Even YOU can save while on a shoestring
Believe it or not, how much you save has little to do with how much you make and studies have proven this! It is time to put away the excuses; here’s a road map for finding money you didn’t even know you had.
That One Simple Word —> Savings
When you hear that one, simple word, do you feel a deep sense of guilt? Of course you do – we all do. That is because, like most Americans, 75% of respondents said they knew that their savings, targeted for retirement, were insufficient.
That’s cause for distress, perhaps, but not nearly as remarkable as the discovery that how much you save now has very little to do with how rich you are, today. This is so true in fact, that the middle-income earners managed to save less than the lower-income earners in that same study. Now this is remarkable when you think about it. Those with less saved more! What is the secret to their savings success?
For those of us who scrimp and save endlessly and with so little to show for it, these statistics are both annoying and embarrassing! It also means you have no excuse for inadequate savings.
The bottom line here is this: You just have to save, regardless! That means for every $10 you earn, you MUST sock away at least $1 in savings. Does not sound to be too difficult, right? WRONG!
UNLESS you have an iron clad savings plan, you will not save a single red cent! The trick is in the purpose and the plan!
WHAT IS YOUR EMERGENCY PLAN?
You are ready but you feel at a loss as to how you will come up with that extra money. You are already barely eking out a living. You can manage if you train yourself to think differently. That is the first part of any good plan. You have to think right. If you don’t think right towards your money, you won’t be able to manage it.
Your First Step: Rethink how you think about money
Saving money is a calm state of mind. Before you can even begin, you have to say NO to all of the spending—and stop thinking that you actually need all the stuff you’re spending all of your hard-earned money on. Just don’t spend.
That is simple enough! Say NO to all of the excuses and reasons for why you feel you MUST spend. Tell yourself, NO MORE EXCUSES, PERIOD! The very next time you want to buy something, take the $50 or $100 out of your wallet, instead and stash it away somewhere. Do you see the logic? That’s why you call saving. You don’t end up with stuff; you end up with the hard-earned MONEY.
Another new way of thinking will be to think of frugality as your savior. Become a confirmed cheapskate and do as your most frugal friends do. Pay special note to the fact that frugal friends fix the shower curtain instead of buying a new one. Sit down with Depression-era relatives and ask about how they made ends meet despite even desperate times. You want to learn to economize.
The next step in rethinking is to become inspired. Spend all of your spare time online and search out those frugal Web sites. Look at “living cheaply,” “frugal living” and “voluntary simplicity.” You’ll find a ton of good Web sites devoted to living on less, such as: thefrugalshopper.com, simpleliving.net and frugaliving.com.
Learn to turn shopping time into activity time. Go for a bike ride, walk down memory lane, take the kids to the park; do anything and everything that you can to take your mind off shopping and spending. It works!
Step # 2: Time to Save!
There are any number of creative ways to live on less. However, you don’t want to make your life miserable. Here are some great ways to economize without missing quality of life.
Don’t think too much about it – just do it! Direct deposit is now your best friend! Your money is whisked away into your IRA, 401(k) or money market account—and you don’t have to do a thing to make it happen. Just drop by your payroll department and/or your bank and fill out the forms. Do it today.
Eat meatless some of the time. Go veggie. Prepare just three meatless days a week (without substituting pricey fish) and you could save $25 a week, which equals $100 a month, which equals $1,200 a year! Beans: You will learn to love them.
Play the money game. Whenever you get a $5 bill, put it aside for later. Alternatively, do the same with ones, with quarters or even all your spare change. You’ll have a nest egg built up before you even miss a nickel.
Never spend the extras. Save all of your income-tax refund, your holiday money from the folks, the $20.38 overpayment check from the telephone company and any other extras and save every penny.
Negotiate and Haggle. You will be impressed by who will drop their prices, fees and interest rates: airlines, hotels, credit card companies, and even computer/appliance/rug salespeople. Before you even think about paying full price: Haggle a bit first.
Re-evaluate your money before you spend. That dinner out for the family will cost more than you spend on groceries in a week. That fancy pair of shoes is worth half the cost of a commuter pass. Learn what your money is worth to you, and you won’t be so quick to dispose of it.
Don’t overpay on your taxes. Yes, you love to get a big refund from the IRS every spring. The fact is, though, you’re effectively lending money to the government and interest-free. Go through your tax return and see if you can hold out until Dec. 31 to maybe get a $150 refund. That way you can use your money NOW should you need it for an emergency and bank the refund when you get it later.
Decide to raise your insurance deductibles. Reassess each of the deductibles for your various kinds of insurance. If you can raise them at all, your premiums will drop.
