No matter how much money you earn per year or what your line of work is, it’s always a great idea to remember the latest financial tips and strategies to keep your money in good shape. Even millionaires have the potential to go broke if they spend recklessly and lose track of their finances, while working-class Americans can surprise themselves with how much they can save if they know what they are doing. Now, what can you do to keep your financial life in good standing? Here are some excellent tips for saving money:
Avoid Expensive Dinners
Americans love to eat out, especially with the fantastic variety of ingredients and ethnic foods in the U.S., from barbecue to Greek to deli sandwiches to sushi bars. In fact, 20% of Americans visit full-service dining establishments on a weekly basis (give or take), and excluding breakfast, the typical American eats out 4.5 times per week on average. But this can cost you in the long run, especially if you are eating at higher-end restaurants too often. It’s one thing to eat out with a group to celebrate a relative graduating college, or having a nice anniversary dinner with your spouse. But the price of one restaurant meal might cost as much or more than the entire day’s worth of groceries, making eating out a money-dense way to get your meals. In short: save the restaurants for special times, instead of making them routine. And avoid fast food if you can. Even if it’s cheap, it’s usually pretty unhealthy anyway.
Take Care of Your Vehicle
This is a case where spending a little money now saves you some big expenses later on, especially if your car is an older one that often needs repairs and inspections. Everything from the oil filter to the brake pads and air conditioner needs to be checked out and repaired if need be, and this can prevent your car from breaking down on the road. If your car is kept in fine shape, that is not only convenient, but it spares you the headache of financing a new car to replace one that just fell apart. Some particular brands are known for their long-lasting cars, so try getting a car like that. Luxury cars, while they look nice, might not last as long.
Start Paying Off Your Debts
This is a topic where many people will say “easier said than done.” You don’t need to pay off every penny of your debts today, but you should review your earnings, expenses, and current debt so you can set up a schedule for making regular, consistent repayments on those debts. This ranges from an auto loan or mortgage to student debts and credit card debts, and those are just the common ones. Not only will your creditors be happy with you, but you save money in the long run since you’re not dragging out the debt and thus paying more in interest. Your future self will save some cash; try to make that happen.
Beware of Big Purchases
You don’t have to live a completely Spartan life that’s devoid of luxury, but by the same token, do be careful about any non-essential spending, and be wary of big purchases of any kind, from cars to houses to RVs pr even a pet or jewelry. Surveys say that one in three jewelry customers is willing to spend $1,000 or more on a piece of jewelry, such as engagement rings. It is one thing to finance an engagement ring for your partner, but don’t stretch yourself to the breaking point for it. Rings can vary greatly in price owing to different gem size or quality, and some jewelers may offer more aggressive prices than others.
It’s not just jewels, either; before making any big purchase (even for essential items), give yourself enough time to carefully think it over. Buyers are likely to say “yes” to a big purchase if they’re impulsive about it, and the immediate “wow” factor of that item can be highly persuasive. But time is on your side, and “sleep on it” is common advice for a reason. Often, the desire for any purchase will go away if your mind gets enough time to mull it over. But if you are still genuinely interested in that purchase a few days later, and you can indeed finance it, then you can make that purchase with confidence. In short: create a big bap between seeing an item and buying it.
Keep a Strict and Realistic Budget
Budgets have been mentioned a few times up until now, and for good reason. Many Americans neglect to create a budget or track their spending or income, and as a result, they tend to run out of money each month, suffer overdraft bank or card fees, fall behind on debt, and make purchases that they can’t really afford. Lacking a proper budget means using money blindly, and that is likely to turn out badly more than a few times. Fortunately, you can start making a budget anytime; it’s never too late.
Your budget serves a number of purposes: it helps you track your income, add up your expenses, make your outstanding debts clear, and make it obvious how much money you can or should spend on certain areas. Categories such as auto debt, mortgages, rent, prescription drugs, doctor’s office fees, groceries, utilities, and much more will be included, and you will see how much money is left over for savings and investing. Setting aside money for investing is a great way to allow compound interest to build up, such as in a Roth IRA account, but you must know for a fact how much money you can safely allocate to that. Don’t cut into mortgage or grocery money, for example.
If your total spending or expenses outstrip your earnings, then at least you will now be aware of the problem, and you can identify where the excessive spending is being done. Perhaps you’re buying too many high-end groceries, or you can’t really afford your nice car, or you have one credit card too many. Cut back on whatever you can afford to, and at the very least, rearrange your budget so you break even every month. Preferably, you come out ahead, and you can invest some money for retirement. If you are in good shape, then you’ll have enough money for all of your expenses, and you will know exactly how much recreational spending you can do each month or year.
Do Everything You Can to Lower Your Bills
This is a fairly simple topic. Your house may not be efficient in water or energy, and this costs you money without you realizing it, such as on the water bill. Many American homes are leaking 90 gallons of water per day, and this adds up scarily fast. Hire a plumber to fix or replace leaking pipes, and consider having low-flow toilets, sinks, and showerheads installed, or even a new tub or faucet, so you are conserving water in the long run. Do something similar with the gas bill and find more efficient appliances.
This is similar to the above point. Consider swapping out traditional light bulbs for more energy-efficient induction lighting bulbs or LEDs to cut down on power usage, and keep lights and appliances off when you’re not using them. This is especially true of the HVAC utility; for example, run it only when you’re home, and be conservative about heating or cooling the home. Supplement with shades and cold drinks in warm weather, and bundle up in colder weather. After all, the HVAC utility accounts for half the total power usage of the typical American house.
Money is a scary topic for many people, and some consider it taboo to discuss. But that is not the right attitude to have; instead, you can face your money head-on and understand exactly what your financial life is like, so you can make more informed decisions and avoid debt or avoid making purchases you actually can’t afford. In short, keep a clear budget (and stick to it), make your home utilities efficient, avoid big purchases that you don’t truly want, and remember that the little things really do add up over time. Be cautious and patient, and it will literally pay off.