According to the National Bureau of Economic Research, the recession that officially began in 2007 did have at least one positive effect. It changed Americans’ attitudes about the importance of saving money. Although thousands pledged to become astute savers, it is happening at a snail’s pace. A 2012 survey conducted by Bankrate.com brought to light some sobering statistics:
- More than 1 in 4 Americans have absolutely no money saved.
- Only 25% have an emergency fund to cover expenses for 6 months
- Close to 49% do not have the funds saved to cover 3 months of expenses
- 28% revealed that they have no financial cushion at all, should they become unemployed. This figure was up from 24% in 2011.
Even with the best intentions, it is extremely difficult, if not practically impossible for many individuals to put money aside for the future. Covering living and health expenses, leaves very little if any, cash left over. If that sounds all too familiar, have a look at the following suggestions. Perhaps you’re already taking a few of these steps. However, there may be some that could enable you to save just a little more!
Getting out of debt may require extreme measures such as putting a freeze on all unnecessary spending. You can literally put your credit cards on ice. Simply place them in a food storage box filled with water and pop them in the freezer. Not so easy to swipe a block of ice, is it?
Credit card debt is a huge problem in today’s “instant gratification” society. Take a lesson from the Great Depression generation: “If you can not pay cash for it, then you can not afford it.” Figures from the Federal Reserve for March 2013 showed that the average U.S. household credit card debt is around $7,000. The good news is that this figure is showing a slow but steady decline, so we are at least trying!
2. Avoid situations where you are tempted to spend money
Sometimes just running out for a loaf of bread and gallon of milk can wreak havoc on our wallet. It is the impulsive spending that does it every time: “They were on sale…I couldn’t resist…They’ll come in handy,” and so on. When you are serious about saving, reducing your visits to stores of any type can make a huge difference. Before making a trip for just one or two items, look around and try to find an alternative or substitute.
In an effort to save, it may become necessary to cut back on your social outings a bit. Oftentimes, we are invited to gatherings and special events where the extra expenses just keep coming. Dedicated savers also have no business accepting invitations to parties where purchases are the main event. You know the drill – drinks, appetizers, and friendly chatter followed by a parade of lingerie, jewelry, educational toys, scented candles, or kitchen tools that you are expected to purchase. The next time you receive an invitation to such a function, send your regrets!
3. Pay Cash
As an exercise in frugality, try this: estimate the cash you think you’ll need for the week and subtract 10%. If you are really brave, cut 20% from the estimated total. Put the projected amount of cash in your wallet and the rest in a safe place – perhaps the bank? As you go through the week, you’ll likely discover that it is much harder to part with all those presidents! When you pay for your daily expenses such as food and gas, it can be very eye opening as your wallet gradually becomes empty. This exercise may also lead you to realize how much you are spending thoughtlessly on coffee, fast food, newspapers, and so on.
4. Learn to DIY
Are you paying for monthly services like lawn care, housecleaning or dry cleaning? Taking care of just those three items on your own could save $100s a year. If you have kids over the age of 7, you’d be surprised at the amount of yard work they are able to help with. The same goes for house cleaning. Teaching family members how to take care of the basics, such as keeping the home and yard clean and tidy, plus maintaining their own clothing are lessons they will benefit from for a lifetime.
Cooking meals at home makes for huge savings as well. Another money saving activity is to set a weekly food budget, plan the menus and include every meal and snack. Make sure to have brown bag lunches too! There are scores of excellent websites that include the steps for low-cost meal planning, shopping, and recipes. Many of them are tailor made for certain lifestyles, such as families with young children, singles, and vegetarians.
5. Buy Secondhand
Change the way you think about purchasing gently used items. Getting over a snobbish attitude regarding used merchandise may end up with you laughing all the way to the bank.
Here is a true story:
As a college student, I was the volunteer costumer for a community theater group. When faced with the daunting task of sewing more costumes than I could handle, I made a list of what was needed and roamed the local thrift jobs. To my amazement I bought more articles of clothing that were either perfect for the play or only needed slight alterations. In fact, I spent much less in both money and time than I would have otherwise!
Now, whenever I need something, I make a list and first check the local second hand shops. They are an excellent place to find off season articles for that cruise in January or winter trip to Central America. And…it is customary to find things that are “NIB,” that is,“new in the box,” for the uninitiated. Last week, my coffee maker died and guess what? I found the perfect replacement second hand – all state of the art, stainless, complete with all the features I love and it was NIB. I’ve since “Googled” that model and it retails for $100 – I spent $6.
Even if you try only one of these tips, it could drastically change the way you look at spending and saving and help you establish better habits for both. Remember, managing money is a learned skill – anyone can do it!