I’ve been recommending now for years that you stop using your credit cards for ordinary purchases, and spend only money you have—by cash, check, or ATM card. Studies have shown that folks will often spend as much as 100% more using plastic rather than cash. This is not surprising when we realize debt is the most aggressively marketed product on the planet.
Plus, credit cards prevent us from seeing where we really stand financially. The more clearly you can keep track of your finances the less likely you’ll end up at the bankruptcy lawyer’s.
Next to credit card problems, the complaint I most hear from folks is frustration at their inability to save money. Saving is a primary way to establish control over one’s finances. Saving is power. And everyone has the ability to save—they just need to know how. So here are today’s tips to give you a handle on saving:
First, everyone, regardless of their income, should set up an automatic savings plan with your payroll department. Have an amount deducted from our paycheck go directly to a local credit union. (Remember, it is often easier to develop a personal relationship with a credit union than a bank. Plus, it’s more likely they’ll remember your name when you call.) It’s easier to save money you don’t see. Make the deduction just a little higher than the most you think you can afford (you can always change it). And watch it grow. If you find yourself unable to keep your hands off the savings, consider increasing your tax withholding. You won’t see your money until you file your tax return next spring, but you’ll have it all. This may be a little painful at first, but within a short time you won’t even notice it.
Second: Try “saving” an amount equal to whatever you spend on nonessential indulgences. Put a matching amount in a cookie jar for money spent on beer, wine, cigarettes, even designer coffee. If you can’t afford the matching amount you can’t afford that vente soy Frappuccino.
Third: Buy an interesting glass vase from a thrift shop and set it near where you empty your pockets at night. Toss all your pocket change in the vase. In six months you could easily have $100 saved. A small thing, but easy. Just saving loose change has persuaded many folks that they DO have the ability to save. And when they become convinced they can save, they find other ways to build that emergency fund or save for other goals.
Fourth, do you balance your checkbook regularly? If not, it’s a good habit to start. Balancing your checkbook keeps you present to where you stand financially. Plus it avoids bounced checks and overdraft charges—which can be murder. If you enter the deduction each time you write a check you can be sure to stay in the black. And don’t forget to balance your statement at the end of the month—banks do make mistakes which are usually NOT in your favor.
And while we’re on checking accounts—look around for free checking. It may require maintaining a minimum balance, but the savings on fees in a year could be $100 or more.
My last tip for today is to consider connecting with an on-line savings campaign, such as smartypig.com, which offers strategies to encourage and empower you to save. But beware—use online help for ideas and inspiration—but always save your money in your own bank or credit union account.
Developing the power to save is a huge first step toward financial stability. It may take a few weeks to see real change, but try it as you would start a long journey—with just one step.
Categorised in: Saving Money
This post was written by Cypress Coast Law