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5 Simple Secrets for Saving Money

Pay Cash, Save the Change

There's a lot of psychology that goes into saving. That's why one way to encourage yourself to save is to put away the plastic and pay in cash. Handing over currency when you buy something gives you a clear sense that you're spending "real" money. Credit or debit cards are so easy to use, they tend to make you forget you're spending your hard-earned dollars.

When you make that cash purchase, get in the habit of putting the change aside and depositing it into a savings fund. You'll be putting aside a small portion of everything you spend, and those dollars and coins will add up. Do the same thing with your checking account: Round up each amount to the next dollar when you enter it in your checking record. You'll accumulate extra funds in your account, which you can later move into your savings.

Paying cash can also help you to stick to a budget. Divide up your weekly spending and put the portions into a series of envelopes for various expenses. One envelope might be for dining out, another for entertainment, a third for gasoline. If you run out of cash before the week is over, you'll have to cut back. You might need to eat dinner at home, opt for a video instead of a movie, or take the bus while you wait for the next week to roll around.