Isn’t it amazing that we’re already done with first month of 2015? I hope that you’ve all started off the new year on a high note. Tax season is here; W-2s were sent out last week. I always plan tax day the weekend after the last of earnings statements have been sent out. I have always thought this to be a healthy habit, and this year, I thought I'd share some saving tips to launch healthy financial planning, for when you receive those income tax returns.
Building a financial future — whether it’s your retirement, your family’s future needs or simply attaining your personal goals, or being able to buy the things you want — all begins with saving. Saving is the best and most important way to make sure you’re financially safe when it counts.
Saving doesn’t just mean getting discounts on the things you buy; it also means putting away money for a rainy day, and pretending you don’t know it’s there. You’ve got to do things like create an emergency fund so that if something does go wrong, you won’t be trying to scrounge up money or borrow from family or friends, wiping out debt, paying off bills that never seem to go away, and eventually, it means putting your money to work for you.
By finding ways to lower your everyday costs, it is possible to build habits that can change the way you look at your life, your household, and the future. It starts with some basic principles: a budget, a savings account, and good spending habits.
Here are some sure fire ways to help you save money:
1. Eliminate Your Debt
Whether it's student loans or credit card debt, eliminating your debt frees up additional funds to be allocated towards other things like savings or investing. Add up how much your monthly debt payments are and see how much you are spending servicing your debt. Create a plan to pay off as much of it as you can so you can start saving.
2. Set Savings Goals
One of the best ways to save money is by visualizing what you are saving for. Start small. For example, I have three different piggy banks in my home strategically placed for me to "deposit" loose change. If you need motivation, set savings targets along with a timeline to make it easier to save. Let's say you want to buy a house in 2-3 years with a 20% down payment - you have a great target, and it becomes much easier for you to identify what you need to save each month to get to your goal.
3. Pack Your Lunch
An obvious way to save money is to try to cut on everyday spending. If buying your lunch costs you $10 and bringing your lunch costs you $3, over course of the year, you could create a $1,820 emergency fund.
4. Shop on Wednesdays and Use Coupons
Most grocery stores launch their sales mid-week. Shopping on Wednesdays means getting first dibs on the sale items. And, you can maximize your savings and spend less time waiting in lines because you are beating the weekend crowd. Second, subscribe to your store flyers and keep tabs on the items you usually buy and when they’re on sale. For example, Omega-3 packed seafood like salmon or cod normally costs $12.99 - $21.99 per pound, but local Fresh Market groceries have them on sale on Saturday mornings for $7.99 – $11.99 per pound. Furthermore, stores will honor coupons from the previous week or combine them; all you have to do is ask. For example, you can utilize as many coupons in Bed, Bath, and Beyond. Spending smarter gets you extra chunks of change which can be added to your savings.
5. Take a “Staycation”
Instead of dropping thousands of dollars on airline tickets overseas or nationwide for the whole family, look for fun vacation spots or free activities close to home. We have some amazing vacation spots and events that are right here in our backyard: quaint towns like Luray or Lexington in Virginia, wineries all over Loudoun County, and free symposiums and museums around the DC Metro area. Prioritize, and keep it real. If you really need a vacation and can afford it, then go and satiate your wanderlustin' soul. If not, don't try to make ends meet and plan a better vacation for next time when you won't have to be stressing out about being broke after a big trip.
6. Pay Yourself First
Set up an auto transfer from your checking to savings each pay period, whether its $50 or $500, don’t cheat yourself out of a long term savings plan. You may be working hard at work all the time, but if you have nothing to show for it in a healthy savings account, you’re not doing justice to your time.
7. Record Your Expenses
Write down everything you are spending money on each month. This will help you figure out what you are spending money on, cut out the unnecessary expenditure, and also help make sure you are staying within your budget. For example, paying $1.29 per iTunes downloaded song really added for me so I switched to an online streaming music service. Seeing this expense trend helped me identify where I could cut spending and generate additional savings.
8. Create a Budget
Creating a budget is the key to success. Knowing limits on what you can spend on each “category” is key. It is important to sit down with the family to figure out what needs to be in the budget. Everything goes in the budget not only the important things like food, gas, mortgage but other little expenses you spend money on each month. For me for example, my budget includes nail appointments, salon visits, dining out, shopping allowances, etc.
9. Utility Savings
This may not seem like much but they do add up. One of the best things I’ve done to upgrade my home and lower my electricity bill is to switch all my lightbulbs to LED. I also use energy efficient curtains for my windows. You can also lower the thermostat on your water heater 10 degrees, which can save you between 3-5% on energy costs. Utility costs seldom go down over time, so take charge and weatherize you home. Call your utility company and ask for an energy audit in order to find out how energy efficient your home is. This will range from easy improvements like sealing windows and doors to installing new insulation or siding, also look into energy star high efficient products. This could save you thousands on utility cost. Little upgrades like these truly make a difference over time.
10. Have a Healthy Relationship with Money
Personally, this was a hard one for me to learn. Especially for my fellow millennials, unlike the previous generation, we don't have the promise of an entry level position right after we graduate from college. We entered the job market during a time when the economy was not on our side. This can create anxiety when it comes to dealing with money. Never lose faith and pick yourself back up. Pay off the debt; work your heart out; and start from somewhere. Just like any goal you have, you've got to set boundaries and employ self-discipline to get the results you are looking for.