Money won’t create success, the freedom to make it will – Nelson Mandela
Saving money is not hard when done the right way. Saving is a habit, the more you practice, the better you become at it.
The first thing you need to do above anything else is to eliminate your credit card debt with high interest. When you calculate the amount of money you spend on interest each month you will realize that this is one of the factors contributing to saving failure. Here are other tips that can help you get out of debt:
1. Set attainable goals
Calculate how much you need to set aside each month in order to attain your goals. If you plan to buy a house 5 years from today, you need to figure out how much you need for your down payment and save religiously. Make sure that it is a realistic goal and that you can afford it.
2. Make a budget (separate the essentials from discretionary spending)
Once you have determined your goals, you need to make a weekly/monthly budget. Again, you need to make sure that this budget is realistic (we are not trying to stop living; we are simply trying to cut the unnecessary expenses). Remember that discretionary items include: dining out, clothing, entertainment, vacation, electronics, etc. And the essentials include: food, mortgage, transportation, medical expenses, insurance, child care, etc.
3. Get rid of the unnecessary expenses in your life.
Take a look at your spending patterns and see if there is anything that you can get rid off. Look over that list again and again and again. Think twice before getting that daily latte in the morning. Just for the latte: $5 per day is costing you $25 per week and $100 per month or $1200 per year! It might be a better idea to buy a coffee machine and make that latte at home. Further, think about the lunches that you spend cash on, $15 per day ends up costing you $300 per month and yes it’s a staggering $3,600 per year, whereas groceries for breakfast/lunch/dinner cost a fraction of that price! I am not implying that you should reject your co-worker invites all the time; I am saying that making a lunch at home is not only a cash saver but also is much healthier than eating out! So ladies, pack your own lunch!
In terms of going out with friends, why don’t you invite them over instead of spending a fortune on that restaurant bills.
4. Only use your credit cards when necessary
Although you should be using your credit cards in order to improve your credit score, the rule is: if you cannot pay for it right now, do not buy it. Therefore, it is ok to use the credit card if you have money in another account to pay for it at the end of the month.
5. Open a savings account
Although I am somewhat against these low interest accounts, these work for conservative people who are either not interested in investments or who are not ready to invest. This account enables you to keep track of your savings and gives you the opportunity to earn interest on it.
6. Fill up that savings account as soon as you get paid
You can sign up for automatic transfers if that makes it easier for you and the bank can withdraw those savings automatically from your paycheck.
7. Use a jar
Yes I know this is old school but it works, if you have change in your pocket just throw it in there, for instance if you are planning a trip in a year this could be an interesting addition to your savings.
8. Make sure you save for an emergency fund first
If you don’t already have an emergency fund yet (3-6months of salary) it is time to start contributing to one.
9. Find a higher paying job if you believe that it is impossible to save in your situation
In addition, some other tips that will help you in the future:
– Stick to your monthly savings plan
– Take very good care of your belongings (this way you won’t have to replace them as often)
– Only buy what you can afford
– Only buy what you really need
– Negotiate your car insurance payments (sometimes all it takes is one phone call)
– Wash your own car
– Re-examine your telephone bill ( are you always going over the data plan limit?)
– Refinancing your debt (i.e. mortgage)
– Wait for discounts! (Do you buy clothes in stores at full price? Chances are that you are overpaying, why not wait for a discount? Use websites such as ebates.com to get free stuff)
– Exchange your credit card for one which allows you to accumulate travel points or the like
– Pay bills on time to avoid late fees
– Avoid ATM machines that charge fees
– Borrow books from the library instead of buying
– Avoid vending machines
– Keep distance from extravagant friends
– Save energy around the house
– Cook at home and bring your lunch to work
Before spending ask yourself the following questions :
– Do you really need that cute black dress today?
– Do you need three cars in your household?
– Do you need cable?
– Do you need all this food from Costco? Or is it going to waste?
– Do you need that new car this year or can it wait?
You can still enjoy your life, money is not everything
Author: Karolina