Gas prices have fallen over the course of the year and rapidly in recent weeks. You may have noticed this in news headlines and at the pump. The news stories may say this is great for the economy because Americans will spend more over the holidays. That might be true for most Americans but if you’re reading this blog that won’t be the case for you. This is a great opportunity to capture the money, no longer spent on gas, in meaningful savings.
According to bankrate.com, “It will be a discount of about 76 cents per gallon from July, when the national average hit a summer peak of $3.75 per gallon.” That is a 20% price reduction. In other words, if you were spending $100 on gas each month you now have $20 to save. Over the course of a year that is $240. In recent weeks gas prices have dropped even further, increasing savings opportunities. According to MarketWatch, prices are under $3 per gallon at one-third of gas stations nation wide. Start by doing a quick calculation of approximately how much you are saving on gas each month.
Easiest Savings Tip Yet
Saving the amount you were spending on gas, may be my easiest savings tip yet. One reason for that is it doesn’t reduce your lifestyle. Also, you don’t have to find a way to cut back. The reduction in your existing expenses just happened! Therefor, its a “painless” way to save. However, it does take discipline. You have to take the time to make savings a priority. One way to do that is to make that savings automatic.
Make it Automatic
Set up an automatic transfer the day after your next paycheck is deposited, from your checking account into a savings account. That way you don’t have to remember to save money. You simply won’t be tempted to spend it because it won’t be in your checking account (for long). Eventually gas prices will come back up but you’ll already have this savings in place. Treat it like a bill that you have to pay. Make adjustments elsewhere in your budget to continue to save. Lower gas prices give your savings a jump start.
What To Do with the Savings
Here are a few ideas of what to do with these funds. First, start an emergency fund, if you don’t have one. Open a high yield savings account and make this account dedicated solely to the purpose of emergency savings. Or you can set this money aside for an expense you anticipate in the future. Maybe you need to replace a computer or mattress. These type of expenses can throw off your monthly budget. Alternatively, you can establish or increase contributions to a retirement account.
Set aside small but consistent savings and let falling gas prices help you SaveUp!
This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.