Reroute your bill payments. You finally got rid of your land phone line, dropped the premium channels from your cable subscription and resigned from your gym. Set up automatic transfers so the money that used to go to these monthly bills goes instead to savings. (If you're still looking for expenses to trim, read "Ditch those money-sucking bills" for candidates and techniques.)
Tax yourself. Americans love tax refunds. The Internal Revenue Service says the average federal tax refund in 2008 was $2,371, up 4% from $2,280 in 2007.
Those getting refunds don't really care that they're giving Uncle Sam an interest-free loan of their hard-earned cash. They're afraid of having too little withheld and having to pay on April 15; even more, they like the forced savings that gives them a big payback every spring.
But it's pretty easy to set up your own forced-savings plan so that you, rather than the feds, get the maximum use of your cash. It takes just three steps:
- Figure out how much more you should be getting in each paycheck. Kiplinger's tax withholding calculator can give you a rough idea.
- Fill out a new W-4 form (.pdf file) reflecting the new withholding amount, and give it to your employer.
- Then arrange automatic transfer for the day after each payday so that extra goes right to savings.
More from MSN Money
Sock away rebates and refunds. Any check that's not a paycheck is a good candidate for immediate deposit into your savings account. Some people take a similar approach to work-expense reimbursement checks. They've typically long since paid for the travel expenses or whatever other purchase for which they're being reimbursed and say that saving the check is a relatively easy way to save.
Do you have another way to capture savings that might otherwise be lost? If so, share it on the Your Money message board.
Published Feb. 9, 2009
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