Bring your mortgage costs down. Look at whether or not the rate is too high. If it is, look to refinancing – this will save you money. Now, let’s look at the private mortgage insurance (PMI) you’ve been paying because you didn’t have enough money to make a 20% down payment. If the equity in your home is greater than 22%, make sure that it is canceled. It’s the law. Finally, pay up on your mortgage. If you can manage an extra $100 per month, you will save thousands in interest costs over the long haul.
Toss out those nasty, glossy catalogs. The best-known form of spending temptation known to man or woman is the catalogs. Sure they are fun and look good, but are they worth the risk of spending? Chuck them straight out into the trash.
Refuse those unnecessary fees. Like the $2.50 you pay just because the ATM is right there, right now as opposed to walking two blocks to your bank, where you don’t get charged at all every time you use your cash card. Alternatively, how about the late fees for returning videos? These really add up. Don’t forget those fat charges banks hit you with when you write a check that, well, bounces.
Clean it yourself. I’ve discovered a very cool trick: When a clothing label says, “Dry Clean Only,” I wash it. On the other hand, dab out that little mustard stain with an old-fashioned cleaning device cleverly known as a sponge.
Don’t pay for a pro. If you can fix the neighbor’s garage door and she can paint the kitchen: go for it and save.
Put your raise in the bank. Put that tiny 3% to 5% boost in the paycheck on your direct deposit and live on your previous salary.
Pay smart for long-distance. Evaluate all of the different telephone plans for value. Pay attention to what you are currently paying per minute. Some dial-around codes or cheap calling cards (one without a surcharge per call) may give you a better rate. Not only will you save, but also you may find you won’t need to speak to Alvin in Schenectady so often.
Just buy the basics for the pets. Say no to pet pampering. Does your dog need those t-bone snacks? Does your cat need that rabbit-fur-lined toy? Probably not.
Vow never again to pay full price. The next time you must shop, hop onto the World Wide Web. Look for eBay, half.com and craigslist.org for excellent sources of “lightly used” goods—everything from books to jewelry to office furniture—even the entire first season of Star Trek on video.
When you are focused on being savings minded, you’re thinking about money changes. Before you know it, you have substantial savings.
If you are serious about having a healthy emergency money fund, you might want to curb the consumer in you. This means, instead of spending, saving. Of course, the number one, best way of saving remains to have a portion of your weekly paycheck automatically deposited to your savings account. If you like the idea of deciding, week by week, how much savings you will deposit, take heart and adapt a serious tip or two. It’s all good if the end result is better and more savings.
Hold that “mother” of all garage sales, once and for all! Do your homework and literally do a house inventory. Journey back, all the way back, into the furthest reach of every closet and decide that, if you have not used it for more than six months, it will have to go. Most people have at least $1,000 worth of garage sale items hidden away in their home. This turns out to be a veritable gold mine for many.
Just how much do you need that nasty, pack-a-day smoking habit? In Washington state, that’s easily $5 a day—or about $1,800 a year—that can go right into your savings. This does not even begin to touch the savings in insurance and health care.
Tame the driving tiger in you. Instead, carpool or use public transportation. This will save you on gas, insurance and maintenance costs—not to mention any money spent on a headache. Using the IRS’s 2002 mileage reimbursement rate of 36.5 cents per mile as a proxy for the cost of commuting, you could save $1,141 a year by driving half the time for 50 weeks of the year (based on a 25-mile roundtrip commute). For an even more serious approach, consider nixing your car if you live in the city. Some cities are now implementing progressive programs that allow you to have access to a car without the ownership hassles (e.g. “Flexcar” in Seattle, Portland and Washington, D.C.)
Buy items used. The average consumer spends about $1,750 a year on clothing and its upkeep, according to the U.S. Bureau of Labor Statistics’ most recent Consumer Expenditure Survey. You can easily cut that in half by shopping at consignment shops and auctions, though the life of the goods may be a bit less than buying new. To account for that, the annual savings may only amount to 25%, or $437.
Become a homebody. At just over $1,800 a year on average, entertainment spending has a way of eating up the best-planned budgets. Consider the library for books, music and movies. Eat out less often. The average person spends $2,276 a year on eating out. Try cutting your spending in half on both areas for annual savings of more than $1,900.
Cut your housing costs. While a move across the tracks may save some money, moves are expensive. Consider renting out a room in your house. The average housing costs per person in 2004 were just over $13,200. In metropolitan areas such as Seattle, rooms easily go for $400 a month. Figure about $20 of that goes to increases in utility costs, and you’ve still realized annual savings of more than $4,000 before any income taxes.
Cut up every one of your credit cards. Build an emergency fund first to handle most unexpected expenses. This allows you to become your own lending agency. Credit cards can be a cash-flow management tool, but paying only the minimum will keep you in debt for years.
