My friend Jackie is frustrated with her savings progress. She works for a non-profit organization and she has a non-profit salary to go along with her job. Jackie is adjusting her lifestyle to the idea that she just won't have as much money coming in as she did before she left her more lucrative corporate career. She has already applied the most popular savings strategies to stretch her dollars but she's still struggling to afford the basics.
Here are my suggestions for Jackie as she works to take her savings to the next level.
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1. Pick up found change. I once believed it wasn't worth the effort to save the pennies, nickels, dimes, and even quarters that caught my eye when walking down the street. After talking to individuals who regularly pick up money from the ground and put it in their pocket, I now believe that keeping an eye out for shiny coins is worthwhile. This can add hundreds of dollars to your savings account each year.
2. Re-budget. Here is how most people create a budget: Step one. Guess how much your necessities cost each month. Step two. Try to stay within those limits. Step three. In three months, forget that you ever created a budget. It's time to refresh the budget. Rather than guess, take a look at your actual spending and reduce your limits to only what is necessary.
3. Reward yourself. If you give yourself a present when you reach a savings goal, you might be able to reinforce the positive behaviors that led you to achieve. Visualize your progress by putting a chart on the wall and updating your progress by coloring in more area with every deposit. With a clear goal and treats to tempt you, you will save more.
4. Start a coupon collective. The internet has made finding deals featuring coupons much easier, with great websites like FatWallet and Groupon. Don't ignore traditional coupons, though. These websites are great for providing you with coupons for items you don't need to buy. You might find better coupons for your grocery shopping in the local newspaper. Work with your friends and co-workers to create a pool of coupons. Look through your papers and circulars for the coupons you need and add the coupons you don't need to the pool. Your friends or co-workers will benefit from the savings you don't need and will add to the pool items that might interest you.
5. Get rid of your pets. Taking care of animals properly is an expensive endeavor. At the risk of sounding heartless, if you can't afford to care for pets, you should not have any. Find the pets a good home with a family that has the means to secure food, shelter, and regular veterinary visits. Some pet owners I know could have purchased a house with the money they spent on their beloved animals.
6. If you use credit cards, use the right cards. If you don't pay off your credit card balances in full every month, you're paying interest and possibly other fees to the credit card companies. That's an unnecessary expense. Get rid of those cards and spend less than you earn. If you do use credit cards properly, find the best cash back credit cards based on your spending patterns to add cash back to your bank account.
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7. Use less. Many consumer products are designed for depletion or replacement. Rather than disinfectant wipes, buy cheaper disinfectant spray, which can be watered down while still being effective, and paper towels. You can use much less soap or detergent than the package recommends, and you can even make your own from inexpensive ingredients. One of my big successes, both in finance and in health, has been replacing my expensive cartridge razor blades with a safety razor system.
8. Switch to store brands and generic brands. The products with a generic brand are often just as good as their brand-name counterparts. While there are some exceptions, it is worthwhile to by store brands or other cheaper options to determine which products offer the best compromise between price and performance. I prefer generic over-the-counter pain relievers, for example.
9. Move away from expensive locations. You can save more money by moving to a part of the country -- or the world -- where the cost of living is much less. You may need to make some sacrifices in culture or amenities, but moving might be the difference of being able to afford to live wherever you want later in retirement or being forced to work until you are physically unable.
10. Don't have children. It could cost $200,000 or more to raise one child from birth to age 18, just for the necessities like food, clothing and entertainment. While children might help to care for you in your old age, you can't count on that being the case, and if you invest the money would have otherwise spent on children you will likely be able to care for yourself.
Some of these ideas may be unpopular. When saving as much money as possible is imperative, however, no idea should be automatically taken off the table. Take all the typical advice like canceling cable television, buying gently-used cars, spending less than you earn, and opening a high-yield savings account, but don't stop there. The future is uncertain, and increasing your savings will prepare you for anything.
Flexo encourages discussions about money and consumer issues at Consumerism Commentary, a premier blog focused on personal finance.
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Kesesyncben of MS 4:04AM May 14, 2013
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