This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

5 Ways To Build Your Savings Rate





It's a strange paradox: Consumers have never had more tools for saving money, yet have never done a poorer job at it.

The Internet age has made unprecedented new tools available to help consumers save money. These tools include:

  • Online retailers
  • Traditional retailer websites
  • Mobile shopping apps
  • Email sales alerts
  • Coupon web sites
  • Review and recommendation websites
  • Auction websites

With so many ways to save money, why can't many people seem to do a good job of it?

Opportunity lost

In addition to Internet shopping tools, a variety of other developments over the past 20 years or so have helped bring inflation down near 1950s levels. Here is a decade-by-decade list of average annual inflation rates from the Bureau of Labor Statistics, with the rate for this decade based on data through the third quarter of 2012:

With shopping tools so prevalent and inflation on the decline, you might expect people to be saving more money. Instead, according to the Bureau of Economic Analysis, personal savings rates are well below the rates of most decades past:

Americans are using lower prices as a means to buy more rather than save money, thus losing an opportunity to get ahead. Many of the shopping tools that aid modern consumers are also marketing promotions that tempt Americans into making more purchases than they otherwise would.

Making your savings count

How can you make sure your savings aren't waylaid by clever marketers? Here are five ways to make your savings count:

  1. Itemize your budget. Plan on how much you should spend on particular items, so when you save money, you can identify the amount saved and direct it toward savings, rather than just having the extra money remain available for additional purchases.
  2. Include savings in your budget. Another effective budgeting technique is to include a set amount of savings in your budget, rather than just looking at savings as what's left over when all the spending is done. If possible, enforce this with automatic transfers into savings vehicles.
  3. Substitute, don't add on. As new products and services become available, think in terms of substituting them for existing expenses, rather than always adding new ones. Examples would include replacing your land line with a mobile phone, rather than having both, or subscribing to a streaming video service instead of having a cable subscription, rather than in addition to having cable.
  4. Put your savings away. Get any money saved out of your checking account as quickly as possible, and into less accessible savings vehicles where it won't be so easy to spend.
  5. Shop for the best savings account interest rates. Squeeze as much as you can out of the money you do save by finding the highest savings account rates you can. Consider online savings accounts, since these often offer higher rates.

Using modern shopping tools purposefully is a great way to save money -- and gain the added satisfaction of using the marketers' tools against them.

null

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs