How to get ahead in today’s economy can seem like a complete mystery. Your spending doesn’t seem excessive given your take-home pay, yet still your finances seem to be dwindling rapidly.
What little things can you do to improve your financial situation without asking for a higher salary at work? Just give yourself a raise, of course!
The best remedy to step back from the edge of financial trouble, is a combination of two actions:
1. Minimize your spending
Trimming down on shopping is a clear first step, but it’s also a good idea to reevaluate and reduce all of your monthly bills.
∙ A few seemingly routine expenses that most people can do without are premium television channels and/or pay television altogether. Many highly rated television shows are available for free via an antenna or on Hulu. For a small subscription fee with Netflix or Amazon you can get access to thousands of movies and TV shows.
∙ If you have a reliable cell phone plan, lose the landline phone.
∙ Dog owners can save on pet expenses in numerous ways. Learn to groom your pet yourself to minimize ongoing expenses. Purchase flea repellants and heartworm medicine at stores like PetSmart instead of at the vet. Dry food also costs considerably less than canned.
∙ Another unconventional way to save money is to make your own laundry detergent. Most families spend $15-20 per month on laundry detergent alone. Making it at home costs less than $2 for the same amount. Saving $18 per month is $216 per year.
2. Increase your savings
Funnel every last dollar you save each month into savings. Yes, it will be tempting to indulge on purchases you’d like to make, but remember each dollar you save and invest is a dollar plus interest in the future.
∙ Treat your savings as a monthly expense. Just like you would never think of coming up short on your rent or car payment, don’t stiff your savings account either.
Implementing just these tips can save you $200 per month which is a whopping $2,400 per year. What could an extra $2,400 do for you? That amount can likely cover you for a month or more in case of a job loss or an unexpected medical bill or pay for unexpected car repairs. Saving $200 per month is akin to giving yourself a $2,400 raise each year!
Why It’s So Important
Making an ongoing and considerable deposit into your savings account is just as important as making your car payment, rent check, utility bill, and food. Without the security net of your monthly savings amount, you could be living paycheck-to-paycheck for many years to come.
Nurturing your savings account is like giving yourself an annual raise, because you’ll have a flexible amount of money at your disposal at all times without having to work any harder at your job. Living simply now can grant you the freedom to upgrade all aspects of your life in the future and solve most problems at the drop of a hat.
The Savings Plan
Make a resolution to deposit ¾ of your disposable income into your savings account on top of the amount you’ve saved on your monthly expenses. Do this by implementing money-saving strategies. If you’re able to save $150 on your expenses by making wise choices and you have $800 of disposable income each month, you would deposit an additional $750 into your savings account each and every month.
Doing this for just 12-months will add up to an extra $9,000 at the end of the year. Over the course of five years, this plan would net you $45,000. Add on a chunk of change for interest or invest for an even better return and you’ll be much better off.
The savings plan in the above scenario would leave you with $200 of disposable income every month. Although that may seem like a paltry amount to entertain a family of three or more, you can find fun and inexpensive or free activities in your local community to help cut costs.
Other money-saving ideas for family entertainment include a matinee movie or play rather than an evening showing. Going to an old time drive-in which charges a flat fee per car is a much better option than paying for a whole host of family members. Next time you’re at a restaurant, consider sharing an entrée with your spouse.
Once the long-term effect is taken into account, the reward will be worth it’s weight in gold compared to the sacrifices that you made skipping on a few luxuries now. You’ll be happy you did!