Making the most of your income is a wise thing to do at any age. Since the financial collapse back in 2007, Americans have slowly but surely weaned themselves from credit card debt. Unfortunately that traditional bastion of consumer debt has been replaced by student loan debt totaling more than a trillion dollars. A very different problem that threatens to plague the current generation commonly referred to as Millennials. With that said, frugality is bound to be a watch word going forward. Just as the depression of the 1930’s effected a generation, there is no question that young people today will carry with them the impact of lean times, years of high unemployment and the high cost of their education. That’s why it’s never too late to make saving a part of your routine.
Young people, in particular have the advantage of time, decades even before retirement in which interest on savings can compound. Now, while it’s true that interest rates have remained very low, in large part as an effort to stimulate a stalled economy, that period appears to be coming to an end. There has been a gradual rise in interest rates, making savings and money market, as well as Certificates of Deposit (CD’s), once useful financial instruments meaningful once again.
Whether you’re just beginning to build a “nest egg” or on the verge of retirement, here are ten ways to help you put aside some cash:
Saving should always be the first thing you do when you get paid. A simple way to do this is to have your employer make a direct deposit from your paycheck into your savings account. Choose an amount you can live with and if you get a raise, include it too. You’ll be pleased to see this account grow quickly.
Avoid Fees and get rewards
It’s the little things in life that add up. Bank fees can be avoided. Don’t use ATM’s at banks other than your own unless you absolutely must. Make sure your checking account has overdraft protection. Fees on ATM’s can be $3 or more and fees for a bounced check start at $35. If you have to have a credit card, make sure it comes with benefits. Whether it’s cash back or bonus miles, privilege should have its benefits.
Keep track of spending
You’ll never find all the little ways to save if you don’t keep track of what you spend. With smartphones this has never been easier. There’s an App for that!
Keep debt to a minimum
Credit cards should be for emergencies only. If you make a purchase on credit pay it off within the month. If you already have a large debt, make a plan to pay it off and stick to it. You’ll never catch up if you just pay the minimum balance due each month.
Reevaluate and separate wants from needs
Look around to see where you might cut costs. Start with the telephone. Do you still need that landline? Are you getting a good deal on your monthly cell bill? Maybe you should sign up for a family plan? What about TV? Is it time to cut the cable? Services like Amazon Prime and Netflix offer entertainment on demand for far less than your monthly cable bill and there’s no commercials. While you’re at it total up those monthly subscription and membership fees and make sure you’re using the services. Small amounts add up quickly. If you’re not going to the gym – cancel the membership and sign up at New Year’s when gyms usually offer their best deals. Lastly, if you need the service, call and see if you can renegotiate. If not, consider a different bundle. Cable companies don’t want to lose you and will try their best to make it worth your while.
Spend a little to save a lot. LED bulbs last ten times longer than regular light bulbs. Consider an energy audit of your home. Upgrade to Energy Star appliances.
Don’t impulse buy
If there’s a big ticket item you want or need to purchase start saving for it. Impulse shopping has never been easier. Don’t give in to temptation.
Frugal means looking for savings
Watch for sales, use coupons, buy in bulk if it makes sense. How about carpooling? Save on gas and spare the environment.
Don’t eat out all the time
This is a variation on the impulse buy, when impulse becomes habit. Skip the latte once or twice a week or bring a bagged lunch. A nice dinner out is a good reward for saving, not something you can afford to do every day.
If you haven’t done so, now may be the time to get that lower interest rate. Consider a shorter term loan and pay less interest in the long run. Your home is an investment. Treat it like one and it can save you money.
One of the best things you can do to improve your financial picture is to make a reasonable plan, one you can live with, one that becomes a habit. If your plan is too draconian you will resent it and may spend out of frustration. Successful saving should not be its only reward. Have a vision, set a goal and celebrate success.