Saving money is often a daunting challenge. However, as every money saving expert will tell you, it is simply a habit you adopt. If you can make it fun and personally rewarding, the saving money habit is much easier.
Pay Yourself First
The easiest and most fun way to save money is the “pay yourself first” technique. Here is the short version.
Treat saving money as you do other recurring monthly bills. Ask the question, “Who or what is more important than me?” Answer: No one and nothing. Why not pay yourself first every month? Here’s how.
- Set your monthly saving goal, or savings bill. It matters not what amount you decide upon. The key is to treat your savings goal like your utility bills, car payment, and rent or mortgage. It is a must pay bill.
- Deposit the amount for your savings bill first, at every pay period. Don’t keep your “bill” in a cookie jar or in the freezer with your food. Deposit it in an interest-bearing account at your favorite bank or credit union. Two important reasons drive this must-do. First, it is psychologically better to have this growing pile of cash away from arm’s reach. The object is to save, not spend. Second, the interest-on-interest effect of compounding begins multiplying your savings to increase your bank account. Cookie jars and frozen meat cannot do this.
- Then pay your other bills per your budget. Get into the habit of living on a budget with the right attitude. Since paying you first is an important component of monthly budgeting, this will make saving money and even paying bills more fun.
Monthly Bills You Can Cut to Save Money
- Consider pre-paid plans for your cell phone. If you must have unlimited internet, texting and calling, you can now find pre-paid fixed cost plans for $65 per month—or less.
- If possible, eliminate your landline phone. More and more people find that they have little need for their landline phone and enjoy saving the $45 to $65 charge per month.
- Control cable TV charges. Do you really need 32 different movie channels? How often do you watch those exciting 5:00 AM cricket matches? You’ll have just as much fun saving $50 to $70 per month by dropping channels you don’t watch.
- If you seldom use your gym membership, drop it. Switch to walking, biking and/or jogging regularly. Once again, you’ll enjoy your walks and bike trips while saving $25 to $75 every month.
- Evaluate your club dues and subscriptions for benefits and relevance. You may love your monthly magazines. But, do you read them all cover-to-cover? Could you read the articles and departments you love online instead—and save many trees? You may use your tennis club regularly, but other organizations may be pure expense with little benefits. Cut out dues for any club that you seldom use or visit.
- Switch to generic medication whenever possible. Many trade-name medications cost $100, $200 or more per month. Substituting generic medication will cut your “pill bills” by 50 percent or more. For example, popular cholesterol-controlling medication Pravachol can easily cost you $105 to $125 for a 30 day supply. Compare this to a similar generic, Lovastatin, which will cost around $45 to $50 for the same month’s supply.
Whether saving money by paying yourself first or cutting a variety of monthly bills, you’ll enjoy the process as much as the results