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Fun Ways to Save Money

Americans are snapping their wallets shut and socking money away amid economic doldrums. The nation’s personal savings rate—hovering at zero just two years ago—has risen to about 5 percent—the highest rate in 15 years, according to the U.S. Commerce Department.

Experts say paying down debt and saving more is a sensible response to job layoffs, declining home prices and dwindling 401(k)s. Smart people, particularly those age 50-plus, are going to have to save. “If you don’t want to work forever, ultimately you’ll be responsible for paying for retirement,” says Dallas L. Salisbury, CEO of the Employee Benefit Research Institute (EBRI).

Still, saving money seems like dieting. You know you should do it, but it isn’t a lot of fun. “Financial entertainment”—programs, incentives, games and devices that make thriftiness more fun—can help ease the pain. Here’s how:

Watch the pennies, and the dollars will take care of themselves.

American households have an estimated $10 billion in spare change stashed in jars and piggy banks, according to Coinstar, maker of coin-counting products. For years, Akron, Ohio, welder Wesley Lance, 63, emptied his pockets into a growing collection of coffee cans. When Lance’s credit union waived coin-sorting fees during Roll Your Change week last year, his wife, Linda, 59, a bakery worker, hauled 20 cans into the bank using a child’s red wagon.

The teller announced the mounting total as she fed the sorting machine. “Everybody stared at me while the teller called out, $1,000 … $2,000 … $3,000,” says Linda. “It was just like winning at the slot machines in Las Vegas.” The final tally—$4,120.18—was a shock. “If we’d known we had that much, we’d have stuck it in a CD.” Meanwhile, it’s stuck away safely, waiting for interest rates to go up.

Roll Your Change is one of many programs around the country sponsored by America Saves, a national campaign sponsored by nonprofit, government and corporate groups to encourage money-saving habits. Check for more information.

Stash your credit and debit cards and pay cash for purchases—you’ll spend up to 20 percent less, studies show.

Credit cards, gift certificates and debit cards are like Monopoly money, says Priya Raghubir of New York University’s Stern School of Business. However, if credit cards are a necessity, she suggests keeping a record of expenses by categories like food, gas or entertainment.

“Cash has a face value, so it feels more real, more transparent,” Raghubir says. “There’s a little pain attached to parting with it.”

Fred Ecks, 43, of Boulder, Colo., learned long ago to live on half his gross income from investments. In the mid-1990s, the former computer programmer slashed spending to pay down $12,000 in credit card debt. He banked half his salary, investing it mostly in bonds. He was so thrifty, he would eat at home before joining friends at a restaurant, then just order a beverage.

“I didn’t get money from my parents or hit it big in stock options or win the lottery,” he says. “I just saved the majority of every paycheck for years. It’s not very sexy, but it sure does add up.”

These days, Ecks says, he volunteers about half time and goofs off a lot. He lives “like a king” on about $1,200 a month, including $609 on entertainment and electronics, $300 for food—he cooks at home—and $93 for health insurance. He has a bike instead of a car. He paid cash for his house, a three-bedroom, one-bath bungalow. He tracks every penny to eliminate mindless expenditures. “A Starbucks cappuccino costs $4—but how much will I enjoy it?” he says.

Think about what makes you happy, says Avi Karnani, vice president of strategic innovation at “Choose your smiles and cries, we say. Sure, you can bring coffee from home, but maybe a Starbucks latte reminds you of your former work life and energizes you for the job hunt.”

Avoid status purchases, he adds—shared experiences bring more happiness than material goods. For free online tools to help track expenses and save money, check out MoneyRight at

For those who already know the joy of saving regularly, a new nonprofit, SaveTogether, makes it easy to spread the message while helping others reach their financial goals. Using an online philanthropy model, SaveTogether helps low-wage individuals triple their savings through the power of matched savings accounts.

Here’s how it works: A saver puts aside $25, a donor makes a secure, tax-deductible $25 donation on the website, which is then matched by $25 from government and participating nonprofits. Prescreened savers are profiled on the website and file reports on their progress saving for college, a new home or a business start-up.

