Although clipping coupons at the kitchen table may be something you remember your grandmother doing, a whole new generation is catching coupon fever. With websites and TV shows devoted to extreme couponing, including The Krazy Coupon Lady and TLC’s Extreme Couponing, it’s easy to see why more people are turning to coupons to save money for their household.
But after coupons are redeemed and money is saved, what should you do with your spoils? If you don’t have to re-invest it all in gas money and rent, use it to improve your financial situation. Here’s a list of the five best places you can store your coupon savings for a rainy day and a brighter future:
1. Invest in Retirement
Nearly 25% of all Americans have less than $1,000 saved for retirement and 43% have less than $10,000 saved, according to the Employee Benefit Research Institute Retirement Confidence Survey. If you find yourself in either camp and are saving money from couponing, make a point to set some aside for retirement. If what you save from couponing doesn’t seem like enough for retirement, think of it this way: if you invest $1,000 each year from coupon savings into a Roth IRA, and your account earns 8% annually, in 20 years, you’ll have almost $46,000. That’s nothing to sneeze at.
2. Establish an Emergency Fund
More than one quarter of Americans have no emergency fund in place. In the case of a major medical emergency or job loss, an emergency fund is crucial. Most experts recommend that you have at least six months’ worth of living expenses set aside in case disaster strikes. The best way to set aside emergency fund monies is to budget for them. Another method is to save your grocery receipts and add up how much you saved by couponing at the end of each month. Then, contribute this amount to a savings account earmarked specifically for emergencies.
3. Invest in Your Kids’ College Education
While it’s certainly a debate as to whether you should invest for your retirement or your kids’ college expenses, if you save enough money from couponing, it’s possible to do both. Consider investing in a 529 college savings program with your savings. Depending on where you live, you may get a break on your state taxes, so check with your tax preparer.
4. Eliminate Credit Card Debt
The average American household carries more than $15,000 in credit card debt. But no matter how much debt you’ve got piled up, pay it off now. If you’re saving money by couponing, devote your extra funds to paying down your high-interest debt first. Again, save your grocery receipts and add up your savings at the end of the month. Devote all of or a large portion of these funds to your debt even if you’re also building up an emergency fund or saving for other purposes.
5. Pay Off Student Loans
Student loan debt can put a serious drag on your monthly finances. Until you pay it off, it’s not going anywhere–even if you file for bankruptcy. Unfortunately, like your degree, your student debt is yours forever. Your coupon savings may not be able to wipe out all your student loan debt, but they can make a dent in it.
Once you’ve decided where to put your savings, consider automating your efforts. Each month, have a set amount deducted from your checking account and deposited directly into your savings or retirement account. You can also set up automatic payments towards your credit card statement or student loan bill. Pretty soon, you might find that saving money and paying down debt is just as easy as clipping coupons.
In what other areas can you use your coupon savings?
This is a guest post by David Bakke, an extreme couponer and small business owner who writes about cash saving strategies on the blog Money Crashers Personal Finance.