When your income barely exceeds your expenses, it’s difficult to imagine saving money. With a little discipline and a clear picture of where your money goes, it can be done.
Start with the simple task of listing all of your expenses. Some of them, like rent or mortgage, car payments and insurance, are fixed, predictable numbers. Others, like utility bills, vary from month to month.
Include everything you can think of; groceries, baby sitter, cell phone, internet access, subscriptions, gym memberships, credit cards and bank charges.
Now, make a list of the other purchases you make on a regular basis; things like designer coffee, shoes and clothing, take-out food, restaurant dinners, drinks at the local pub, magazines, books, hobby items, fresh flowers, hair and manicure appointments, make-up, jewelry and household décor.
How much do you think you spend on a monthly or annual basis on these items? To get a good idea, keep all of your receipts for a month, or longer. Don’t throw any of them away, no matter how frivolous they are. Divide them into piles of similar purchases, and add them up. Chances are you’ll be surprised how much money you spend on beverages, weekday lunches, and convenience or amusement items.
This is where you can start making adjustments. Set a goal for yourself. Perhaps you’d like to buy your own home someday, but the goal is completely out of reach from where you stand now. How long would you have to save your money to have a down-payment? It might take years…four to seven years or more, in fact. That’s why now is a good time to start saving.
You can ask your bank to take a certain amount of money out of your checking account each month, and apply it to your savings account. You can also do this yourself every time you cash a check or make a bank deposit.
You don’t have to live a life without fun or flavor. Examine where your money goes and adjust your spending to allow for some of it to be saved. Do you really need another pair of shoes this month, or can you get around with what you have? What if you cut back on the times you ate out? Cancelled a few magazine subscriptions? Got a library card to supplement your reading list?
You’ve probably heard the phrase “latte factor”. This refers to the amount of money you spend in the course of a year if you have an innocent one or two designer coffee drinks a day. Let’s say you only have one a day at $3.00 each. Over the course of a year that’s $1,095.00. Take that same money and invest it in an interest earning account, and you’ve got a fair start on your savings.
What about saving your pennies? It isn’t just for kids. Get in the habit of taking all of your change and putting it on a water jug or other container. Every time you break a dollar, sock that change away in a place where it isn’t easy to get to. Ever so often, put the coins to work; roll them up and stash them in a savings account or a mutual fund. The more dollars you break, the more money you save.
Got stuff? Consider having a garage sale, or find your niche on eBay. Some of us are very good at collecting things. Eventually, we can probably afford to let go of some of them.
Kids can gobble up cash too. Have you fallen into the habit of buying them a toy every time you go to the store? Stop. Impulse buying is a learned behavior, and this may be one of the earliest ways we learn it.
Do you shop when you are bored? Angry? Frustrated? Insecure? Try some form of aerobic exercise instead. Go for a walk, ride a bicycle, go swimming, knock the dust of that home gym in the corner. Get in the habit of having other habits.
Saving money is something you get better at with practice. It can be hard at first. It can seem fruitless when the results aren’t accumulating as fast as you’d like them to. Hang in there, and keep your goal in sight. Saving money can actually be fun. Once you get the hang of it, you’ll find yourself thinking of new ways to save and new goals to save for. In time, saving will become an automatic part of your daily routine.
