Money Saving Tips

Are you one of those people that just can’t seem to save money? You go to work every day, earn a decent income and just can’t figure out where your money is going?  Here’s a few tips to manage your money outgo.

1.      Know your income and expenses: You must start here. How much do you bring home (net income) and what are you required expenses (housing, car payment, utilities, etc)? Make a complete list of all your monthly expenses, go back three months, so you can find everything and avoid the anomalies.

2.      Separate the “desires from requires”: Umm hmm, this is the toughest step, we tend to blur the lines of what we want vs what we need. This step is easy to do when you don’t have any money but add money and the whole picture changes. Try the “last dollar test”, if this was my last dollar, would I spend it on this? This will help you while prioritizing spending decisions.

3.      Stop competing: Stay off social media if you struggle with this step. It will keep you spending money that you really don’t have. Watching friends and acquaintances on these sites can cause you to feel inferior, it appears that everyone is winning on social media; new cars, great trips, high end restaurants. Keeping up with the Joneses will keep you broke.

4.      Pay yourself first: Come hell or high water, the moment you receive a pay check, take at least ten percent up front and put it away for savings. This is in addition to the funds that are allocated for retirement (401k). Once you become more disciplined you can increase the percentage of savings. If you don’t have the discipline to do this on your own, use a direct deposit from your employer to a separate account. I suggest a credit union or financial institution that provides a no fee account.  Don’t get an ATM card and don’t get online banking. This will keep you from frivolously accessing the account.

5.      Pay Cash When Possible: See Step 2 (above) for why. I am a huge fan of credit, I’ve written many articles about it.  However, paying for items in cash will help you stay within your budget. It also saves you money. Spending cash is interest free, no annual or late charges on cash, and when its gone, its gone.

Saving money is a lot like working out. We all know we need to do it, we actually know how, but we simply lack the discipline to get started and/or stay the course. Mastering ones spending is the first step to financial freedom for you and your family.