Last week I got way-laid by a dinner with some complications, so I postponed discussing budgetary matters until now. I have a fairly well-regulated financial plan, but I almost always do at least a little reconsidering at the beginning of a new year. This year, though, I had to do more of an overhaul than usual because I have some special plans for this summer.
Last year my friend, Mrs. L, called me up and said, “We’re moving to Norway!” After I had picked up my jaw off the floor, we talked about the reasons (her husband’s Norwegian; their kids won’t get to enjoy their two cultural backgrounds unless they actually live over there for a while; etc.), plus gossiped about lots of important girl matters. At the end of our conversation, though, she said – half-joking, “You’ll have to come visit me in Norway.”
Well, besides the fact that she’s one of my three closest friends, Mrs. L also did me the honor of choosing me to be godmother for her oldest child. My goddaughter is a beautiful, smart girl with a quirky sense of humor and a love of adventure (some of her favorite story and movie characters are Iron Man and Darth Vader, so you can see what I mean!). It’s harder to stay in touch with her when she’s in Norway, of course, so I’m taking matters into my own hands.
I’ll be flying over in late June to stay for a whole week.
Now, last time I went to Europe, my trip was completely paid by the school for which I was working, since I was the homeroom teacher for 11th grade and they needed me to keep an eye on my students. Free trips are awesome, I can attest, but hard to come by. This time I have to pay for the plane tickets myself, which meant some budgetary juggling.
As I said, my finances are quite well-regulated, which is good for keeping me out of credit card debt, but not so good for finding extra money to save for trips. Most everything is already accounted for, you see. However, back in late November (in fact, when I began my KonMari project – I promise I’ll stop talking about that someday, just not quite yet!), I had an idea. You see, I’d been selling DVDs which I no longer wanted on Ebay, and I made about $15 in the process. That’s not a lot, but it was free money, so I put it into my trip fund.
Then it struck me: I actually have quite a few sources of random income that count as ‘free money.’
For example, I like to grocery shop at Fred Meyer and at least where I live, the store has a very generous gas discount program connected with its rewards card. I signed up once I began shopping there regularly, and then realized that the other benefit is a cash rebate program. If you spend $500 or more in a quarter, you get back 1% of the total. This rebate arrives in the form of a coupon four times a year.
Up until now I had simply spent the coupon the week after it arrived in the mail. I’d not thought about it except as a nice discount on my grocery bill here and there. Then I realized: that coupon is income. Not very much, granted, but every little bit helps. Since it's basically equivalent to cash (even if I can only spend it in one place), I started treating it as if it really were cash. Last time a rebate coupon arrived, I deducted the amount from my grocery money. Then I transferred the same amount from my checking account to my fund for the trip to Norway.
Since I have a cash rewards credit card, the same process gets applied there. I’ve also made some returns recently where the credit was applied to a store card which I couldn’t use anywhere else. Every time I spend part of the credit, I transfer the equivalent amount to savings. This has made my home-banking a little bit of a juggling act, but by dint of regarding every free thing (rewards rebates, return credit, work bonus, consignment sales…even free movie tickets from a Regal Cinemas card!) as a source of income to be deposited into the trip fund, I’ve collected about $1000 in approximately two months.
Of course, some times of the year are more generous for random income than others. December through January are probably particularly lucrative, due to end-of-year work bonuses, or tax returns, or gift-cards in one’s stocking, etc. My rapid savings has also been affected by the fact that I cleaned out my belongings and consequently consigned books and DVDs and kitchen wares. However, even without those favorable factors, I’d say that any person could put aside a fair amount of random income in any month.
The basic strategy is to change one’s perspective on free things.
I guess what I realized was that in the past when I received ‘free’ income in the form of a gift-card or rebate or what have you, I ended up spending that money in addition to my usual budget. However, if instead I regard my budget limits as absolute (no more than $100 a week for groceries, for example), then when I suddenly receive an extra $6.48 for groceries as a coupon, that automatically goes into savings. This can applied to everything; if you want to be incredibly strict, you could go so far as to use the strategy even when friends and family are nice enough to treat you to something!
Of course, the approach may not work for everyone, and I admit that sometimes it’s a bummer to be so strict, since a free movie ticket doesn’t mean an extra movie, just a deposit of $10.75 in savings, but in the end I think it works out. After all, the things for which we save tend to be special: trips abroad, possessions that will either be extremely useful or very important to us, down payments for investment purchases. The satisfaction of being able to build up a fund for such a goal – perhaps of reaching it sooner – is well worth avoiding a few indulgences here and there.
So anyway, I’m curious. If you’ve made it through my whole post I’d love to know what your saving strategies are. Everyone has different ones, and I’m always looking for good tips!