I think we’re all familiar with a certain bank’s gimmick of rounding your debit card purchases to the nearest dollar and depositing the difference into your savings account. If you’re not, check out Bank of America to get details.
I’m going to go out on a limb here and say that this isn’t a good idea, especially for young people who are just beginning to learn how checking accounts, debit cards, and finance in general work. First, this does nothing for actual savings, since the amount that is being deposited is very small. Second, this kind of thing makes balancing your statements a pain in the rear. How do you differentiate between two $24.00 purchases to see if one of them may be incorrect? Lastly, some of us live very close to the vest, and that level of volitility in a checking account could be the difference in wether or not you have to pay NSF fees on an item.
If you are truly interested in increasing your savings, here are a few tips that will show you progress much quicker than this program.
- Get a jar, or piggy bank, and put the change from everything you pay cash for in it. At the end of every month, put that change into your account.
- You will be working with ‘extra’ money, or money that you are not trying to account for in your checking register.
- When working on your budget, pick a specific percentage of your income, or a specific dollar amount and label it for savings. Treat this as you would any other bill that must be paid, and on time.
- If you are in the habit of going out to eat frequently, try brown-bagging it for one day every week, and put the money you would have spent into your savings account. Five dollars every week can add up very quickly.
- Structure your savings and spending habits in a way that you don’t have to pay any unnecessary fees. That amount should be then transferred into your savings account.
- Pay extra on any revolving credit cards you may have. As you reduce the principal, you will find yourself saving money everywhere you go.
Whatever you decide on, don’t fall for clever marketing by a big bank. Do some research to see if the deal they are offering is worth it. Remember, they are out there to make money, not charity, and they won’t make offers that are too good to be true unless they really aren’t true!