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Have you been working for years but have nothing saved? Do you feel like you can’t breathe until you get your next paycheck because you don’t know if your last bill might cause your rent check to bounce? Or maybe the electric company will have to fight the cable company for your money.
You are not alone. Read on for nine easy tips to help you save money. Even if you choose to only follow one, you will be in a better position tomorrow than you are today.
Organization is a crucial step toward saving more money. I suggest going back to the basics and begin by writing down every penny you spend over the course of one month—literally every penny. Don’t forget the coffee at Dunkin’ Donuts, the newspaper at 7-Eleven, house bills, entertainment bills, etc. As you write items down, also categorize them: food, entertainment, household. After one month you should have a clearer picture of how and where you are spending your money, and seeing these numbers for the first time should open your eyes. At this point, you must choose what to reduce. You work hard, so you get to decide what stays and goes. Make a point to reduce spending by 10%.
2. Use budgeting software
There are great services available that will consolidate all your accounts in one portal. This will give you a macro view of your financial position. Once again, knowledge is power, and being able to look at all of your account balances should help you make better financial decisions across the board, ultimately saving you more money. Mint is one highly regarded site in this field.
3. Limit yourself to one credit card
Simplifying your life is an important part of saving money. When you have multiple credit cards, store credit cards and debit cards, it’s very easy to lose control. Multiple balances, interest rates, and due dates can overload a person and leave room for error. Error in this case could cause overdraft fees, bounced checks and high interest rates. Limit your charging capabilities so you can keep track of your spending. This will also help with monitoring your cash flow.
4. Open up a high-yield savings account online
Have you ever looked at the current interest rate on your checking account or your savings account at the local bank? It’s probably below 0.5%. Every dollar your money makes for you is one less dollar you have to save or earn yourself! So open a high-yield savings account. Most are FDIC insured, have slightly limited accessibility and pay higher interest. They can pay more because there are no bricks-and-mortar expenses associated with these institutions. I suggest moving most of your short-term savings to this type of account, leaving enough money to cover one to two months of bills and expenses in your checking account. As bills are paid, you can replenish your checking with transfers from this account. However, the majority of your money should be earning the highest interest rate it can with the same banking protection.
5. Sign up for your company retirement plan
The easiest way to save more money is to make it automatic. Signing up for your company’s retirement plan is one way to do this. Not only will they take the money right from your paycheck, but they might even give you some of their money! This company match is another example of your money working for you. Signing up is one of the best things you can do. If you are already enrolled, I dare you to increase your contribution by at least 1%. Because it’s pre-tax, you will not feel the hit dollar for dollar in your net pay. Even with the increase, I have to believe your bills will still get paid and your lifestyle will adjust to amount of net pay.
6. Put your savings on autopilot
Every month you should have an automatic contribution go into an investment account or high-yield savings account. This is like paying yourself, and if you don’t think about it, your lifestyle will adjust again. Make the money disappear by moving it into an alternative account automatically.
7. Don’t spend $5 bills
This tip was given to me by a great client. He simply stopped spending $5 bills. Every time he gets a 5-spot, he puts it in a jar in the kitchen. When it reaches a certain point, he puts it in the bank. It’s a simple tip that helps him save money. Give it a try!
8. Buy used or introduce yourself to the local librarian
The message is: Stop buying new books! Get a library card. You can borrow books, music, DVDs—all free, and all the same items you’d have to pay for at the bookstore. If you are a person that needs to own materials, go online for the best prices. The value of the knowledge inside is not based on the price you paid.
9. Take public transportation or carpool
A great money saver is to carpool to work, to the game, to movies, etc. If you want to go further, take public transportation. There are discounts if you buy in bulk and sometimes they can actually get you to your destination faster, thanks to dedicated lanes.
There you have it—nine easy tips to save more money. If you take only one of them to heart and “own” it, you’ll see your savings grow.