If you’re the average American with at least one credit card, you probably have close to $8,523 in credit card debt, according to industry research group CardWeb.com. At an average APR of 14.4%, it could cost you as much as $1,100 a year in interest rates alone. By simply waiting until you’ve saved enough money to make purchases, you could eliminate those interest payments.
If you’re very ambitious and follow all the above tips, you could be looking at savings of some $12,000 a year. Figuring you can invest that at the historical rate of return of 10%, your savings do start to compound nicely—and rapidly. Instead of the debt, go for the emergency fund and save.
Here are even more tips to help You Save Money:
1. Don’t settle for interest checking. Have a separate savings account that can’t be as easily accessed as a checking account.
2. Keep your savings in a different bank - one that’s off your regular route, or perhaps even in different town. That way you won’t be tempted to dip into it every time you visit the bank to make a checking deposit.
3. Buy short-term savings bonds, which have 6-month to one-year maturity dates. You will get a higher rate, while at the same time keeping your money close in case of real money emergencies.
4. If you can, open the account under two, different names and require that both signatures be required to make a withdrawal. Two people can debate each withdrawal and keep each other in line.
5. When you get your paycheck, immediately put a minimum of 5% in your savings account. After just a year, you’ll be amazed by how much you have actually saved and you will feel great about it.
Visualize abundance and wealth everyday.
Am I actually suggesting that you practice some sort of mysticism that will make you into a “money magnet”?
Perhaps yes, maybe no.
Call it what you wish - a mind game, mysticism, New Age—the solid fact is that behind every wealthy man and woman is a positive attitude toward money.
Look at it like this: It costs ZERO one way or the other to have either negative or positive thoughts. So why not have positive thoughts AND increase the ODDS?
There have been many studies done on the thought patterns and the mind-set of some of the richest, most successful people in the world. The one thing that they all had in common was a positive attitude toward money and their ability to earn and keep it.
WHAT HAVE YOU LEARNED? RESPECT MONEY AND THINK POSITIVELY TOWARDS MONEY. THIS IS A GREAT START TO MEANINGFUL SAVINGS.
The key to being able to raise emergency money when needed most is to be in the right frame of mind about money in the first place. Think positive about money and spending and save. You can’t beat that equation!
Do you truly want to save?
Take a serious look at how you spend and then change it. Quit smoking those cigars,
take in a roommate,
park your car—and you’ll save as much as $10,000 a year.
It really is just as easy as all that!
Are you finding it harder and harder to blame savings shortfalls on your measly pay check?
Will it surprise you to learn that how much you save has little to do with your income?
Well it is very true, in fact. It has more to do with whether you want to save and are willing to adjust your finances to boost your savings.
A recent study by Venti’s and Wise, “Choice, Chance and Wealth Dispersion at Retirement,” found a very wide range in how much people at the same income levels were able to save for retirement. The study pointed out that it wasn’t just the higher income folks who managed to save the most. Indeed, even people in the lowest income groups were able to save more than some of their middle-income peers—by as much as $100,000.
What was their conclusion?
Persons with little savings on the eve of retirement have simply chosen not to save as much and spend more over their lifetimes.
The key, then, is simple enough: Spend less than you earn and SAVE MORE.
It is easy to see why some people get into financial trouble.
Some people don’t stop and think that earning money is only one part of the financial health equation. The other critical part is learning how to manage money and save.
A big part of the problem for so many is that people just don’t know enough about their own financial reality. They don’t even know what they earn, they don’t even know what it takes to live comfortably, and they don’t even know their true, discretionary income.”
What can be the solution?
People need to educate themselves. Sit down with your monthly bills and statements and figure out your real income and outgo. Then, decide if you like what you see. If not, create a realistic plan for changing it.
To help with the process, ask yourself these four essential questions:
• What’s my true and current financial picture?
• How do I choose to live?
• Can my current money support this and how do I really want to use my money?
• How can I best make use of my money?
Treat managing your money as if you would any other household chore and allot enough time for it each month.
Make note that: Many of the financial tools that have made life more convenient—such as credit cards—can promote very bad financial habits and prolong debt when misused. Credit cards should be used ONLY as the cash-management tool that they are and not as a borrowing tool.
Keep in mind that you are spending tomorrow’s money when you put things on a credit card. You keep locking yourself up and losing your freedom, bit by bit.
The bottom line on financial health is Stop Spending.
Regardless of the time in history and no matter what the current state of the economy, no matter what the current trends are, no matter what the unemployment rate is or where interest rates are, some money-saving ideas always work and stay true.
Big changes come from small steps and if you determine to put even one of these many savings secrets into place, you will see big change in your life.
You will now learn a variety of savings tips. You will learn how to best place your hard-earned money in a variety of down-to-earth ways. What you will learn about will set you up nicely in your day to day life.
