Money is important. For some, more so than others. But for everyone, we all have a need for money. With the financial situation the way it is, it is so much harder to save money and get ahead today than it was a few years ago. Sometimes we all feel that we can never have enough money, or we just can’t cut corners enough to save…the truth is, saving can be fun, and can provide satisfaction in itself.
Essentially in order to save money, you have to ensure that your expenses are less than your income. An easy way to do this is take a summary of your past 5-6 months worth of expenses and average them out to get a monthly expense figure. This will allow you to understand where you stand. If you need to supplement your income, try passive income, or even start looking for a temporary part time job. Once you have detailed your status, you can now try and determine how you can save money and start moving ahead, or out of debt.
Firstly, figure out what you classify as wants and needs. Remember each person is different, each situation will be different. You are the only person who can determine what you need to survive (usually food, shelter, clothing etc) and what you want to survive (entertainment). Looking into this factor, should allow you the ability to save approximately 3% of your income each month.
Food: In my opinion, food is the killer for monthly expenses. Far too often are people spending too much money on food and in turn only hurts your finances and your health. I started my budget in January 2009, and since then I have been able to spend on average $45/week for 3 people. During this time I also lost 10 lbs. I am a pretty active, healthy person, so to lose the weight was just by really planning what foods we needed to survive. I don’t suggest buying in bulk. Why? In my experiences, although the price may be cheaper, if the food is in your home you will consume it no matter what. For example: buying bulk juice boxes: the more of a product that you have, the more you think you can consume…Therefore the product will diminish in almost the same amount of time. Also, within the food category is restaurants/take out, which is again a killer. One night out can rack your expenses up 60$ just for one meal! Watching your grocery bill, in my opinion could save another 3% of your income each month.
General Shopping: Research is key! There are several guidelines that I recommend to save money while shopping (clothing, cleaning products, misc. items etc). It is important to remember that not all brand name products are worth the mark up. On the flip side, some “no name” products really are cheaper quality and will not last compared to their brand name counter parts. It is really important to research for big ticket items to ensure that you are making the right decision. Coupons/discounts: Such a large part of our society today. How many times do you hear about campaigns that offer a free product with the purchase of a different product? For example; I clearly recall offers of buying a new T.V and you get a digital camera. Take advantage of the promotion; however don’t just buy it for the sake of buying it. That is why planning is essential to saving money. With a plan, it’s harder to veer off course. With planning and researching, you can save approximately 3% of your monthly income.
Eliminate Interest build up: Common sense here states that paying interest (credit cards) is a vicious cycle. It is too easy to put everything on credit card and fall into the trap of debt. I try to pay for everything in cash. I do have 1 credit card for emergency situations; however I really limit the use of the plastic. Doing this, depending on your current credit card balance, could save you 2% of your monthly income.
Overall there are several methods to saving money and being more frugal. These are just some of the options that I follow strictly. If you have any other suggestions, comment on this post!