This is a link to the sixth in an ongoing series billed as 30 Day Challenge to save $1,000 by Ramit Sethi at IWillTeachYouToBeRich.com, his blog on personal finance (banking, saving, budgeting, and investing) and personal entrepreneurship. His series outlines the various ways we can keep money in our pockets.
The term “fuel hedging” refers to airline companies’ tendency to try to protect themselves by estimating the price of jet fuel and locking in prices to protect themselves if prices go way up.
Ramit’s suggesting isn’t technically “hedging”, it is, instead, “averaging.” When you know prices will be higher at a later date, save the difference between what you are paying now and what you will be paying later. The trick is to save it in a separate account — move it out of your checking account. Out of sight, out of mind, for one thing — if you don’t see it in your checking account, you won’t spend it on something unnecessary. A lot of money “vanishes” because it’s not clearly marked for a specific savings purpose.
Also, when money is automatically saved, there is more savings.
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For previous tips: Tip #1: Pack lunches for the rest of the week, Tip #2: Turn your thermostat down 3 degrees, Tip #3: Sell something on eBay today, Tip #4: Involve your friends in your savings challenge, Tip #5: Optimize your cellphone bill