Do you wonder how to get ahead in today's economy? Chances are, your spending doesn't seem to be excessive given your take-home pay. Yet, your finances seem to be dwindling rapidly.
What can you do to improve your financial situation if you're unable to ask for a higher salary at work? Give yourself a raise, of course!
When you seem to be on the edge of financial trouble, the best remedy is a combination of two actions:
1. Minimize your spending. Trimming down a shopping habit is clearly the first step, but it's also in your best interest to consider cutting back on your bills.
• Some routine expenses that most people can do without are premium television packages or pay television altogether. You can watch your favorite TV shows for free with an antenna or on Hulu.com. Lose the landline phone if you have a cellular phone. And minimize your utility bill by going on your provider's monthly budget plan.
• If you're a dog owner, you can save on your pet expenses in several ways. Minimize your visits to the groomer by learning to groom your pet yourself. Purchase effective flea repellants at stores like Pets Mart, instead of the vet. Also, you can save a few dollars by switching to dry food rather than canned.
• An unconventional way to save money is by making your own laundry detergent. Most families spend between $10 and $20 each month on laundry detergent alone. Making it at home costs less than $2 for the same amount. If you're able to save $18 per month, this equates to $216 per year.
2. Ramp up your savings. Place every last dollar you save on monthly expenses into savings. Yes, it will be tempting to indulge on purchases you'd like to make. But remember, each dollar you save today is a dollar you'll have tomorrow.
• Treat your savings as a monthly expense. Just as you would never think of shortchanging on your rent or car payment, don't shortchange your savings account either.
Overall, if you implement only the tips mentioned above, you can save $200 per month, or $2,400 per year. What can $2,400 do for you? It can likely cover you for a while in case of a job loss or medical emergency or it can pay for unexpected car repairs. Essentially, by saving $200 per month on your routine expenses, you're giving yourself a $2,400 raise each year!
Why It's Important
Making a considerable deposit into your savings account each month is just as important as making your car payment, paying your rent, utilities, and buying groceries. Without the security net of savings, you'll be living paycheck-to-paycheck for years to come.
Nurturing your savings account is like giving yourself a raise because you'll have a considerable amount of money at your disposal without having to work any harder. You'll be able to live simply now, yet have the freedom to upgrade all aspects of your life at the drop of a hat should you want to.
The Savings Plan
Vow to deposit 3/4 of your disposable income into your savings account - along with the amount you've saved on your monthly expenses - by implementing money-saving strategies.
Therefore, if you're able to save $150 on your expenses by being frugal, and you have $800 of disposable income each month, you would deposit $750 into your savings account each month. By doing so for just 12-months, you'll have $9,000 at the end of the year. If you continue this savings plan for 5 years, you'll have $45,000. After 10 years $90,000, plus a chunk of money from interest on your savings will be yours!
Based on the above scenario, this savings plan leaves you with $200 of disposable income each month. While it may seem like a paltry amount to entertain a family of three or more on $200, you can find fun and inexpensive (or free) activities in your community to help cut entertainment costs.
Other money-saving entertainment ideas include attending a matinee, rather than an evening showing, or going to a drive-in which charges a flat fee per car or only charges for adults. Share an entree with your spouse when attending a restaurant.
Yes, you'll have to live below your means. However, is having $9,000 at your disposal worth it to you? If not, does $45,000 make it more appealing? What about a $90,000 savings after ten years... or even a six-figure savings of $135,000+ within 15 years?
Once the long-term effect is taken into account, it's more than worth sacrificing a few luxuries now. You'll be glad you did!