Saving: How to make saving money a lifestyle
by Karon Brandt
To become a "saver" rather than a "spender" requires motivation, discipline, and practicing good savings habits.
The lifestyle of smart savers includes (1) Planned savings and cutting costs (2) Paying off debts, and putting that "borrowed" money into savings instead (3) Not spending to begin with - as in deciding the item is a "want" rather than a need (4) Investing money to make more money and (5) Earning more money.
(1) Thoughtful, pre-planned savings programs tend to become a habit quickly; the money is not missed that isn't put into the budget to begin with. This means some earned income should go into a direct deposit account, a 401(k) program or a separate savings account, which remains untouched for anything but the direst emergency.
Know your money-in/money-out situation. By making a budget, you can spot unnecessary purchases, and you will observe areas which can be reduced or eliminated altogether. You have to "know the flow" before you can stem the tide. Now's the time to put into practice many of the tips you've heard in the past.
Suggestions for cutting costs are listed, from large items to smaller. The ongoing accumulated savings will add up to big bucks. Once you start saving, you'll come up with more ideas of your own.
1. Refinance your home for a lower mortgage rate or buy a smaller home. You should seriously consider this if you're overextended, and the loss of your home is a real future possibility.
2. Get rid of one over-sized, gas-guzzling car and buy a smaller, economy car or motorcycle instead - if you need a 2nd or 3rd vehicle. Rotate car use. (Think "responsible" college student, quick errands, and short-distance drives.) Smaller usually means fewer costs to maintain and store; repair and insure.
3. Get rid of unnecessary "luxury" items like yachts, 4-wheelers, snowmobiles, exotic pets, the 5th cell phone, and the 3rd computer. Sell for a reasonable amount and put the money in the bank or pay down debt.
4. Save on food: Avoid eating out or bringing home fast foods; shop with a grocery list; don't buy junk foods - you are what you eat; buy a freezer and fill it with terrific-sale items; plant a garden; buy in bulk; use coupons; join a food co-op; watch for in-store specials and stock up that extra freezer.
5. Shop second-hand shops for (some great name-brand!) clothing, furniture, children's items, appliances, glassware, etc. at a place like Goodwill or the Salvation Army. Also check out yard sales and household auctions. You can triple your spending value, and this kind of shopping can become addictive. No impulse buying. Buy only what you need; set a spending limit.
6. Comparison-shop online before spending over $25. Research. Do online shopping forearmed with knowledge of what you want (with free shipping and no check-out hassles!) or go to economy-pinched, highly-competitive brick-and-mortar stores.
7. Check out "Consumer Report's" for Best Buys. Look in your library or subscribe for $26/year. You'll save hundreds of dollars by buying the top recommendations from lists of hundreds of the most popularly-purchased consumer items per year.
8. Save on gas, electric, water, etc. by using less. You've heard it for years. Now motivate the family to put it into practice: by turning off unused appliances, taking shorter showers, cutting down on fuel costs, raising the temp on the A/C, etc. Promise a monthly family reward like an ice cream night, dinner or movies for cooperation.
Remember, the "reward" can't cost more than the "savings." But even family "bribes" are acceptable to make things work in the beginning.
9. Insulate your home. Replace the roof, furnace, windows, A/C and all appliances with newer, more energy-efficient items, as needed.
10. Agree with others to reduce the costs of gift-giving for birthdays and Christmas. Make gifts or offer free services by way of "coupons": This coupon can be used for 4 hours of babysitting, on demand; this coupon is worth one home-cooked lasagna; this coupon entitles you to 3 "errand trips."
(2) Pay off credit-card debts from the highest to the lowest interest rate. As you pay off one, destroy the card and pay off the next. Hidden charges, late fees, and constantly-raised APRs make credit cards a budgeting nightmare.
Destroy all but one credit card, for emergencies. Part of the "Savings' Lifestyle" is the pay-as-you-go plan. If you can't pay by cash or check, don't buy it.
(3) Save by not spending to begin with. Prioritize. What do you really need and what is passing fancy? Avoid impulse purchases. Practice decision-making with every purchase. Become aware of what you use money for. Saving will become habit-forming.
1. What about giving up a bad habit, like smoking? Now is the time. If you're a 3-pack a day family, you could save hundreds of dollars per month. You'll be healthier, and you know that living in a smoke-free environment is better for kids and pets. Extra reward: you could save on devastating health care costs by not developing heart or lung disease or cancer.
2. Do you really need your daily caffeine kick at $4 per cup?
3. Do you really need daily newspapers or 10 different magazine subscriptions with the 3 computers you have at home that give you instant news?
4. Are you drinking too much? Or wasting money in another "bad habit" way? Reconsider. You can start a "new-day resolution" any time. Think of your health and the emotional rewards for the people who love you.
5. If you can save a usually-spent-amount by overcoming a bad habit, reward yourself with a monthly treat like a day at the spa or golfing.
6. Bartering: trade off child care for transportation or computer services; plumbing for car repair, etc. You can get very creative with this idea.
(4) Investing money to make money. Make your savings work for you in safe investments like CDs with long-term growth. Talk to a financial manager or check out SuzeOrman.com for great investment ideas.
(5) Earning more money. How about an extra income from another job, a 2nd family member going to work, creating a home business or taking in a boarder?
If you can figure out how to bring in more money, plan to save it and not spend it. That money should go into an immediate savings or investment account. Or pay down debts more quickly. Once you're debt-free, the savings can grow very quickly and the mental relief will be immeasurable. To some degree, money can buy happiness - when you save it.
Money equals Security, Personal Empowerment, and Peace of Mind.
Saving money becomes habit-forming because the results are so rewarding.