Saturday, February 2, 2008

Keep the Change

Bank of America has a program in which, if you make a purchase using a BoA card, the difference rounded up to the dollar is deposited into a checking account. For instance, you buy a coffee for $1.65, then $0.35 is put into your account. Buy lunch for $8.89 and $0.11 is deposited. I don't know if other banks have a similar program. BoA is the only one I've heard of. Now, I don't use Bank of America myself, but I love this idea, so I decided to implement this myself.

Because I've been tracking my spending with Excel anyway for the purpose of establishing a monthly budget, it's easy to know how much I spend on each purchase every month. I simply put all these expenditures in a column, listed the differences next to them and totaled them up. For January, this came out to $12.57. Not exactly a mass of cash. But again, it's a little bit here and there that can really add up. This is another example of investment snowflaking. If I average an extra $12 /mo. through keeping my change, then that's an extra $144/yr. plus a few bucks of interest.

It's a way of creating yet another part of a larger savings and investment system. In a way it "taxes" me on these purchases by forcing me to save the difference in change. But this is the best kind of tax, because it goes into my ING savings account at the end of the month. Psychologically it's not stressful at all to deposit a mere $12-13 per month. Coupled with my automatic savings and other smaller savings techniques, this can't but be a positive contribution to my increasing net worth. I'm going to stick with this plan over the coming months and see how it goes.

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