Easy Money Saving Tips
First lets review some concepts. Everything we earn gets allocated somewhere. There are two categories of goods we purchase, depreciating assets and appreciating assets. A depreciating asset is one eventually tries to go to a value of $0 sometime after we purchase it and an appreciating asset is something that can grow in value sometime after we purchase it.
An example of a depreciating asset is necessities like clothing, food, cars, furniture, durable good like big screen televisions, washer and dryers. Examples of appreciating assets could be certificates of deposits, gold, bonds, stocks, mutual funds, real estate or other collectibles such as art.
We choose where our money gets allocated, based on lifestyle, salary, and spending or saving habits. The following list are some tips or ideas of areas we have some control over to improve our saving and spending habits.
Build your savings
You should already be putting money into your 401k savings plan, if you don’t have one you can open a Roth IRA. You will also want to start saving in an account for unexpected expenses that will come up from time to time. In this account you should stride to save 3 months earning, incase you lose your job.
Track your spending habits
Keep track of everything you spend over a 1 or 2 month period. You can track this with an app, or use your checking account and print out a monthly statement. Analyze where your money is going, can you make any changes to save money? Focus on the non-essential things; can you do without some of them? Also look at the big expenses can you do anything to reduce them?
Credit Cards
Keep your monthly balances at zero. If you have balances, start paying back more than the minimum so they we get paid off sooner than later. Focus on the credit cards with the highest interest rates. Credit card companies should be ashamed at the rates they charge us, while the banks ay us 0% interest for savings, but shame on us for falling into their trap.
There are many credit cards that will charge 0% interest on balances for 12-18 months. Apply for one and transfer your existing balance so you will pay no interest while you pay the balance down.
Automobiles
This is one of the biggest depreciating assets we own. Do the math, how much are you paying in monthly car payments plus insurance. Now multiply this over a 40-year period. If your jaw doesn’t drop, consider yourself one of the smart or lucky. If your jaw drops, try buying used cars that are about 2 years old, low mileage, that’s easy on gas with a reliable track record, use car fax, inspect it closely before buying and keep it as long as possible to save money. I know most people don’t do this, because when I walk the parking lot at work, I have the oldest car in the lot.
If you are set on buying new, try buying on the last day of the Month. Many times the dealer will come down on the prices to met sales quotas. Another time to buy is after the new models come out. Many deals will be available on last years models.
Auto Loans
If you bought and financed your auto at a dealership, most likely you did not get the best interest rate. The dealership will hold back the best rate, the one you deserve and instead charge a higher rate and skim off the difference and put it in their pocket. The dealership has many ways of ripping off the consumer. The good news is you can refinance the auto after the purchase. Many time even years after your purchase. If you are interested in saving money and lowering you monthly payment, check out refinancing rates at the following site.
Eating out
This is one of those non-essential expenses. I think it is great to eat out on occasion, but look at your own budget. How much are you spending on eating out at lunch and dinner? Track it for a week then multiply it by 52 weeks for the year. Does it seem high? You can make changes here as needed. Bring you lunch to work, use leftover if you have them. Also cooking at home can be fun and can be a shared, experience with your spouse or partner. Learn to cook, if you don’t know how.
Join a big box discount club
This is a really good idea if you have a family, not so much for a single person. However if the club sells gasoline you can usually justify the club membership just on the gas saving for one car alone. Do your research, not all items are cheaper than your regular grocery store but some items are cheaper.
Insurance
Insurance is money out the window until you really need it. Shop for better rates yearly on car insurance, home insurance policies. Also look at you medical plans yearly. If your young with no health problems you can do the high deductible plans, they are typically lower monthly costs, As you get older you will probably want to switch to high monthly lower deductible plans.
Stay healthy
You hear it all the time, eat healthy and exercise. If you live in a cold weather location a gym membership is a great idea. But make should you allocate time to go. If you live in a warm weather climate you can exercise outdoor for free. Get motivated; start walking, biking, etc. You health is you wealth.
Coupons
I asked my wife for one good saving tip. This was it. You can find coupons for just about everything, either online or in local flyers delivered to your home. If you’re going to buy something it makes sense to have a coupon to save a few dollars.
Durable goods
Do your research, buying just on price alone, may not make sense in the long run if you have to replace the item sooner because of poor quality. Do you research online or subscribe to consumer reports to buy quality items. It may cost a few dollars more, but will be a savings in the long run.
Renting
This is something will all do at some point in our lives. If it is temporary or you perfer renting over owning great. Consider your situation and add up your rent payment over a year, now multiply time the years you plan to rent. If it seems like alot, your right it is. There are plenty of programs for first time home buyers (i.e. anyone you hasn’t owned in the last 2 years). Click for more details.
Mortgage
If you have a mortgage, accelerate the payments. If you look at your statement see what went toward principle last month add that amount to current months mortgage payment and watch how fast you will pay down your mortgage. This can save you up to 100k or more over the life of your mortgage.
Need more ideas?