Financial experts often focus on savings. First, they want you to be financially secure, to have enough money in an emergency fund in case a crisis occurs. They also focus on investment, whether this is a mutual fund, real estate, or sturdy little savings bond. This money makes money.
However, to have the money to invest, you need to either find money in your existing budget or make a bit of extra money. Last time I wrote about moonlighting for a goal. Moonlighting to create an emergency fund or to put the initial payment into a retirement savings plan is a worthy goal.
There is another way to find this money, and that involves money that saves money. Let’s say that you’ve managed to save a bit of money for an emergency fund. You plan to sit it in the emergency fund, which is located in a low-interest but easy to access bank account.
If you own your home, there are other ways that you can save money in the long term. Let’s say that you currently pay $130 a month for gas and that most of this goes to heat your water. Like most of us, you probably have an inefficient tank-based water heater that turns on and off all day, even when you are not home. You decide to invest in a more efficient tankless hot water heater. This saves you money on your energy bill. If you were able to put the money into the heater up front, you now save $60 a month without even thinking about it. You didn’t need to do anything differently.
This money can go to your retirement savings or your emergency fund. Just pretend it’s not there, and have it automatically withdrawn from your account at the same time as your gas bill.
If you have to get a small loan to pay for a home renovation, calculate how long it will take for the energy savings to pay off the loan. Use the savings to pay the loan, then start putting them into a separate account.
There’s more than one way to save, and while this might be a circuitous route, it will yield savings for a long time.