Turning savings into a game can help you stash away cash
The Savings Ladder starts you small but can build for big ticket items
Previously, I’ve covered several techniques to trick yourself into being a better saver, but I found a new one via TikTok that caught my interest and took some of those small savings strategies to the next level for when you need to train yourself into saving larger and larger amounts. It’s called The Savings Ladder.
Like all good techniques, it starts small. Pick a small item you want to buy, and determine its price. Let’s start with a new outfit that costs $100. You begin putting away your money, but you don’t just save that $100. You have to keep three times the amount of what you want, plus the cost of the item. Once you’ve done that, you buy yourself that item. You have to get that reward to get a hit of dopamine and keep yourself from getting discouraged.
This puts you on the first rung of the ladder, and now you pick out a bigger goal. Let’s move on to a new laptop for $1000. You already have $300 leftover in savings from your first purchase, and now you have a headstart to savings the $4000 you need to purchase your laptop. Once that’s achieved, and you’ve rewarded yourself, you’ve got $3000 in savings to start your next dream purchase.
The TikTok user who popularized this technique, Jandra Sutton, says her family used it to pay off student loans and even raise enough for the down payment on a house. Overall, the concept of the ladder leans into gamifying your financial life to make it more likely you stick to your goals. By structuring the savings as a reward system and not starting out aiming for a big-ticket item first like a house, you give yourself chances to fail and then succeed and be rewarded instead of getting discouraged when your savings aren’t building fast enough. Of course, there are plenty of other ways to use gamification to jumpstart a savings strategy, from competing with friends and loved ones to save up the fastest for a reward or implementing the savings as a challenge like a No Spend November to stock money saved from skipping out on non-essential budget items like eating out or new clothes. Whichever works to get you motivated is the way to go.
Watching Out For Credit Card Fee Increases
As you know, we’re bullish on using points cards if you can to maximize your benefits for everyday expenses, but often those cards come with hefty fees. In recent years, we’ve seen hikes to those fees, which can seriously impact how valuable a card is for you. Most recently, it’s the Amex Platinum Card, beloved of travelers for its great points return on travel expenses (5x points on flights and prepaid hotels). Unfortunately, it’s now jumping up from $550 to $695. However, that does come with perks, including new ones meant to cover the $145 increase. These include a $200 credit on hotels when you book via the Amex Fine Hotels website, a $179 credit for CLEAR membership, $25 a month off at Equinox, $100 credit at Saks, and $20 a month toward a limited selection of streaming services. This is in addition to already existing credits like $200 airline incidental, free Global Entry, and up to $200 a year in Uber credits. Amex deems it worth $1400 total if you use every credit, but even using some can negate the whole card fee.
Amex is running a 100K points offer to get you in the door for potential new members, requiring $6000 spend in six months. While that may seem enticing, if you’re not a heavy travel spender, there are other cards out there that can earn you excellent rewards for a fraction of the price. Check out starters like Chase Sapphire or Capital One Venture.
Recently I advised some friends to lean into a hotel rewards card as they planned upcoming travel. They could easily earn a few nights free of the intro bonus alone, and with several trips scheduled through the end of the year, they’d get themselves almost a week of free stays. Hotel charges can eat up a ton of your vacation budget, so having some banked rewards can help leave money to more frivolous and fun parts of a trip beyond just where you sleep. Of course, to maximize these cards, you have to stay loyal to a particular brand, so be warned.
Adjusting Our Schedule - Just some housekeeping. You may have noticed a delay in newsletters since our last message. This is because we’re transitioning to a more monthly schedule to relax this summer. We will probably retain that through the end of the year while adding shorter link-heavy editions between exciting deals and articles. Have feedback or questions? Tweet me @RaeVotta!
Disclaimer: I am not paid directly to promote any services or products. All advice provided in this newsletter is general advice and does not consider your financial situation. In addition, I am not a tax professional.