The vast majority of Americans have less than $10,000 in savings, and more than $10,000 in debt. Lower wages, higher living costs and readily available credit has led to a throwaway, carefree society in which very few of us think about saving or are capable of doing so.
In this guide we’ll show you the best ways to save for the future, whether you’re looking for a buffer should you lose your job, your house, or health, or you want to cover your child’s college fund.
10. Don’t Act on Impulse
Everyone is prone to buying things on impulse. We live in a consumerist society, that’s the way it is and advertisers earn millions because they know how to feed this need.
To avoid spending money in this manner, make sure you:
- Always write a list before you go shopping and only buy the things on that list.
- Wait 24 hours before making big purchases to give yourself time to think it through.
- Never grocery shop when hungry.
- Don’t gamble or shop online when drunk.
9. Reduce Gift Spending
Stop spending huge amounts of money on gifts that no one will use. Parents buy too many toys for their kids, couples buy too much for each other, and then you have the obligation to buy something for everyone you know.
It’s great for the retail industry, but not for everyone else. To reduce the damage done by the holiday season, set a price limit with your friends and family, and every time you get a gift you don’t want, sell it or re-gift it. It may sound like a cheap and terrible thing to do, but it’s better than letting it gather dust in a cupboard somewhere.
American families spend over $2,000 a year on bottled water and coffeeshops; over $3,000 a year eating out; and over $500 a year on wasted food.
Smart budgeting and planning can reduce that grocery bill and a simple reusable bottle and thermos can save you from coffeeshop prices. As for dining out, if you can’t bring yourself to stop or slow down then at least pickup a credit card that offers rewards on dining and entertainment.
Don’t do everything by the seat of your pants—plan! It makes a huge difference when you know what direction you’re heading in and you have everything written down.
6. Focus on Debts
If you have debts then your main goal should be to pay them off. Don’t just meet the minimum payments, focus on paying as much as you can whenever you can. More frequent payments mean lower interest repayments, which in turn will leave you with more money at the end of the year.
If you’re really struggling, get some free help from our debt specialists. Just phone: (888) 431-6751.
5. Use Your Windfalls Wisely
Do not be tempted to spend an unexpected windfall on a vacation or an overpriced car. Even the most fastidious of budgeters will let loose when it comes to such a windfall as it’s not part of their budget and feels more like a gift.
Windfalls like that can make a big difference in your life, providing you use them properly. Pay off debts, if you have them, and put the money into a savings account if you don’t.
4. Sell Your Stuff
There are many great yard-sale apps out there. It has never been easier to sell your stuff—so take advantage of it.
Have a look around your home for things you no longer need or use and see how much they can fetch. You should also adopt a “sell-first” attitude. If you buy a video game and complete it within a week, get rid of it while the value is still high; if you buy a dress/suit for an event and know you won’t wear it again, take it back to the store and get a refund. It’s not a coincidence that the vast majority of debtors have a habit of hoarding goods.
3. Get a Long-Term Savings Account
The typical approach to savings accounts is to go too big too soon. You get the idea in your head, you miscalculate how much you can afford to save, you deposit the money and then, months later, you withdraw it.
This is not the attitude to have. You need an account that receives small amounts over the long-term. Rather than depositing hundreds or thousands, try depositing $10 to $100 a month. Just sign-up, set the deposits to occur monthly, and then forget about it.
Forget about how much you’ll earn and don’t be tempted to go big. Just deposit an amount that will not impact on your finances at the end of the month and then automate it. Five or ten years down the line you’ll have a nice rainy day fund.
2. Invest in the Stock Market
Stocks rise and fall and are considered a risky investment because of this. But if you look at stocks over the long-term it’s actually a sound investment, earning 10% a year on average over a decade (around 6% when accounting for inflation).
That’s because the falls are usually followed by rises. Take Amazon as an example, during the crash in the early 2000s they were worthless. If you had bought shares prior to it then they would have been worth very little, but if you had held onto those shares for another few years, they would have been worth more than before the crash.
And today, Amazon is one of the only trillion dollar companies in the world!
1. Focus on Hours Worked
The best way to add more value to the money you have and to avoid frivolous spending is to look at it in terms of what you needed to do to acquire it.
We’re all guilty of spending frivolously because we have the money to do so. If you have a few hundred dollars burning a hole in your bank then you might be more inclined to waste $50 here and there. But if you earn $15 an hour then that’s over three hours of work you’re wasting.
You’ll think twice about buying a video game you know you’ll be bored of in an hour if it takes you three hours to cover the cost.
This mindset is also great for giving up smoking and drinking, because if you do the sums you may discover that your week of hard work is merely paying for your weekend of hedonism.