We hear all the time about how people cannot save any money anymore. The U.S. savings rate is abysmal. Whether it’s just by habit, convenience or lack of priorities, many people have a mindset that leads to wasting money. If you start consciously thinking about how you spend money and make changes to the way you think about money, you can get yourself out of this habit. Once you start implementing a new way of thinking, you can find enough money every month to build your emergency savings, contribute to your 401(k) or fund your IRA. Here’s how:
Set a goal to save money and make it realistic. It sounds simple, but if you have no goal, you won’t save any money. Don’t start with some enormous amount that will lead to a severely restricted and monastic standard of living. Start small. Decide to save $25 the first month. Then increase the amount you save each month. It will get easier.
Learn to be patient. Everything goes on sale at some point (even Apple products). The only time you should buy something is when it’s on sale. If you need something, put it in your calendar for the 1st of the month that it normally goes on sale. When the reminder comes up, start looking for sales.
Don’t replace things that aren’t broken. Stainless steel appliances are attractive but can you really afford to replace all your white appliances, which are working perfectly well, to have an “updated” kitchen? If your 42” television still works, do you really need a larger one? You’re simply confusing wants with needs. You want stainless steel appliances. You don’t need them.
Start valuing your time properly. There are people who will drive miles out of their way to save a dime on a gallon of gas. This is most likely not a valuable use of their time. Then there are people who will just go online and buy a plane ticket (or anything else) rather than spending a few minutes per day over several months repeatedly checking prices until they catch an airfare sale. This would have been a valuable use of time, resulting in savings of possibly hundreds of dollars. Spend time researching sales and discounts where it counts the most. Then spend the remaining time researching the smaller purchases. Don’t drive 20 minutes out of the way to save $2.
Take proper care of your possessions. Calculate how many hours you have to work, after taxes, to pay for the things you buy. You work so hard to make that car payment. Why not take the time to wash the outside and inside of your car? Throw away the garbage in it. Vacuum the upholstery. It’s great exercise. Take it in for scheduled maintenance. Everything lasts longer if you take proper care of it.
Learn to be flexible. We all have a dream vacation in mind, but you have to be flexible. You may want to go to Hawaii over Christmas vacation, but the cost is double or triple what it would be if you chose to go at a different time of year. Or, Hawaii may be too expensive for your budget at any time of year. Be flexible and look at other less expensive but equally beautiful beach destinations – like Florida.
Get organized. Keep a list of things you need on your phone. When you are out and about, check your list. Something you need may be on sale but if you can’t remember what it is you will miss the sale. Do you come home from the store only to find that you already had something you just bought? Go through your kitchen cabinets and organize everything into related groups and rows. Put the items that expire first in the front. Do you spend 15 minutes every day looking for your keys? Put a bowl or key rack by the door. If you can’t find documents because there’s a pile of paper on your desk, get in the habit of recycling junk mail as soon as you walk in the door. Clean out your closets so you aren’t searching for shoes, hats or gloves, or buying duplicates of things you already have but just can’t find. Getting organized frees up time you can spend looking for sales and discounts on things you really need.
Get out of the gift club. We all appreciate a thoughtful gift, but honestly I don’t need anything. If you can’t fund your IRA — get out of the gift club. Do your adult friends still give each other birthday and/or Christmas gifts every year? Why not just buy your friend a glass of wine? If people keep giving you gifts and you don’t reciprocate, eventually they will stop. Don’t be pressured by others into spending your money.
Set your bills on auto payment. Every bill you have should be set up to be automatically paid from your checking account or through a credit card (that you pay off every month). Auto payment has been an option for more than a decade. The credit card company isn’t going to “drain” your bank account in error. If you pay your credit card or cellphone bill late, the fees can add up to $25 or more. Can you really afford to take that chance? If it’s possible that auto payment is going to lead to an overdraft in your bank account, then you have too many bills. You need to cut back your spending.
Ask for a discount. Nearly everything can be negotiated — and that includes prices on appliances, electronics, shoes, even food that’s about to expire. Don’t be afraid to ask for a discount. The worst thing that can happen is the store clerk says no. If he or she won’t reduce the price, ask for a cash discount. You don’t have the cash to buy it? In that case, maybe you should just leave the store.
Change banks. People don’t have traditional banking relationships like they did in the 1950s. Your ability to borrow money is based on your income and credit score — not whether the banker knows who you are. If your bank has no ATMs conveniently located near your home or office, you need to change banks. Five bucks a week in ATM fees over a lifetime is a lot of money. Do you really want to pay to access your own cash?
You are who you associate with. If you’re surrounded by people who waste money, it’s hard to break out of the wasteful mindset. Enlist the help of someone thrifty. Everybody knows one. Even if it’s an acquaintance, make contact. They will know every trick in the book and will be more than willing to share. Trust me. The thrifty are always looking for new like-minded friends because we’re in the minority.
Here’s a bonus way to reinforce the saving mindset: Read the Living on the Cheap websites.
This isn’t a shameless plug for our network. Our team is dedicated to living well and spending less. Every writer, editor and publisher on every site has years of experience in saving money. Spend some time going through the main Living on the Cheap website and the other city sites and learn from us. Subscribe to Living on the Cheap, and the city you live in and cities you might like to visit and get information every day about the best deals and discounts. We do most of the work for you.
You don’t have to change the way you think all at once. Start with one thing at a time. Once you get going you will find that it gets easier to change your ways. After you see the impact that one change has on your finances, you will become more energized to find other ways to save even more money.