing spare change in a piggy bank might be effective in helping you reach mid-term savings goals, such as saving for a trip or building up an emergency fund.
In 15th-century Europe, workers stored loose change in clay pots, jars and bottles to be used for emergencies. Because the containers had to be shattered to extract the change, these clay vessels worked well to deter spending.
In the 18th century, a clever potter who may have had a penchant for “dad jokes” crafted a clay jar, made of pygg clay, into the shape of a pig.
Piggy banks remain handy tools to teach kids about saving, although keep in mind you can earn more than 5% interest in a high-yield savings account, instead.
4. Comprehend the Power of Compounding
A piggy bank provides a convenient way to save money, but not the most profitable. By understanding the power of compounding, you can make your money work for you. Thanks to compounding, $200 in the bank, today, saved at 5% interest, compounded daily, will total nearly $330 in 10 years.
The concept also works when you think about spending money. In The Compound Effect, Hardy talks about how spending $4 on coffee five days a week adds up to more than $51,833, compounded at 8% over 20 years if you invested it, instead. You’ll stop and think, “Do I really need that coffee?”
5. Pay Yourself First
This advice dates back to George S. Clason’s classic tale, The Richest Man in Babylon, although you can probably find references to it that date even further back. One of the key tenets to building wealth, according to the book, is to “Pay yourself first.” Clason recommends putting at least 10% of all the money you earn into a savings or investment account for yourself.
6. Purchase Gold or Silver
From family heirlooms of jewelry to gold and silver bars or bullion, experts have previously told GOBankingRates.com that gold, silver and other precious metals can hedge against inflation and political uncertainty.
“Crypto, stocks, and equities are all paper-based assets and items that really correlate to events in the marketplace that can have a negative impact on their value,” Jonathan Rose, CEO of Genesis Gold Group, previously said. “On the other side of that scale, you have precious metals.”
Rose’s company recently launched wallet-sized bars of gold and silver, which allow you to tear off pieces of these precious metals to use in commerce or trade, much like you would break off a square of a chocolate bar to share with a friend.
Final Note
The economy has changed, but the basic tenets of personal finance remain intact. These old-fashioned methods of saving money and preserving wealth work just as well as they did centuries ago.
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This article originally appeared on GOBankingRates.com: 6 Old-Fashioned Ways To Save Money
