We all know that we need to save. Yet few of us save. Why? Because there are too many competing priorities for money in our lives. But, you can save for those larger purchases, for the emergencies that will surely come, for your children’s university, for a house and for your retirement. You may think you don’t have enough money. You may think you’re living paycheck to paycheck with nothing left over after you cover your expenses. You may think you have to earn more money to have enough money to save.
The truth is that saving is not a matter of mathematics. It’s emotional. Once you make saving a priority, then and only then will you save. Until you decide to pay yourself first, you will not save. By the time you reach the end of the money, there won’t be enough left for you. Here are some quick tips on how to save money.
Tip #1 – Know where your money is going
Keep track of what you spend for the next month. Write down each purchase, or ask for a receipt. But at the end of the month, your task is to account for every penny.
Tip #2 – Get control of your debt
Unsecured credit card debt and auto loans are two of the biggest drains on personal finances. Adopt the attitude that if you can pay for it in cash, you don’t need it. Stop using your credit cards and paying high interest rates on things you probably don’t need anyway. Stop buying new cars on credit that lose their value as soon as you pull them off the lot. Snowball your way out of debt, then stay out!
Tip #3 – Are you a collector?
Lots of people spend money collecting things. Perhaps you collect records, books, antiques, coins, dolls… look at your collections. Do they have any real value (a limited quantity in high demand), or are they one of thousands with no real resale value? Do you have duplicates? Are you buying more than you can enjoy?
Tip #4 – Review your budget for gifts
Do you buy expensive gifts for a large list of friends and family? Can you do something instead that might have even more meaning for the person receiving the gift? Sometimes giving a homemade consumable gift to someone whose house is messy and including a handwritten note will be the best gift they receive.
Tip #5: Use the “sleep” rule.
Before you make a major purchase (for most people, that would be anything over $300, but your personal limit could be lower or higher), get some sleep. Why do you think a salesperson goes to such lengths to close the deal before you leave the store? They know that if he has time to think about it, he may decide that he really doesn’t need to make the purchase right now. So, go home and sleep. If you’re still sure the next morning that buying is the right thing to do, then go ahead and do it (assuming you’re not violating Tip #2 by using a credit card or going deeper into debt!).
Tip #6 – Always write a shopping list before you go shopping
Shop with a list and don’t buy anything that isn’t on the list. There has been a lot of research on creating in-store displays to entice shoppers to make those impulse purchases. If you stick to your list, you won’t fall prey to that marketing ploy. Another good technique for grocery shopping is to use the envelope method. When you get paid, write a cash check for the amount of your grocery purchases for that pay period and put it in an envelope. When the envelope is empty, you stop shopping for groceries until the next payday when you can refill the envelope.
Tip #7 – Have a party
No, I don’t mean a total costly affair. But instead of going out to dinner, why not invite some of your friends over? You could even ask them to bring their favorite dish and have a potluck meal. You could talk about a good book or check out a $1 Redbox Rental. Entertainment can still be fun without being expensive.
Tip #8: Declutter
Go through your closets and dressers and organize your clothes. If you’re like most people, you have clothes that need to be mended, clothes that need to be thrown away, and clothes that no longer fit or you just don’t like anymore. Put aside the repair and repair it instead of replacing it. Clothes you no longer want can be sold at a garage sale, taken to a consignment store, or even donated to Goodwill for a tax deduction (just ask them for your tax receipt).
Tip #9 – Buy used
Not everything needs to be bought new. Did your washing machine break down? You can get a used one at your local appliance store for $75. Does your kid go through video games in a day? Shop used in Hastings or at your local video game store. You can also purchase used film at your local store or your nearest Redbox store. Never, ever buy a new car. You will lose thousands of dollars of its value in the first two years. Let someone else take that hit; buy used.
Tip #10 – Reduce the consumption of convenience foods
It’s easy enough to bulk cook and freeze leftovers to create your own “convenience foods.” You can bring them to work with you while saving that $6-$9 fast food lunch bill. Not to mention, the food you make at home will likely be much healthier than the food you buy at your local fast food restaurant.
These are just a few tips to help you find ways to save money. But remember, unless saving becomes a priority for you, it will never happen. So get started today, even if you save just a little. Make saving a habit and you’ll be amazed at how quickly your savings account will grow.