Budgeting! Just hearing the word makes some people
break out in a cold sweat and run for the hills. But don't worry...
in this article I will show you some easy and relatively easy (and
painless) ways to boost your savings.
Savings, like anything else worthwhile, requires a
bit of creativity and some self-discipline. Unfortunately, these
days self-discipline seems like a dirty word to many people who grew
up in the post 60's era when the the theme was "if it feels good do
it".
But, now as many of those people are getting closer
to retirement they are realizing that they haven't saved enough. So
they may have enjoyed their youth but might be in for a miserable
retirement if they don't figure out how to start saving more, soon!
But believe it or not, if you sit down and really
put your mind to it, you can come up with dozens of ways to give
your savings a boost.
Here's a few ideas to get you going:
Get a Jar
This seems a little silly but it is a good place to
start for those who have no savings at all. Take an ordinary jar and
put it on your nightstand and then put all of your spare change in
it. Many people already do this but then raid the jar when they need
extra change. But if it is going to be the beginning of a savings
program you need to make it a one way process. Put money in but
don't take it out!
When the jar gets full, put the money in the bank in
a long term savings program (see our article on
the Jars
method for more information). It is amazing but you won't miss
the money and people who thought they couldn't save anything will
find they have saved a couple of hundred dollars in a year. Now this
isn't enough to retire on... but it is a start.
Saving money is like a magnet... once you have a
start the money begins to attract other money... and the bigger your
magnet the more money it attracts. So if you don't have any savings
this is a good way to start your magnet.
Sock away your next raise
At the moment, you are used to living on your
current salary but when most people get a raise they make the
mistake of increasing their standard of living by the amount of
their raise (or a little more). But what if you saved that raise and
continued to live on your previous salary? You are already used to
living on it so it won't be an additional hardship. If you receive a
5 percent raise, and stick it into your savings, you won't even miss
it because you never had it!
The key to making this work is to have the money
automatically put into the savings or retirement so you don't have
the opportunity to spend it (or even see it).
There are many stories of people with ordinary
salaries who were able to retire millionaires simply by using this
method. If you aren't quite that motivated, you might try saving
half and increasing your standard of living by the other half just
so you don't feel too deprived and then go out and binge and bust
the budget. You have to be realistic about what you are going to be
able to do in the long run.
Set Realistic Goals and realistic treats!
If you are used to "if it feels good do it"
mentality going on an austerity budget will be extremely painful and
probably won't last long so don't forget to reward yourself.
When you've reached your savings goal treat yourself a bit. It
doesn't have to be an expensive treat just as long as and your
family enjoys it! For a small treat I will take my family to
the local gas station where they have 25¢ ice cream bars. Total cost
$1.00 for a family of four, but it is a nice treat for something
different. Recently, I decided to go for a bigger treat at the local
Ice Cream shop and almost had a heart attack when I paid $8.00 for
four single scoop Ice Cream cones. Did we enjoy it eight times as
much as the 25¢ ice cream bars? I don't think so! I think we
will go back to the 25¢ ice cream bars.
A night at the movies might cost $50 or more when
you add in $5 popcorn and $3 drinks. How about renting a video and
popping your own corn instead?
Pay Cash
If you are running a credit card balance, pay cash
for all new purchases until you have paid off your credit cards.
Interest will eat you alive and rob your savings program... so pay
cash or use a different credit card that you can pay off every
month. See my article on how to
save $1000 a year in Interest for more information.
The best way to pay off a debt is to schedule the
payments through an automatic bill pay checking account. Just figure
out how much you need to pay each month to pay it off and schedule
the payments. Once you have finished paying off a credit card
debt or car loan, don't just put the extra money back into your
checking account, or it will just end up being wasted. Since the
expense is already factored into your budget just change the
destination to your long term savings or retirement program.
Live on One income
If you are married and have two incomes first check
to see if you are actually getting ahead. Often one spouse is simply
earning enough to pay for the extra expenses of working. Add up the
cost of the additional car, day-care, extra clothing, etc and see if
it is really worth working outside the home. Is it possible that one
spouse could stay home (or work from home) and you would actually
come out ahead?
If at all possible, adjust your standard of living
so that you are living on one paycheck and save 80%, 90% or even
100% of the other paycheck. This can rapidly build your nest egg,
and if the money is put directly into a retirement account or IRA it
can drastically reduce the amount of taxes you owe. Technically, you
may have to have both spouses contributing to their own retirement
programs but the total should add up to the amount you have chosen.
An added benefit to this is if one spouse loses
their job, you will be in a much better position to weather the
storm since you are already used to living on one salary.
Tim McMahon is the editor of numerous financial websites and has
been writing financial articles since 1997. For more information see About
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