Tips on Saving Money
Going hand and hand
with an effective household budget is saving money on those things that you
truly need. To start saving, take an inventory of your needs to see where you
can shave the dollars. Begin with the biggest items first, where the most
potential for savings is, and move down the scale to the less expensive items.
A moderate savings on one of the big items (houses and cars) combined with savings on the smaller items (food, clothes, etc.)
can reap a large reward in your total budget. The following are some thought
starters:
General Tips
Distinguish between Wants and Needs: You will save a ton of money if you don't mistake wants for needs. Needs are pretty
simple to identify--those items that are necessary to sustain: Shelter, food,
clothing, transportation. Wants are those things that enhance or possibly
improve our family life. A car is a need. Unless necessary for your business, a
$40,000 Sport Utility Vehicle is a want, even if a lot of people don't see it
that way. Have you ever heard (or said) "I absolutely need...?" when the actual meaning was
"I really want?" This is not
to suggest that you shouldn't be able to have the things you want--only that to
delude yourself into believing that a want is a need--and busting your budget
in the process--is a recipe for financial disaster.
Is less better? Perhaps it was due to the booming economy, perhaps "keeping up with the Joneses", maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see if there couldn't be savings found with minor changes in habits.
Try before you Buy: This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, after! Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying, "geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)
Is less better? Perhaps it was due to the booming economy, perhaps "keeping up with the Joneses", maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see if there couldn't be savings found with minor changes in habits.
Try before you Buy: This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, after! Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying, "geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)
Specific Tips
The Big Ones
The Big Ones
House Mortgages. In all probability,
your mortgage will be the largest single expense in your budget. Obviously,
getting the best deal here is of ultimate importance. Not comparing could cost
you thousands of dollars over the term of the mortgage. An excellent resource
for comparisons is LendingTree Mortgage Loans where you can submit one easy and quick loan request form and within 3
business days get up to 4 offers from competing lending institutions. Find more
information on LendingTree Mortgage Loans here.
Cars. For most families,
the next biggest expense is their car(s). Mistakes made here can often be as
costly (on a monthly basis) as mortgage miscues. Take a look at the vehicle(s)
you presently own. Do you own too much vehicle for your needs? Do you have
equity in a car that you no longer use frequently? Could you downsize and save
money, not only in monthly payments but also in maintenance, insurance and
operating expenses? With the vehicles that you do own, are you getting the best
deal on your repairs, maintenance and insurance?
And the Smaller Ones
that Add Up
Insurance. Most of us pay our
automobile and homeowners insurance premiums by habit, rarely if ever making
comparisons. With many families insurance costs totaling over $2000 a year,
even a 15% savings equates to $300 annually. Some hints from the Insurance
Information Institute on saving money on your homeowners insurance include:- Be
sure to shop around. It may take a little time, but it could save
you money. The insurer you select should offer both a fair price and
excellent service.
- Raise
your deductible. Deductibles on homeowners policies typically
start at $250. By increasing your deductible to $500, you could save up to
12%.
- Beef
up your home security. You can usually get discounts of at least 5%
for a smoke detector, burglar alarm or dead-bolt locks.
- For
more tips, see
the Saving on Homeowners Insurance section.
For automobile insurance the Insurance Information Institute recommendations include:
- Shop
around. Prices for the same coverage
can vary by hundreds of dollars from company to company, so it pays to
shop around. Surf the net, ask your friends or call your state insurance
department for ideas about companies and agents to contact.
- Ask
for Higher Deductibles. By requesting higher deductibles on
collision and comprehensive (fire and theft) coverage, you can lower your
costs substantially. For example, increasing your deductible from $200 to
$500 could reduce your collision and comprehensive cost by 15% to 30%.
- Take
Advantage of Low Mileage Discounts. Some
companies offer discounts to motorists who drive fewer than a
predetermined number of miles a year.
