How to Save More MoneyBy: Benjamin Gran
Lots of people think, "If only I made more money, I could save more." The truth is, saving money doesn't have much to do with your income. It's true that someone living in poverty will not be able to save as much as someone earning $50,000 a year. But if you have a regular middle class income, the most important factors in helping you save money are your own dedication, discipline and sense of intention in saving. You can save more by deciding to save more.
Lots of people who have big incomes are actually not very good at saving money - they're used to having plenty of money coming in, so they don't pay enough attention to the money going out. Chances are there are lots of people earning $150,000 a year who save less than people who earn $50,000 - because the "$150,000 lifestyle" is so much more expensive. Once they start making a certain amount of money, people tend to find that their "needs and wants" become more expensive. "Keeping up with the Joneses" takes on a new meaning when everyone has more money to spend.
What are some ways that you can save more money, no matter what your income might be?
Figure out where your money is going.
Do you know how much you spend each month on your rent or mortgage, insurance, gas, and utilities? You might be surprised at how little money you have left after you add up these "fixed expenses." Find out how much truly discretionary income you have at your disposal each month, and look for ways to shrink that part of your budget.
Be ruthless about your spending.
If you really want to save more money, you need to re-examine your budget priorities. Do you really need cable TV? Could you get by with renting Netflix and RedBox DVDs instead? How many meals are you eating out at restaurants? Get serious about meal planning instead - every time you cook dinner in your own kitchen, you're saving money and "paying yourself" to be your own personal chef. Try to go grocery shopping only once a week - every time you're in a store is a chance for you to make impulse purchases or over-spend; limiting your number of shopping outings helps you to avoid temptation.
Re-think your "fixed" expenses.
Even "fixed" expenses like insurance and mortgage payments can be re-negotiated if you are willing to bear some additional risk or pay some upfront costs. Could you refinance your mortgage to a lower rate? There are some closing costs involved in refinancing, but you can often roll these fees into the total cost of the new loan, so that you can minimize the amount of cash you have to spend. Could you raise your deductibles on your insurance plans? Raising your car insurance deductible from $500 to $1,000 can save you money every month - but you need to be prepared to pay more out of pocket in case of an accident.
Liquidate your assets.
This is a fancy way of saying, "Have a garage sale." Do you have an elliptical trainer in the basement that hasn't been used in three years? Snap some photos and put it on Craigslist - chances are you could sell that thing for a few hundred dollars. Do you have old clothes and toys that your kids have outgrown? Sell them at a consignment store. Purge your closets of unworn clothes, outdated items and unused furniture. Go through every room in your house and identify something you can sell. The added money in your bank account - and the reduced clutter in your house - will give you a newfound peace of mind.
Saving money isn't always easy, but it's not rocket science. It just takes a certain willingness to re-think your financial habits and re-align your financial life. Many people go through their financial life on "auto-pilot" without ever taking control. If you want to save more money, making more money isn't necessarily the answer. Sometimes you just need to do a better job of taking control of the money you have.
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How to Save More MoneyBy: Benjamin Gran
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