“These stories of people who are at the bottom of society’s pyramid can inspire us all to be better savers,” says Dylan Higgins, CEO and founder of SaveTogether. will soon include a map of local programs that sponsor Individual Development Accounts, matched savings accounts for the working poor.

In her first job, Marylyn Ervin, 73, made 50 cents an hour working for the telephone company. “I saved up and bought my first new winter coat. That was such a big thing, because before I’d always worn hand-me-downs,” says Ervin, who was one of 12 children on a Depression-era farm.

Now co-owner of a successful family grocery store in Morganfield, Ky., Ervin enjoys telling her 23 grandchildren childhood tales of getting only one toy at Christmas or using a kitchen dishpan as a sled. Telling stories to children and grandchildren helps transmit family values about hard work and money, says Nathan Dungan, author of Prodigal Sons and Material Girls: How Not to Be Your Child’s ATM.

“Grandparents can play an important role in passing on values like thrift, saving for a rainy day, deferring gratification and surviving bumps along the road,” says Dungan, who founded Share-Save-Spend, a nonprofit that teaches financial literacy.

Many families have difficulty discussing money, says Dungan, but grandparents can tell children things a parent can’t. “You can’t just tell these stories once,” adds Dungan. “Children hear something different at age 5, age 10, age 20. It’s the repetition of storytelling that reinforces a family’s core values around money.”

Barbara Cornish, 56, of Detroit, struggled to save money every month, but she withdrew $50 to $100 from her small savings account at Communicating Arts Credit Union when tempted by a new purse or a pair of shoes. “I just wasn’t disciplined,” she says.

Now she’s a regular saver, converted by an innovative prize-linked program called Save to Win. Last year, eight Michigan credit unions pooled resources to award a $100,000 grand prize and smaller monthly cash prizes in a savings raffle. For every $25 deposit, participants earn a chance to win, up to 10 times a month. Save to Win has been so successful, with 11,700 account holders putting away $8 million, that the program will continue this year.

Prize-linked savings programs, which blend the thrill of a lottery with a traditional savings account, are popular in more than 20 countries, says Harvard Business School professor Peter Tufano, who helped design Save to Win.

“The average American household already spends $514 a year on lottery tickets, and in poor families lottery tickets are the savings plan,” he says. “If you saved that money—with the power of compound interest—just imagine how much you would have.” In fact, that sum invested annually in a CD yielding 3 percent a year would grow to more than $6,000 after 10 years.

“Saving money can be really fun,” says Cornish, a former customer service worker. “You feel like you’re accomplishing a lot just putting away just $25 to $50 every month. Who knows how much that will be by the end of the year?” Her goal is to save $2,000 as an emergency fund for car or home repairs.

Every February, Dave and Jenny Buck of Minneapolis declare a ban on restaurants, movies, even coffee shop lattes. They clean out the pantry and the freezer, buying only milk, fresh produce and a few generic items. “We call it economic camping,” says Dave Buck, 50. “We just get down to basics.”

Six years ago, alarmed at the ads bombarding their young sons, now 12 and 14, Jenny Buck persuaded the family to take the “no-spending month” challenge. “The first thing you learn is how much extra time you have because you aren’t running to the store,” says Jenny, 47, like her husband a fundraiser for nonprofits. Instead of dining out, the family hosts potlucks, borrows movies from the library, or looks for free activities like playing cards.

Jenny Buck estimates no-spending month saves them $2,000 to $3,000. It has been such a success, the family now extends its frugal ways through March. “The overriding principle for us is about really appreciating the life we have,” says Jenny. “Without adding anything more, we are rich beyond belief.”

Pay yourself first. “Save automatically on a regular basis, either through a workplace retirement plan or on your own,” says Steve Brobeck of the Consumer Federation of America. “Instruct your bank or credit union to transfer a modest amount every month or pay period.”

Congress may pass a law requiring businesses to offer individual retirement accounts, which would help people without a workplace plan. Meanwhile, save 15 cents of every dollar earned, pretend that money doesn’t exist, and live off the rest, says EBRI’s Dallas L. Salisbury. “After a few years, when you see how much you’ve saved, that’s what’s really matters."

Elizabeth Pope writes about work and retirement.