Seven Tips on Saving Money

On these financial crisis times we are currently facing we’ve seen many friends or family members under economical hardship, or we may be in that situation. How can we get out of it? It’s neither easy nor fast, but the good thing is, it’s doable! With a few money-wise tips you will be able to get a few extra bucks at the end of the month, which may not sound like a lot at the beginning, but everything adds up.

Reducing Makes the Difference

Before jumping into any other tip, sit down and write down how much money you spend in every purchase: groceries, gas, clothing, electricity and others. You can cut off many extras you can perfectly do without, such as eating out, ordering takeaways or going to the movies every week. You can rent DVDs, which is much cheaper, you can learn new recipes to try at home and start eating healthy.

Other items you can cut down on: gas (walk wherever you can, carpool or make all you errands in one trip), clothing (are you sure you really need to buy new clothes every week? By the way, check your wardrobe for what you don’t longer use), food & medicine (go generic), electricity (change your incandescent bulbs for the more efficient CFL bulbs).

The Ten Percent Rule

For everything you cut down or save, put a ten percent into a savings jar. For instance, if you were able to cut down on your electricity bill from 300 to 250, you had saved 50 bucks! Then put aside 5 into the savings jar. The same goes for every income in the house, on the condition that you put aside the 10% before paying any bill! Why? Because if you only have 90% of your regular income to spend then you’ll be forced to save more in other things such as eating out, clothing, electricity, cell phones, etc.

If there’s no possibility for you to save a 10% every month, then start with a 3 to 5%, and try to increase it every month. At the end of the year this money can be used to pay off your mortgage, or a student loan, or you can also save it for an emergency. The key is not to splash it out unnecessary: don’t go and buy a new TV & home theater set, or the effort would have been pointless.

Start a Money Diary

 Write down how much money you spend and how you paid, and leave a comment on how you felt about the purchase: was it necessary, such as groceries or was a latte? At the end of the week read it again and reflect on your feelings. You will find there are plenty of things you can cut down, look into the future and change your habits.

Pay in Cash, No Credit

Most probably, you are up to the neck in debts, therefore, using credit cards is just delaying the debt and making it bigger. If you turn to cash you’ll feel and see the money running out of your pockets and will think twice before spending a buck unnecessarily again!

Keep one credit card (the one with the lowest interest rate) for emergencies only, and pay as much as possible every month in all credit cards. You can start by paying a bit more on the one with the lowest debt.

Look Where to Buy

For certain items such as basic clothing, some pieces of furniture or just decorative elements, you can go to thrift stores, flea markets or yard sales. There you’ll find many items, many of them unique, at ridiculously low prices. These places are great for finding vintage items, or designer clothes at reasonable prices.

Look Where to Sell

If you check your wardrobe you’ll find plenty of items you don’t need any more. Or you can find old pieces and bits around the house: comics, coins, decorative items, almost anything you don’t use any more can be sold, either in a yard sale or online via eBay or Craigslists.

The Time/Money Relation

If what you lack is money but have the time, then you may be able to find a job. Ok, let’s suppose you’ve been recently laid-off, you can still look for a part-time job anywhere or a home based job (such as baby-sitting, tutoring or direct-selling). Although you will not be able to make as much as you used in your previous job, you will still making money and gaining new job skills. Later, you’ll be able to find a position more similar to what you used to work in, and, if you still have the time, you can keep your part-time job as an extra income.

Finally, these few tips will help you make a few extra bucks, but the most important thing is, these should be turned into lifelong money-wise habits, and if you and your children learn and acquire them you will be giving them a valuable lesson: how to face a financial crisis.