Personal finance is a topic to take seriously, and earlier is better for assessing your own finances and spending habits. In fact, you are never too young or too old to do this; adolescents and college students are encouraged to learn smart and safe spending habits so they can have a more stable adult life, and seniors can keep tight control over their money once they retire and stop earning paychecks (and prepare their estate in their will). Here are some great tips for saving money throughout the year:
Budget For Everything
It is essential that you do some calculations ahead of time so you can determine how much a fun or important activity will cost, and how much money you can afford to spend on it. This ranges from groceries to what sort of car you can afford all the way to moving (13% to 20% of the American population moves every year). This way, you will not accidentally overspend and end up in debt, nor will you be excessively cautious and cheap to the point of self-sabotage. Also, consider the idea of “paying yourself first.” With each paycheck, calculate how much of it must go toward essential spending, then set aside another, fixed chunk to save and put away in a bank account. Whatever is left over is free for recreational spending. Paying yourself first allows you to build up money more consistently, and this is a great strategy for investing in an IRA, for example.
Set Up An Emergency Fund
This is a fairly straightforward idea, and it’s a major reason why you should set aside money with each paycheck. Ultimately, everyone is at risk of accidents or setbacks no matter how careful they are, such as needing a hospital visit or their car breaking down. If you’re paying yourself first, try a similar strategy for an emergency fund (and only use those funds for emergencies).
Plan Out Your Holiday Shopping
Most Americans buy gifts for each other several times per year, and the most extreme example is Black Friday, when major retailers offer aggressive discounts on many items large and small. Walmart sales are a good example of this, but hardly the only one. Also, you may buy gifts for a wedding anniversary, Mother’s Day, or Valentine’s Day, like flowers (Americans spend $1.9 billion each year on Mother’s Day flowers). Bear in mind that many retailers will drive up prices based on seasonal demand, from florists during Mother’s Day to clothes retailers when the seasons change. Try to dodge the busiest shopping times of the year whenever possible, such as buying holiday items right after the holiday (like Halloween decorations in early November). Non-perishable items like these will certainly be there for a while.
Save All of Your Change
This is an example where patient accumulation will yield big rewards if you are diligent about it. One theory says that big changes come not from sudden leaps, but from many small things adding up over time until they reach critical mass. In short, don’t hold out for a huge windfall or winning the lottery (literally or otherwise). Plan ahead and remember that everything counts, including change and coupons. Let quantity make up for lack of quality, and you pleasantly surprise yourself by what you see. Keeping a change jar is a fun and tangible way to track this progress, and you can even set goals, such as “fill the jar halfway or more by June.”
Take Care of Your Vehicle
This is an instance where spending money now will save you money later; saving money doesn’t mean pinching pennies for everything. Think ahead and make sure your car is in good working order so it doesn’t suffer costly and inconvenient issues such as a blown gasket or a wheel popping off, or worse. Routine inspections and maintenance at an auto shop keep your car in good shape, and workers will diagnose issues with your car early. Some fixes are easy and straightforward, such as rotating the tires or swapping out wiper blades. In fact, wiper blades date back to 1903, like small brushes that moved up and down over a windshield. Honor this automobile tradition and update your wiper blades before it rains again.
Only Use Your Bank’s ATM
Here is a simple but very real way you save money. Whatever bank you’re a part of, whether UMB or Bank of America or others, try to only use your bank’s own ATMs for withdrawing cash. This isn’t for the sake of brand loyalty; it’s because withdrawing money from another bank’s ATM will result in a small fee, and if you withdraw cash often, this can add up. Don’t let the power of accumulation work against you.
Ride to Work With Other People (Carpooling)
Earlier, it was mentioned that you should keep your car in good working condition. But what if you carpool to work? The U.S. Census Bureau says that the average American spends 26 minutes getting to work, and that means a lot of automobile emissions and costly gas being burned. So, you can set up a schedule with your co-workers and rotate duties for carpooling, and this means that you are driving your car to work only once or twice per week instead of every workday. This can take a few cars off the road, and better yet, you can enjoy driving in carpool-only lanes, which tend to be practically empty.
Be Careful With Dining Out
No matter what, you’re definitely going to spend money on food, so the question is not whether you buy it, but what sort. Going out to eat can be fun, but even if you eat at cheaper diners or fast food joints, this is expensive compared to eating at home. Just one restaurant meal may cost more than you’d spend on groceries for all three meals of the day, in fact. You can divide your monthly grocery bill by 90 (thirty days times three meals) to see what a single home-cooked meal costs, then compare that to what a restaurant meal would cost. The difference should be clear. So, it’s best to save restaurants for special times such as a wedding anniversary or celebrating a relative’s college graduation, for example.
Something similar can be done for coffee, too. Not everyone regularly drinks it, but if you do, forget the Starbucks line and buy a coffee maker and your own bean bags. There’s an upfront cost, of course, but your home coffee station will soon pay for itself, and then some since you’re no longer paying for Starbucks or similar coffee places. Besides, making coffee at home can be fun, rather than a chore.
Delay Your Spending Decisions
Many advertisements urge you to make a purchase right away, such as tempting you with weekend-only sales or saying something like “you deserve this right now!” But don’t fall for it. People are much more likely to spend money on impulse than on planned purchases, and advertisers want you to make snap decisions and think in the short term. Instead, if you find an item or service you like, give yourself at least 24 hours to think it over, or even two or three days. This gives your brain time to more fully process the idea, especially during sleep. Often, your desire for the purchase may be gone. If you sincerely do want the item, then it’s time to buy. But think about it properly so you can make that purchase with confidence.
Nearly everything you do in your life, both fun and essential, will cost you money in some shape or form, but that doesn’t mean you have to leak money every hour of the day, every day. Carefully reassess your spending life and perform a thorough self-audit, and you’ll figure out what’s truly worth spending money on, versus your spending that is nothing more than rote habit. Being cheap and being frugal are two different things; with a little financial clarity, you can be comfortable and save up a lot over time!