Many of us have long been amazed and puzzled by the fact that our budgets every month seem to equal exactly what we spend. One of the principal reasons for this is that we have no savings component built into the budget! One of the first ways to start developing a nest egg is to make it a priority.
• Open a bank account for savings – if it’s in the same bank as your checking account, you can transfer funds into it electronically. And then just do so, every time your paycheck rolls around. Don’t set it aside for Christmas, or a holiday, or some other near term use. Make it a true savings account.
• Let them do it for you at work. Open an IRA or 401K and the controller at your place of business will automatically withdraw a sum from your check every pay period and place in the 401K. That’s a retirement account, so those are tax free dollars until you withdraw them.
• When does the biggest expense of the year come along? For most of us, it’s Christmas. The way to keep this holiday from cleaning you out is to start shopping in August, and buy a gift or two every month. The other part of this suggestion is resisting the temptation to blow the budget after Thanksgiving, when the advertising is all around you.
• Don’t use credit cards. It’s that simple. It’s debit, every time. If you can’t afford to debit it, you can’t afford it. If you don’t apply this approach to Christmas, you’ll be paying for it until April, when the holidays are three months gone.
• If you have a major expense coming up such as a summer vacation, plan for it. With plane tickets sooner is always better, so buy your tickets early. That’s one less item coming out of your summer budget. If you’re going to go into debt for that trip, decide how you’re going to pay it off and when.
• Take a look at your monthly budget, and see if there are some items you can lop off. Two that are always vulnerable are the cable TV bill and the cellular phone bill. Do you really need four tiers of programming? 1200 minutes of talk time per month? If you can knock those two expenses down twenty dollars a month, add it to your savings deposit.
• Commuting has become a significant expense, and commuting in your own car is not going to get cheaper anytime soon. Take a look at the public transit options; at carpooling; at working at home. It doesn’t have to be a total change in lifestyle - if you can come up with one or two days a week when you’re not in your car alone, you will be saving enough money that it matters.
• Never go to the grocery store hungry and when you do go, take a list. Don’t buy anything that’s not on that list. Impulse buying can lay waste to the noblest plans.
Then there’s the basics: take your lunch to work, drive a car that takes regular gas, stay out of convenience stores – the list goes on. Frugality is a state of mind, but saving is an act – or rather, a series of acts that we engage in leading directly to a growing bank account. With electronic banking, setting aside extra cash – no matter how little – is simply a matter of turning on your computer.
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