Save Money by Rounding Up to the Next Dollar
“I have $500 extra in my checkbook,” my wife told me the other night.
“What do you mean?” I asked.
She explained that for the past 2-1/2 years, she’s been rounding every transaction up to the next dollar. If she spends $49.74 at the grocery store, she enters this in her checkbook as $50. If she spends $21.23 on gas, she enters it as $22. As a result, she saves an average of 50 cents every time she performs a financial transaction. She’s made roughly 1000 transactions since she started this, and now has $500 more in the account than her checkbook register shows.
When she reconciles her accounts, she merely double-checks to make sure all transactions are present — she doesn’t actually reconcile totals.
I’m not sure I could ever do this — it would make me tense — but my wife finds great satisfaction in having this buffer.
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Andrew Flusche said,
February 8, 2007 @ 10:03 am
I think this is a really cool tip. I keep track of spending using Microsoft Money. I used to round up all cash transactions. Since I don’t carry change anyway, it made more sense to only track the actual bills I carried. Thus, any change from a cash purchase went straight into a jar/dish. This could then be “free” money for another day.
Andrea >> Become a Consultant Blog said,
February 8, 2007 @ 11:34 pm
I just keep $2k in my account at all times. It’s enough to ensure free banking and it gives me a nice buffer, as well as emergency funds to pay off my credit card in an emergency.
Danielle said,
February 9, 2007 @ 9:38 am
I belong to Bank of America’s Keep the Change program, which basically does that for you by automatically moving the change to your savings account. The added benefit is that BOA matches some of the saved funds.
Jennifer said,
February 9, 2007 @ 10:07 am
Or you could sign up for Bank of America’s Keep the Change program:
http://www.bankofamerica.com/promos/jump/ktc/
Poorer Than You said,
February 9, 2007 @ 2:44 pm
Haha, I came to say “BoA’s Keep the Change” as well. It’s nice in that the money doesn’t sit in your checking account, but instead moves to your savings, and especially because of the match that BoA gives.
Of course, I haven’t actually signed up for this yet, since I don’t have enough of a buffer in my checking account to do the automatic $25 transfer each month to keep the account free… but it’s on my list =)
links for 2007-02-10 » Bill2me.com said,
February 10, 2007 @ 8:24 am
[...] Money Hacks | Save Money by Rounding to the Nearest Dollar For awhile now Bank of America has been advertising a program in which they round every transaction to the next dollar and deposit the difference into a savings account. What basically happens is that a purchase of $34.70 leads to a $.30 deposit towards (tags: Lifehacks) [...]
casey said,
February 13, 2007 @ 7:21 pm
B of A has an automatic program of this rounding up idea… EXACTLY. and, the bank even matches a portion of what you save….. THEY give you some bucks for doing it.
look into Bank of America.
randy said,
February 13, 2007 @ 8:21 pm
My wife and I have been doing that for about 5 years now, and indeed, it’s nice to have the buffer. The only downside is *knowing* you have the buffer.
gamehack said,
February 14, 2007 @ 12:50 am
This is the same as the “Save the Change” [1] program initiated by Lloyds TSB here in the UK.
[1] http://www.lloydstsb.com/savethechange.asp
Moneychump » 52 money hacks - one for each week! said,
February 20, 2007 @ 4:46 am
[...] just don’t pay attention to the amounts of the checks, just the cancelled checks themselves. One persistent hack after 1000 transactions, has run up more than $500 in free money. [...]
Twiddly-Doo said,
February 21, 2007 @ 12:08 am
Not being from the US, can anybody explain to me why you would save money by spending more? Do you pay a small fee for checks that aren’t rounded?
alex chiang: web 6.0 » “saving” money through bad accounting said,
February 21, 2007 @ 1:43 am
[...] The latest piece of digg-fodder was one of those “N tips on saving money”. Usually, those lists are pretty dumb (aka use your common sense), but I am oddly drawn to them, like the el cheapo Asian moth that I am. Today, one of those lists linked to this blog post about saving money by rounding up. [...]
Mark said,
February 21, 2007 @ 7:10 am
Twiddly-Doo - the “check book” being talked about here is not the same as a “cheque book” for payments. It’s a way of keeping track of your account. You’re not spending more: just recording more than you actually spent, then being magically surprised how much this error has added up to over time.
It’s like a cumulative version of setting your watch five minutes fast to avoid being late.
Thales said,
March 1, 2007 @ 7:21 pm
How in the world can you “save” money that you never had in the first place?
Use Your Grocery Receipt as a Cue to Save ∞ Get Rich Slowly said,
March 12, 2007 @ 1:27 pm
[...] is a variation on the wife’s favorite money hack, rounding up to the next dollar. That earlier tip didn’t sit well with some readers who thought she was just deceiving [...]
zen habits » Blog Archive » Nifty links for Feb. 8, 2007 said,
March 15, 2007 @ 11:22 pm
[...] Hacks: Save Money by Rounding Up to the Next Dollar. J.D.’s wife has saved $500 over the last 2 1/2 years with a simple little [...]
Jude said,
March 23, 2007 @ 5:27 am
You’re not saving money. You’re just not accounting for it correctly.
Stephanie said,
June 16, 2007 @ 10:09 pm
I do this in my own checkbook, but I also keep track of the roundoff underneath the other total in Parentheses so I have an easier time balancing my checkbook. I guess this is only recommended for people who can keep their hands off the extra cash.
DooDah said,
July 11, 2007 @ 3:47 pm
I will add my 2 cents to the topic..
To those who say it isn’t saving because it’s your money. That is the defination of saving isn’t it? It’s simply a tip to trick you into saving. I plan on implementing this immediately.
Instead of putting away $100 a month into a savings account, you cut it up into smaller pieces and it happens automatically. You save your $100 in 200 - Fifty Cent transactions.
This would work for a lot of younger people who aren’t as strict in transferring their one lump sum of money every month, or who don’t have a high yeild savings account to transfer money to. Better yet, transfer your “change” savings into one of the said high yeild ING accounts.
Earning is when you accumulate money that wasn’t yours, saving is when you accumulate your own money. Simply put, anyway.
Domainator said,
September 9, 2007 @ 11:59 am
How did you find that great wife? My wife would like to spend money.
JDuncan said,
February 18, 2008 @ 1:42 pm
Would you all be compelled to round up and give that ‘extra’ to a non-profit organization for a good cause?