So you’re determined to start saving for a car or a house this year, and you’ve decided you’ll settle for Ramen Noodles and holey socks to do it. Before venturing down the path of total deprivation and running the risk that you’ll binge and overspend, consider ways to Spend Wisely:
- Separate Needs from Wants – Decide what you need and what you want in advance. Treat yourself on occasion to something you want. Make sure it fits into your yearly budget.
- Set a Yearly Budget – Your budget should include savings and expenses such as clothing, accessories, self-care, and entertainment. Make sure to also include a few wants so you don’t feel completely deprived.
- Pay Yourself First – Determine an amount to save and set it aside before you do anything else. Consider opening a separate bank account and have your savings direct deposited.
- Avoid Revolving Credit – Pay off credit card purchases at the end of the month to save on interest and help build your FICO score.
- Pay your bills on time – Save on late fees and also help build your FICO score.
Don’t go Window Shopping – You’ll always find something you MUST HAVE!
- Shop Off Season – Buying winter apparel and accessories in January/February, summer gear in August/September, greetings cards when the holidays are over can save you 50% at department stores and 70% or more at designer discount stores.
- Shop for Clothing Seasonally – Take the amount you’ve allocated to clothing per year (i.e. $900). Use 30% ($360) to shop for summer clothing once during the year and 70% ($540) to shop for winter clothing once during the year. Don’t shop or browse at any other times in the year.
- Shop Designer Discount – At the end of each season, manufacturers sell full racks of unsold wholesale clothing to designer discount stores such as Annie Says, Century 21, Daffy’s, Marshalls, and Sims at a fraction of the cost. They pass the savings on to the consumer at 50% or more off the suggested retail price.
- Brown Bag Your Lunch and Dinner – You’ll save a fortune by preparing your own meals. On average 50% or more is saved by eating home-made. Instead set one day in the week you’ll treat yourself to take out and stick with it.
- Make your own coffee & energy bars – A cup of self-brewed coffee with milk and sugar costs only $0.20 as opposed to Designer coffee at $3.00 per serving, and regular at $1. Home-made energy bars cost $0.75 per bar as opposed to $2.00 for store-bought.
- Cut Premium Channels – Instead, purchase a movie subscription such as Netflix for a small fee per month for unlimited movies.
- Get Your Deal of the Day – Sign up at sites such as Groupon and Living Social. But use the deal for what’s already in your budget! Do not be tempted to overspend by getting deals on stuff you don’t need.
- Buy in Bulk – Check for volume discounts at your local supermarket or wholesale club, such as BJ’s and Costco.
This post relates to the Life Strategy: Balance, Finances