Money Saving Tip #1:
The great Albert Einstein once said, “It takes a genius to see the obvious.”
Let these wise words guide you today. What he meant by that is that sometimes the simpler things in life are the most powerful ... but because they are so obvious, we tend to ignore them, and not let them work for us.
One of the most powerful money making ideas is this: keep a daily diary of everything you spend. Go to the dollar store, buy a little book, and carry it with you wherever you go. Write down every penny – each single penny - you spend. It’s just as simple as that.
If you do this one thing, you will find that something magical happens in your financial life in only a few weeks.
There is something incredibly powerful about writing down each of your expenditures. It makes the flow of money through your life more realistic and exacting. It shows you simply and clearly just exactly where you are spending your money, on what and why. Once you know this, it becomes much easier to control your spending. You will feel empowered with self-control and this will encourage saving.
Many people who have taken up this practice have not only learned something about themselves, which they never before understood, but they are often astounded by the simplicity of the lesson learned.
For example, a person could realize through examining their notebook that they actually spent nearly $1,000 throughout the year on diet soft drinks, snacks and candy bars! Since their job only brings in $20,000 per year, they realized that 5% of their entire income was being frittered away on something entirely frivolous. The person gave up the snacks and drinks, and found they had enough money to go on vacation the following year. If you had the choice between snacks and a much-needed vacation, which would you choose? Of course you would choose the vacation, we all would.
The point is, it was their daily expense log that helped achieve the insight and clarity they needed to realize control of their finances. That’s what a simple spending record will do for you - it will give you much needed control over your spending, and thus your financial life. There may be nothing but a 75-cent notebook and a ballpoint pen between your life of financial struggle and financial freedom.
Money Saving Tip #2:
Stop deficit spending! We all know how Uncle Sam has been creating debt—spending more money than our country takes in. It’s called deficit spending. Well, don’t do the same! The same rules apply to you and me. Using those nasty little plastic cards may be the “American Way,” but it’s a debt making way and creates plenty of fools each new day.
Today, the average credit card holder is carrying around $8,000 in plastic debt!
Spending yourself into such debt with a credit card is certainly very easy, as many of you already know. The reason is psychological. When you give that clerk a credit card, it’s just not the same as handing over a stack of green dollar bills. Would you as readily hand over a pocketful of ten-dollar bills as toss a credit card across a counter? Probably not. This one is a no-brainer for most!
Credit cards put you in debt and keep you there. Even for people with good incomes, paying your credit card debt down to zero can be amazingly difficult. In addition, make no bones about it; credit card debt will sap your financial strength just as readily as an open vein will deplete your physical body of its very life force. Using a credit card by choice can quickly turn to using it for need. Once you get to that point, you are already in trouble and it becomes time to get some help.
There is no secret in freeing yourself from the credit card game. You must take out a pair of scissors today, cut your cards in half, and begin paying them back, slowly but surely. Be sure to always pay more than the minimum amount due, even if it is only $10 more.
Once you stop adding to the debt, even small payments will eventually, add up. You can get out of debt, if you are patient and self-disciplined. Once your cards are history, you must adopt a strict pay-as-you go policy. Instead of buying now and paying later, save now and buy when you have the full amount. This is key to being able to save.
Once again, stopping credit-oriented consuming is one of the most powerful financial tools available to anyone today. Why not pick up this tool and use it for yourself?
Money Saving Tip #3:
Sell all of your junk. That’s right; it’s high past time for a serious yard sale. Search throughout your house or apartment for every single item that you don’t really need, and then sell it all! Every last piece!
Take an inventory. The truth is, most people are astounded by what they own - and how much money they have tied up in items they no longer need and use. Why let it just sit and collect dust while it could collect interest instead in a savings account?
You could easily be $600, $1,200 ... even $5,000 richer by the end of the week. As an added bonus, you’d have your place cleaned up, and you will have a fresh feeling of beginning all over again. A garage sale is an excellent way to start. Not only do you clean out your house, but also it often gives a psychological boost that helps people get control of their life and money.
Money Saving Tip #4:
Ben Franklin said long ago: “A penny saved is a penny earned.” Yes, it’s still true and still one of the most powerful moneymaking tips in all of history.
Understood well within Franklin’s famous statement is the difficulty of saving.
It’s tough to save and much easier to spend! We all know that! That’s why every penny saved truly is earned - because it takes so much effort to hold on to that cash! If you can do it, it will work magic in your life. Having a savings account will de-stress your life. Imagine being ahead of your bills, rather than behind. When you are ahead of your bills, you entire life comes under your own control. You sleep better at night. Your mind is freer to come up with new ways to make more money and save more. Saving is contagious - once you let it get started!