First Person: I'm on a Tight Budget, but I Still Pay Myself First

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Budgets get pulled tight sometimes because of illness, moves, job loss, natural disasters, or family emergencies. This is especially true in a bad economy. In our present bad economy, I've experienced four of these reasons for tightening my budget since 2008, from job loss to family emergencies. I can now say there are simple ways to keep saving even on a tight budget.

Round up

When budgets get pulled tight, the only spending tends to be on essential items. This is when the preferred "pay yourself first" method of saving goes out the window. That $10 or $50 you want to save from the outset might make the difference between paying and not paying a utilities bill. Pay-yourself saving is in the first round of budget trimming, right along with dinning out for lobster salad, sirloin and chocolate mousse. So, to keep saving on a tight budget when the only spending you are doing is for bare essentials, round up.

With each purchase, round up the total paid amount. Depending upon how tight the budget is, you can round up the total amount to the nearest $5, $1, $0.50, $0.10 or even $0.05. Anything counts. I'll never forget the first year I discovered this. It was a tight-budget year and to safeguard against bank fees and overdrafts, I rounded up by $0.20 every time I made a purchase for food, sundries or gasoline, which was about all I was buying. At the end of the year, I discovered I had saved $620 in my account. Impossible, I thought, but, no, on a round-up of a meager $0.20 per essential purchase, I had put by $620 without even feeling the loss of it.

Trade in a whim

A bolder approach to saving on a tight budget is to trade in a whim purchase for money saved. For instance, you're in the supermarket and you have gotten the needed items on your list when you see your favorite potato chips on sale at 2 for 1. Purchasing those chips would be a whim purchase. You can trade that whim in for money saved. There are two ways you might do this. Both involve pretending. The first is: Pretend you buy both, then move that amount out of your spending column, as you would do if you handed over the payment to the clerk, and into your savings column. The second is: Pretend you buy one, then move that lesser amount to your savings column. Either way, round up the pretended purchase cost and include that in the savings column, too.

Lie to yourself

We round up, pretend and lie to ourselves. Work your budget from paycheck to paycheck. Start at zero with each new paycheck regardless of what your bank statement gives as a balance, and there will be a balance. If you are rounding up and trading in whims, you will have a balance, small at first, of course, but it will be a surplus balance. Of course you must continue to balance you bank statement, and this is where lying comes in. After you balance your statement and see the small but growing balance, lie to yourself. Say it ain't so. Say you have zero in your account. And then leave it alone.

Record keeping for saving on a tight budget can work for cash expenditures, check writing and ATM Debit card purchases (and for the up-and-coming mobile phone transactions). For cash payments, carry bank deposit envelopes with you. Put that cash from traded in whims and round-ups directly in a deposit envelope then drive or walk to your bank's ATM deposit machine. For ATM Debit card or checkbook payments (and mobile phone transactions), use a bank registry as you do for checks. Parenthetically record the actual cost ($7.01) while recording the rounded-up cost in the balance column: $7.50. Record traded-in, rounded-up costs parenthetically in the balance column ($3.00). This provides your working budget balance. Lie to yourself about the "real" balance and stick to your working budget balance. You'll see, you can still save on a tight budget, even with only essential purchases made.

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

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