A New Tool to Help You Save
Personal finance writers -- myself included -- tend to extol the virtues of cutting out unnecessary expenses (you know, that daily latte) as a way to save more. For example, eating out once a week might not seem like a budget buster. But if you crunch the numbers, you might be surprised to find out how much your weekly restaurant habit is costing you each year. That amount gets even bigger if you calculate how much you could've gained by putting the money into an interest-bearing account rather than spending it.
The new My Savings Machine tool at Bills.com makes it easy to see how much you could save by cutting out small expenses.
The tool lets you select expense categories, such as coffee, eating out and nightlife, and a weekly dollar amount you spend on that item, activity or service. If you don't want to cut out an expense entirely, just enter the dollar amount by which you expect to reduce your spending in that category.
Then you select the rate of return you expect to receive on that money if you put it in a savings or investment account. Finally, select a time period for calculating your savings. When you see your total savings, the number can be eye-opening -- and motivating.
For example, if you spend $50 less on eating out each week and put the money into a college-savings account earning 5%, that account will have about $47,000 after ten years. Suddenly, saving for your child's education doesn't look so hard.
Try the My Savings Machine tool to see how much you can save by cutting out a few expenses. And share your experience in the reader comments box below.