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Food. Not only do you
need to eat food to live, the expense of it for the average family can eat you
alive! Since food is a necessary and recurring expense, just saving, for
example, $20 a week on your purchases can convert to over $1000 in savings over
the course of a year.- Try
to plan in advance. By knowing what you need, you will be able
to buy in larger quantities (almost always less expensive) and cut down on
convenience food purchases (always more expensive).
- If
you use national brands, spend a little time clipping and using
coupons. $1.50 invested in the Sunday newspaper could save you $20 or more
at the checkout. Organize the coupons by type, so as you develop a
shopping list you can make a notation if you have a coupon.
- Consider
store brands or generics. You may find the quality is equal to (and
sometimes better than) the national brands, and store brands/generics are
generally considerably less expensive.
- When
it is on sale, stock up. Of course this only applies to those items
that you use on a regular basis. Stocking up on an item which you use once
a year doesn't make sense (and robs you of spending money, not to mention
shelf space).
- Shop
at the store that is the cheapest overall. Surveys have shown that
there is sometimes as much as 10-15% difference on identical grocery
orders at 2 different stores in the same area. If you spend $500 a month
on groceries, that can equate to $600 to $900 a year in savings. Don't
throw away your money just because it is your habit to shop at a certain
store.
Clothing.
Although many consumer items have actually reduced in price over the last few
years (most notably, computer and electronic items) the cost of clothing has
seen a continuing upward spiral. In addition, a purchase price that not too
long ago bought a good quality garment now seems to buy virtually "throw
away" clothing. With some planning, though, it is possible to maintain
clothing purchases that are in line with your family budget.- Buy separates that coordinate. You can make numerous combinations with a few well
matched items. For women, jackets, slacks, skirts and blouses can be mixed
and matched to create many different outfits. Plus you can change the look
of these outfits with accessories such as jewelry or scarves. Men's
clothing offers a wide variety of separates that can be coordinated:
blazers, slacks, shirts and ties can all be interchanged to create a
versatile wardrobe with a minimum of expense.
- Buy a season ahead. Buy next year's winter clothes at the end of this
season and save. The styles won't change that much (if at all) and you
will pocket a big difference in the price.
- If you are "hard" on clothes, buy quality. Buying an $80 pair of shoes that will last saves money
in the long run instead of having to buy 3 pairs of $35 shoes that don't
hold up.
- Stay away from trendy fashions. Stick with the basics. You can always be sure you
clothing styles will last from year to year when you buy perennial
stand-bys such as medium length A-line skirts and solid tailored blazers
for women or neutral color shirts and tailored to semi-tailored sports
coats for men.
Telephone. In
most areas of the country, your local phone service is currently regulated and
has a fixed price. The difference in long-distance costs, though, can be
eye-opening. Many consumers simply stick with their current long-distance
carrier because it is convenient and they feel that it would be a hassle to
change. By shopping around, however, you may find some considerable savings
that can really add up. We were able to find a plan that gives savings of about
$16.75 a month and $200 a year, a fairly considerable amount. Switching over
was simple and not time consuming--a pretty good return on time spent!
Comparisons.
It used to be that comparison shopping was a long and drawn out process. Driving
from one store to another or making numerous phone calls could be a real time
waster. Even if you were able to make an adequate comparison, sometimes it
wasn't worth the hours you needed to invest to get the comparison. The Internet
has changed much of that. Now you can make quick comparisons on most items,
usually within a matter of minutes. What would once have taken hours to
accomplish now happens at the click of a mouse, a real time and money saver.
Don't forget online resources. For example, a site such as Ebay could
save a lot of money for a couple of reasons: First, you can make comparisons
among a number of sellers and second, you may be able to find second-hand
merchandise which can save you a bundle.
Travel.
Price differences here can be enormous. The difference in costs on the same
trip--same airline, same hotel, same car rental--between two travelers can run
into the thousands of dollars. Take a little time to comparison shop to assure
the best possible deal. A travel resource that we have found effective for air,
hotels and cruises is 
Travelocity,
