Sometimes I have so many thoughts about money swirling around in my head, I can’t consolidate them into one coherent message. Here are my random money thoughts for Tuesday, September 20th.
Saving a Dollar Every Time You Spend Money
I heard a commercial on the radio for a Wells Fargo checking account that forces you to save by transferring a dollar into a savings account for every transaction on your debit card. I instantly wondered how many transactions I do in a single month. So I looked it up.
58 transactions on my two main cards in August (this includes bill payments). I probably have a few more on other cards, so let’s call it 70 transactions a month. That means I’d be saving $70 a month, or $840 a year. Am I gonna do this?
Heck no! I think saving games like this are stupid. It makes people think they are making real progress towards saving money, when in reality they are saving some low, variable amount. If all you can do is save $70 a month, let’s just say I hope you aren’t planning to retire anytime soon. Like ever. I say pick an aggressive monthly saving goal and drive towards it.
Plus, I think this particular “saving” method will lead to more spending. People will enter into a mindset that spending money is good for their savings. You know what’s better than spending $20 to save $1? Saving $21.
Quiznos Coupon Song
Remember a few years ago when Quiznos ran an ad campaign where if you brought in any coupon they would give you a dollar off a sub? Do you remember the marketing genius that was weird looking rats singing horribly? Please watch this:
First of all, it’s a great marketing campaign if people remember it years later. Second of all, way to run a coupon campaign without actually spending any money on printing coupons. You guys at Quiznos are smart! Maybe Quiznos marketers can figure out how to eliminate the national debt too.
15 Years of Technology
I ran across a Best Buy advertisement from 1996. You can see the whole thing at this link. Here are some of the highlights:
- $399 for a 27″ Panasonic TV (that probably weighed 172 pounds)
- $140 for a Magnavox AM/FM CD Boombox with Dual Cassette Deck, Remote, and Detachable Speakers (I think this one runs on 28 DD batteries)
- $2,400 for an Acer desktop with a single core 166 MHz processor, 16 MB of memory, 2GB of storage, a 14″ color monitor and a printer. (My $600 desktop today has a quad core processor at 2.93 GHz [each core 17x higher frequency], 6 GB of RAM [375x more memory], and 1TB of storage [500x larger])
Isn’t it awesome to think where we will be technologically in another 15 years, and how much cheaper things are going to become? I know one thing; I better get a freaking jetpack for my 40th birthday!
Share Your Random Thought!
I can’t be the only one that has random money thoughts. What’s the first thing that pops into your head about money? Share it in the comments if you love me!
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
Sending a dollar off to a savings account certainly should not take the place of a normal savings plan. However, $840 isn’t a shabby amount. I do something similar in that I never, EVER give anyone change, and any change I get in return goes directly into a change jar at home. That has netted me something in the neighborhood of $1,000, but over a longer period than a year.
I don’t spend much cash. In fact, I am at a time in my life when I have more than I need, so buying stuff isn’t a priority. I probably wouldn’t get a lot out of the WF scheme, but there are some who DO need to spend cash/debit and could find this to be a good **ancillary** method of adding to savings.
I wouldn’t discourage it, as long as people didn’t, as you say, spend JUST to get the $1 in savings. And let’s face it: anybody doing that really isn’t too bright, now are they?
$840 is not going to get you to a lush retirement, but it’s also nothing to sneeze at either. If you can save that amount with little impact to your everyday spending habits, there’s no problem that I can see. Just so long as you don’t skimp on saving elsewhere, and end up in a hole.
In 1997, I bought a 32″ TV for like $800. That was big money and big TV at the time. I treated that thing like it was plated in gold. Which is good because I still have it and it’s still our primary TV in the family room downstairs. But, it’s definitely funny to see how things change so much over time.
I remember those old heavy TVs. I had a 37″ from my parents that I literally left in my third floor apartment because I would radther buy a new flat panel than move that TV one more time. The apartment complex ended up buying it from me for $50. So I really felt like I won with that choice.
My local credit union has a similar program with a set amount transfered to a savings account. My wife wanted to do it, but I talked her out of it and we just transfer a larger amount each month on our own and get the cash bank from a rewards credit card, which we always pay off each month.
I’m not a fan of those “automatic savings” options. Like Kevin said, it may lead to unnecessary increases in spending, but I also think that it’s not smart to automatically take out money from a person’s account when people already have trouble keeping their accounts balanced. What happens if a person writes a check or pays a bill online then goes to the store to buy groceries before the other payment clears and the transfer ends up causing an overdraft? Is the bank going to forgive it? Or, what if it’s a lean month or there is another timing issue and the transfer actually causes the overdraft? I’m sure there are better ways to teach people to save than this.
When I started my BoA debit card, it had the “Keep the Change” Program on it automatically. It rounded up to nearest dollar, and put that much in your savings. (spend $0.75, debt charge for $1 and $0.25 to savings). This accounts for even LESS than $1 per transaction from WF above, but for the first 3 months BoA matched all contributions 100%. So, I could go buy a slurpee for $1.03 and have $0.97 transfer to savings (my own money), then BoA would give me another $0.97 free!! That means my slurpee only cost me 6 cents (1.03 – 0.97).
Yes it was only for 3 months, but I was tempted to make purchases 1 item at a time. As an added benefit, my 50 item shopping basket can now go thru the “10 items or less lane!”
Although I am past my 40th birthday, I would like a jetpack too.
that account that was at wachovia they encouraged a monthly contribution as well which they capped at $100/month but they gave you 5% interest on it. i was building up an emergency fund in that account. now that it is wells fargo they dropped it to 2% but there is no cap on what you can put in
I often think I need a jet pack since I hate driving. I am waiting for this guy to go on sale http://www.ubergizmo.com/2011/09/the-martin-jetpack-will-be-available-in-2012-for-100000/
I had totally forgotten about those commercials, and then a coworker sent me a link to it yesterday afternoon. Creepy coincidence!
Interesting post Kevin, thank you.
I remember that commercial, can you also send me the link
Cathy? Anyway thanks for this informative post Kevin.
One of the key secrets of money is that little amounts matter. Even the smallesr amount of money, given enough time and the magic of compound interest will grow into a million dollars. Regular small amounts of money can grow into a very large pot of money.
Most of us think that if we get that bonus or increase in salary our life would be easier. But in my experience, it is actually the same. It is hard to understand why I can only save little money. I had read that I should save at least 10% of my income. I think it is kind of low but when I tried doing it, I realized I thought wrong. I have been making some progress and maybe I can think of a way for the money I saved to work for me.
Saving a buck per transaction isn’t going to amount to much, but if you do many things like this then it can add up right? I think we should consciously save though, playing those games will help, but not a lot.
In 15 years, you’ll be able to get a tablet for free, just need to sign up for the data plan. 🙂