Saving is always a good idea. In good economic times this could lead to a better financial standing and could even lead to wealth. In bad economic times, it could help you avoid financial ruin. To put it simply, savings lead to wealth and debt leads to poverty. Savings could help you buy your dreams such as that house or car that you have always dreamed of. It could also help you build that nest egg for retirement. Savings could also help you get out of a rough spot such as a family emergency. It is therefore important to save.
Here are seven tips to help you get on the right track in terms of saving.
1) Stop Spending More than You Make As I have stated, savings lead to wealth and debt leads to poverty. Make sure to keep your credit cards in check. Sure spending is very easy as you just have to swipe a piece of plastic at the terminal. However, paying for what you have spent is another issue. Just think of all the excess money you have to pay in terms of interest and late fees. Not to mention, each credit card has its own annual fee.
Another trap that people get into is getting into big time loans for vehicles or for property. Just look at what is happening to America
today. So many people are being kicked out of their homes because they could not pay. Whenever you make a loan, make sure you have income sources to pay for it.
Yet another culprit here, are those installment plans for high tech gadgets and appliances. Sure it is interest free and sure it could be paid in easy payment terms. But could you afford to make all these payments? Don't you have other bills to pay?
In short, cut down on loans of any type unless absolutely necessary. Spending money that you do not have only creates deficits. Look at what is happening to the government. It is now trillions of dollars into debt. The same thing could happen to you but in a smaller scale.
2) Cut Down on Utilities
Utilities are a big part of everyone's expenditures. Utilities include electricity, water, telephone services, Internet services, cable television services and cellular phone services. While most utilities are necessities in
today's world, they are a monthly recurring expense and eat up a chunk of your income. The bad thing about utilities is the tendency for people to misuse and overuse them.
In terms of electricity, try to use lower wattage bulbs and appliances. Turn off any appliance or light that is not being used. Also moderate the use of appliances that use up a lot of electricity such as air conditioners and heaters. If possible, use solar energy for your heating needs. Also, try to install insulators in your home to keep it warm during winters.
As for the water, try to wash clothes at the same time. Try to set aside a day to do all the laundry all at once. You could also save water by washing your car using a pail and some sponges rather than use a garden hose. Try to wash all the dishes at the same time as well.
For the telephone bills, there are several things we could do. First is to choose the plan that best suits you. If you are an infrequent user choose the cheapest plan. If you are a heavy user choose a plan that makes sense on per minute or per second charges. Also, try to limit the number of long distance calls you make. If possible just use chat in the Internet or send email.
In terms of our Internet utilities, try to choose a suitable plan for you. Try to see what makes the most sense in terms of cost per second or per minute. If you do not have much need in terms of speed and availability, use a dial-up. Why pay for unlimited use when you will be using it infrequently?
As for cable television, it is not always a necessity. Sure it is cool to be having hundreds of channels that range from sports to technology, but if you are not home often or do not have time to watch, it is best to cut it off. Try to also avoid buying too many Pay per Views. These Pay per Views add up by the end of the year.
Lastly, we have the cellular phone bill. Similar to the telephone bill, choose a plan that suits you best. Try to also limit your calls. Do not also waste usage sending useless jokes or quotes. Also, do not subscribe or buy too much stuff over the cell phone such as games, music and wallpaper.
3) Save on Transportation Costs
With very high gas prices, saving on this area is a must. There are several ways to do it. First is to use a fuel efficient car. According to Forbes.com, the most fuel efficient cars include the Toyota Prius, the Honda Civic Hybrid and the Volkswagen Jetta. The article could be found in TDIhttp://www.forbes.com/2008/11/12/vehicles-fuel-ef ficient-ecologic08-forbeslife-cx_sw_1112cars.html.
There are several ways to save more in this area. You have to make sure your car is well maintained so it doesn't guzzle too much gas. You could also try to commute using a bus or train. Sure it is less convenient but we are trying to save money here. Lastly, you could try to carpool.
4) Cut Down on food Costs A big percentage of most people's income goes to food expenditures. There are several ways to do this. We have to involve careful planning of what to buy, where to buy and how much to buy. We must also be always on the look out for special offers and for those ever useful coupons.
In terms of what to buy, we must first make a list and stick to it as much as possible. Always have your grocery list and calculator handy when visiting your local grocery or supermarket. Try to include on the list filling, yet inexpensive foods such as tuna, spaghetti, eggs, instant noodles and macaroni and cheese. Also check the food network or the Internet for cheap recipes such as soups, stews and casseroles and buy the ingredients for those. As much as possible stay away from prepared food as it costs more. Just buy the powdered version, raw version or the raw ingredients.
In terms of where to buy, buy from discount stores, dollar stores or wholesale outlets. As much as possible try to avoid convenience stores as these are expensive places to buy groceries. Try the farmers market as well for fresh produce. Buying stuff that is in season helps because it usually is cheaper.
Lastly, we must know how much to buy. As much as possible, try to buy in bulk. This is especially true on frequently used or consumed items. If you do not consume the product enough to warrant this then buy smaller packages. Watching the products expire and go to waste negates our efforts.
5) Budget and Save This is something that everyone should do but not every does. Make a list of expenses and allocate your funds with regards to these resources. As much as possible, try to allocate a portion of it towards savings. Try to use accounting software such as Quicken to monitor expenses and trends in spending.
A savings account is also a must for everybody. When people tuck away money in an account they do not see it. "Out of sight, out of mind" as the saying goes and people are less inclined to spend it. You could also try saving small sums in a piggy bank or cookie jar by placing loose change. This also adds up.
6) Source Your Items Properly Although, it is always nice to own a shiny new item especially when they are hot in the market, this is bad for us in financial terms. Usually new gadgets or appliances are expensive when they first come out. Wait for a few months or a year when the price drops. Also look for a sale on these items. Try to also take advantage of coupons or rebates for gadgets and appliances.
When it comes to buying books, try to buy surplus or second hand books. Sure they do not have that "fresh from the publishing house" smell but they are priced significantly lower. If you see something you need in a garage sale then buy it. Sure it is used, but it is cheap as well.
Also try to get hand me downs from family, friends and relatives. One man's trash is another's treasure. Try to also buy things off friends and relatives such as used appliances, books and gadgets at almost giveaway prices. If they do not want cash, try to swap. Yes the barter system is obsolete but it still works in modern day society.
7) Clamp Down on the Doodads
Doodads according to Robert Kiyosaki are things that clearly do not earn anything and may have little or no market value. This definition is sourced from Cashflow The E-Game. Doodads include appliances, gadgets, Starbucks
coffee, concert tickets and other expenses that are not exactly necessary.
Try to monitor your expenses on these items. Take what David Bach calls the "latte factor challenge" monitor your expenses in a day and check what you spend your money on. The latte factor by the way states that we all spend money on little things such as cigarettes, bottle water or soda. This however adds up through the years and ends up costing us a lot of money. This could be found in David Bach's book Start Smart Finish Rich.
In the end, saving money requires discipline and commitment. You really have to want to do it. All the tips in the world could not help you save if you are not up to the task. As long as you have the will power to save then it is possible.