July 21st, 2011
Community Karma: Renee’s Painless Savings Strategies
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**This summer, we’re excited to present “Community Karma,”a weekly series featuring people just like you sharing their financial stories, personal money tips, how they over overcame hardships, and more!**
In 2002, Renee Prink and her husband bought a brand new Honda CRV, paid for in full with $24,000 in cash they saved up. The couple plans to do it again this fall, perhaps a Subaru this time.
With two kids– aged 11 and 17– to support, how do the Prinks save enough money to buy their cars in cash, keep a rainy day fund and build up their daughter’s college savings?
Renee shares her favorite—and simple!—tips on how to live below your means and save up for the important things.
Start saving for retirement as early as possible. Hear that, recent college grads? As soon as you land your first job out of college, you should immediately start saving for retirement. Renee had her first “real” job at 22 and began her retirement savings immediately. Now, she and her husband regularly max out their 401(k) contributions to make sure they have plenty saved up for the future.
Use payroll deductions. Renee has a portion of her paycheck deposited directly into savings. That way, “you never even see that money,” she says. Out of sight, out of mind? For Renee, at least, it bulks up her savings and keeps her spending in check.
Save your raise. Whenever Renee receives a pay raise, she puts most of it into savings. She figures her family can continue to live without the extra funds.
Start college savings early. Renee’s youngest daughter already has a healthy college savings account. When Renee found out she was pregnant, she and her husband immediately put $1,000 from their tax return away to save for her higher education.
Getting reimbursed for small work expenses? Save it! Renee drives for work sometimes and gets reimbursed for gas and wear and tear to her car. It doesn’t amount to much, maybe $1,000 or $2,000 each year, but she puts it away into savings.
Fund your “rainy day” savings first. Though Renee and her husband like the idea of using cash savings to pay for a car, they would never “bottom out to buy a car,” she says. Before making any big ticket cash purchases, they make sure they also maintain a rainy day fund that has enough to support 3-6 months of living expenses. That way, they’re be prepared for any financial emergencies.
Bottom Line: Renee’s best piece of advice? “Look for ways you’re not going to miss the money—it’s painless.” She and her family have all they need, but aren’t excessive on wants. And that means they’ll drive away happy when they pay cash for their new car.
What’s your best savings strategy?