- Personal Finance
Learning to Save Money
Saving money is both a skill and a gift. Some people are naturally born to save money easily. Others are spenders and have to learn to save money. It works best when we grow up learning to save, but many of us aren't taught these things as we grow up. Instead we have to learn as we get older or forever spend your time living pay check to pay check.
Myth: The More Money You Have the Easier It Is To Save
Many people live by the myth that when they get more money it will be easier to save and that is when they will start. However, statistics prove that most of us live above our means whether our means are very little or quite a bit. We want a bigger house, a newer car, a larger TV, a better computer, and more fancy services when we get more money. We have a want list that makes it impossible to live by the belief that we will start saving as soon as we have money to save. Instead we need to figure out how to start saving now, so that we can save even more when we get more money. This will let you plan for the future and be able to retire come time for your to enter the days of not working!
This famous family has the tried and true skills to help anyone cut back on their expenses. It is true that you may not want to do everything that they do (after all they are the cheapest family in America), but even taking on a little of their advice a little at a time will be helpful.
The first step to saving money is to understand where and why you are spending your money and to figure out how to cut costs in your life. To do this you will want to sit down and write out a budget.
- Start with your must have expenses. This should include any debts you have such as a car payment, credit card payment, or student loans. It should also include a food/household budget amount, gas expenses, your utilities, and your rent or mortgage (if you have one).
- Add a few luxuries things that you feel are important. This might be a cable bill or entertainment fund. You will want to make sure you have money to do a few things that you enjoy doing so that you don't get frustrated and then overspend.
- Make sure you are setting asside money for clothing should you need some and other occassional expenses such as car maintenance.
Now that the budget is set out, find out how much money you are spending verses how much money you bring in. It is important that you are spending less money then you are bringing in. If you are spending as much as you are bringing in or more then you are bringing in you need to figure out where you can cut expenses. Many of us have a wide range of places that we can cut expenses if we really think about it. Now is the time to find money to save.
Myth: Second Hand Isn't As Good
One great way to save on items you want or on clothing is to shop second hand. You can do this with a number of second hand shops many of which will be benefiting a charity as well. Some of these shops are full of great clothes with great price tags and some even have things that still have their new tags on them for a fraction of the costs. Garage sales are also a great place to get used items for great prices. You can also go to second hand book stores and get books for a fraction of the cover price (plus many have exchange programs so you can sell your books back for store credit).
Many of us have a huge number of things that we buy that we don't need. These things are eating from our savings and making it so that our futures aren't looking as bright as they could be. Cutting expenses doesn't mean you have to live bear bones and not enjoy life, but it does mean that you won't have as much excess in your life and this can mean a better future and a larger savings should something happen.
- Cut the Food Budget. You can cut your food budget by making a list and buying only the things that you need. Cut back on pre-pared and pre-packaged foods (you don't need to buy a Hamburger Helper instead buy egg noodles and a package of beefy soup mix or sauce mix. You will spend less, and make more!). Look for deals and avoid junk food which you and your family don't really need.
- Skip some of the extras in life. Many of our extras in life include coffee from the coffee shop, sweets, junk food, eating out, and going to the movies. Find alternatives to these extras so that you still have something, but for less. Get into making your own fancy coffees, make your own sweets and snacky types of foods, freeze meals so you can pull them out and pop them in the oven (which will be like eating out in how much work you have to do), and rent a movie from Blockbuster instead of going to the theater.
- Wait 48 hours before buying major purchases. This will let you consider how often you would use it, when would you use it, how whould you use it. Do you really need/want it? If you can live without it, you will know in 48 hours and you can save yourself lots of money this way.
- Be careful shopping for clothing. Make sure you will wear it before you bring it home. Many of us have clothing items with the tags still on them.
Myth: Saving Small Amounts Isn't Worth It
Every penny you save is another one you can have grow toward your future. You want to connect the pennies in your couch and add them to your savings. That five dollars you could put in your savings really does matter. When you start thinking that it matters you will see your savings grow faster and better.
A penny saved is a penny earned, right? That may be true, but if you don't ever work on saving your pennies then it doesn't really matter. However, armed with the right knowledge and a bit of tough love you can save more pennies! And every penny you save is worth more than each penny you earn.
Now that you know where to get money from it is time to figure out how to save the money. This is often hard for many of us. We see we still have money in the bank and off we go to figure out how to spend it. (I am so guilty of this one!) So, with that, how do you save money?
- Collect change in a jar. Make it so that you can't spend the money in the jar. Once a month deposit all you collect into the savings account. It might not be a lot, but every penny can help!
- Once you have figured out a budget that has you spending less then you make you can then place saving into your budget. Whether you are saving $25 a month or $2500 it is a good idea to make sure you are paying this out to your savings just like you would a bill. Go to the bank and move it to your savings account.
- If you get a raise, have that money put into your savings account (if you have direct deposit you can do that automatically). You don't need to increase your budget because you make more money now.
- Don't belittle the savings. If you can only save five dollars a month, don't belittle it. This makes it easier to spend it. After all, it is ONLY five dollars. If you get into that habit it will work with a lot of different numbers. After all, it is ONLY a hundred dollars.
- Only touch your savings for emergencies. Emergencies are defined as health, home, and work. If you have a health issue you can touch your savings account, if you are going to loose your home, or there is an emergency in your home that has to be fixed (plumbing, electricity, heat), or you need something in order to continue to work (work boots, your car fixed). Other then that, it can wait. You don't need a new computer till you have the money (that isn't part of your savings) unless you are making money with your computer. You don't need the newest movie, game, or fashion item. It can all wait.
Saving money has a lot to do with taking the money that you get and putting it somewhere that you won't spend. However it also has to do with spending less money. The less money you spend the better it will be for your savings goals in the long run.
Generate Extra Money
Another option to finding money in your life to save is to generate extra money for saving. This can be done in many different ways depending on the time you have to donate to the project. This doesn't mean you shouldn't work to save money from your earnings and your every day life, but you can increase your earnings with these ideas.
- Have a garage sale. If you have been living in your home for more then a year or two, you probably have things you don't use. Instead of letting them clutter up your life, sell them in a garage sale. Garage sales are perfect for knick nacks, small items of little worth, and general clothing items. Price it cheap and you will make your money one quarter at a time!
- Sell it online. If you have something that is likely to be worth something (more then a quarter or a dollar at a garage sale) you can try selling it online. Collectables, game systems, fancy electronics, and expensive brand name clothing often sell well on e-bay.
- Write articles online. If you are decent at the English language you can write articles online and you are likely to see money come in from that. If you only have a small amount of time for that then you will see a small amount of money, but over time this can grow into a nice sum.