LESSONS WITH LINDA - Three ways to start saving money without thinking about it

Let’s face it. Saving money takes discipline. It’s much easier to buy a new car, splurge on a vacation in Maui or indulge in a Starbucks latte every day than it is to save money for the future. But financially preparing for emergencies, your child’s college education or your retirement doesn’t have to be difficult. Here are three ways to start saving without thinking about it.

Automate your savings

The beauty of automating your savings is that it can happen without you knowing it.

Schedule a predetermined amount to transfer from your checking account to your savings account every time you get paid. Many experts recommend putting 20% of your paycheck to your savings. Let’s say you get paid every week and set aside $150 each paycheck. In six months, you would have almost $4,000 saved, which doesn’t include what you could earn in interest. Not bad!

Automating doesn’t have to end there. If your 401(k) plan has an automatic escalation feature, set the contribution to increase by a certain percentage every year. Also consider allocating a raise or a bonus directly to your savings — you probably won’t even miss the extra money.

Enroll in a high yield savings account

Congratulations! You’ve done a good job of setting up automatic deposits into your savings. But where are you going to put your money so that it can grow? One option is a high-yield savings account.

The average percentage yield (APY), or the money you earn in your deposit account in over a year can be around 0.50% for a high-yield savings account. Compare that to 0.01%, which is the average APY for traditional savings accounts at most U.S. banks.

The difference isn’t huge, but while a $1,000 deposit in a traditional savings account will make you pennies in a year, a high-yield account can earn you dollars.

Not sure how to choose the best high-yield savings account? It’s important to consider the account’s APY, the minimum balance and deposit requirements and withdrawal options. Also make sure the institution is FDIC insured.

Cash your coins

Cashing in your coins is another way to save money without thinking about it. I know we are in the midst of a coin shortage, in part because people are using more plastic because of the pandemic. But many retailers have stop requesting that customers pay with their credit card.

When purchasing something in cash, I usually never give the exact change. By the end of the week, I have a lot of coins in my purse. All of those coins go directly into one of two large storage containers. In about four months or so when both containers are full, it’s time to make my coins work for me.

Go to your local bank or credit union

Many banks and credit unions will allow you to cash your coins for free if you are a member, but may require that you to roll the coins in wrappers. That can be very time consuming.

A better option might be to use the bank or credit union’s coin counting machine, if they have one. While the machines are typically free for members, non-customers may be able to use them for a fee. The perk of counting the coins at your local institution is that you can immediately deposit the money directly into your savings account.

Visit a Coinstar kiosk

If you don’t have access to a bank or credit union that offers coin counting services, you might want to consider Coinstar.

Coinstar is the company that operates those green coin counting machines you may have seen at your local supermarket. Be aware, the company charges a 11.9% processing fee which can vary depending on the location. That means if you have $400 of change and choose to receive the cash payment, Coinstar will charge you almost $48!

Want to avoid those fees? You could cash in your money for an eGift card at many popular retailers like Amazon.com and Home Depot for free, though retailer options will vary by kiosk. Make that eGift card work for you by waiting to cash your coins until you have to make a purchase. Once you buy what you need, make an extra deposit of the money you “earned” directly into your savings account.

In case you’re wondering, the largest amount of coins I cashed in at a Coinstar kiosk was $615! Happy savings everyone!