I am going to start a new component of this blog: Tip Tuesday. Since I’m starting to get a hang of this grown-up thing, I’ll post tips about what I’ve learned in life. It will happen on Tuesdays. It’s a novel idea, really :)
This Tuesday, I feel like giving a few hints on how to save money. I don’t mean finding coupons so that you can buy two pairs of shoes instead of one. I mean actually saving money. I have a finance background, so saving money is near and dear to my heart.
You know that euphoric feeling you get when you buy a really hot pair of skinny jeans that make your ass look like a dream? I get that same feeling when I see my savings account balance go up. I know that we are living in tough times, and trust me, I more than understand how money can be tight, but we all have to adapt. You never know what may happen six months from now. With that said, we all need to have some money stashed away for a rainy day, an emergency, retirement, etc. Here are a few simple tricks towards getting there:
1) Open a high-yield savings account
Having a savings account is crucial. Banks like ING Direct and Ally offer free savings accounts with higher interest rates than you will find at your standard brick-and-mortar bank. I recommend having your savings account at a different bank than your everyday checking account. That way, it takes a bit longer to move funds from your savings account to your checking account, and that lack of instant accessibility makes it harder to spend money on a whim.
2) Utilize your accounts and direct deposit to your advantage
Have a portion of your paycheck sent directly to your savings account so that you never even see the money in your checking account. If you don’t see it, you won’t be tempted to spend it. In addition to a savings account, I’ve also found that having two separate checking accounts is helpful for me. One checking account is strictly for my fixed monthly expenses (car payment, insurance, cell phone bill, etc) and those payments are automatically debited. I never have to worry about payments bouncing since the same amount of money goes in and out every month. The second account is for debit card access for things like groceries and going out to dinner. If there isn’t any money in there, I can’t spend anymore, and those leather boots have to go back on the shelf.
3) Use automatic payment for bills if you can’t handle it yourself
I don’t know about you, but I am not one to sit down and write a million checks every month. I need that to just happen automatically. If I had to pay by hand, the bills would sit on my desk, get lost, sit in my car with the stamps on them, and wouldn’t get paid on time. I’d then be stuck paying late fees all because I’m lazy. If you are good enough at paying bills, bless your heart. We all know our strengths, and that just isn’t one of mine.
4) Keep your receipts…and actually look at them
I would say that the majority of people have absolutely no idea how much money they spend over the course of a year. If you kept track, you would probably be shocked. $4 at Starbucks here, $10 on lunch there…it all adds up. Take a week, even a month, and keep all of your receipts. Tally them up at the end of that time period and see just how much you are spending. In looking at your spending, you can get a better idea of where you can make some sacrifices on things you don’t really need. Try making your coffee at home a few times a week, and you can put that spare cash into your savings account. If you don’t want to tally everything by hand, try using a website like Mint, which helps you do it online. It shows you a fun little spending cloud, pie charts, budget trackers and other visuals to see where your money is going.
5) If you have a 401k or other employer sponsored plan, use it!
Many companies offer a match for your 401k/403b contributions. If you think you are too young to start saving for retirement, you are dead wrong. It’s never too early to start, and saving something is better than saving nothing. If nothing else, contribute at least as much as your company will match, which can be up to 6% or even higher, depending on the employer. If you choose not to contribute and don’t capitalize on your employers offer to match your contributions, you are completely missing out on money that your company is willing to give to you. You wouldn’t tell your employer “no thanks, I don’t need my last paycheck for the year” would you?
6) Eat at home
Seriously. I don’t think this needs an explanation. Try to cook more of your own meals. You’ll know exactly what you are eating, and we all know that making your own food is significantly less expensive than going out to eat every night.
7) Break up with plastic
If your spending is getting out of control, take your debit/credit cards out of your wallet and only use cash. It’s much harder to part with a crisp $50 bill than it is to just swipe and forget about it. When we use plastic, we become detached from the money we are spending. Half the time, I have no idea how much I just spent at Target since I swiped my card before the cashier even finished scanning. If you are carrying balances over on your credit cards every month, everything you buy becomes that much more expensive. Using credit cards definitely isn’t a bad thing if you can do it properly, but just keep it in check.
8) Take advantage of your credit card benefits
Yes, this counters #7, but if you are a responsible credit card user, they can offer some really great benefits. You can get free travel insurance, discounts on everyday items, extended warranties on technology purchases, free rental cars, and loads of other things. Read into your credit card’s program description to learn about the advantages you may be missing
I think these tips are enough for now. Not every Tip Tuesday will be money-related, so I promise it won’t be dry and long winded like this every time :)
If you have any specific questions, feel free to email me at email@example.com or comment below.