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Tips to save you money

March 04, 2005|by Lynn Little

Paying down debt and building savings need not be a dream. The trick is learning to use what you have wisely.

People neglect saving because they don't think they have much to put away. Putting away $10 a month or saving your change every Friday can add up. Skipping one $1 trip to the vending machine every week can save $52. Doing it every day, five days a week, 52 weeks a year, will yield a savings of $260.

Even people who say they can't save money usually can save something. For example: A father enjoyed taking his three children to a convenience store on Saturday mornings for chocolate milk and cinnamon rolls. The outings cost about $15 each week - or $60 a month - and the family began coming up short.

In reviewing their expenses with a financial counselor, the family decided to enjoy chocolate milk and cinnamon rolls purchased for a lower cost at a supermarket. Doing so saved them about $40 a month (or $480 a year) but still allowed the children time with their father.

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Here are some tips to help you find ways to save money:

· Identify key expenses, such as a house payment or rent, car payment, insurance, food, medical bills, etc., and pay those bills first.

· Think about short- and long-term goals. Ask yourself: Will you need a new refrigerator this year? New tires for your car?

· Or, do you want to plan a weekend holiday or vacation?

· Identifying needs and goals usually can help people begin to separate needs from wants, which is key to successful money management. Before you buy, ask yourself: Which is more important? An extra sweater or new tires that will provide a safe ride?

· Stop shopping for recreation to reduce loneliness or boredom. Resolve to shop only when you have a specific need.

· Shop with a list and spend as little time as possible in the store - wandering around can increase the temptation to make unnecessary purchases.

· Leave credit cards at home and carry a small amount of cash. People who shop with a credit card can be tempted to spend more. You might also consider using a debit card that offers the convenience of plastic, but limits spending to what you have in your bank account.

· Pay down balances by paying as much as you can on the card with the highest interest, while also meeting minimum payment requirements on other cards to avoid extra fees.

· Choose direct deposit. You'll save time, and funds usually are available more quickly.

· Make saving a habit. Check to see if your employer offers an automatic payroll deduction to a savings account. If you don't see it, you won't be likely to spend it.

· Set aside money for an emergency fund. Sooner or later, everyone is likely to experience unexpected medical bills, a plumbing problem, a car repair or job loss. To meet such expenses, saving the equivalent of six months' salary is recommended. That might seem an unattainable goal. Start now to set aside funds to meet unexpected expenses. Earmarking tax refunds can jumpstart an emergency fund.

· Make a birthday and holiday gift list, and add in the extras, such as a nephew's wedding in Denver that also will involve travel expenses. Add up estimated costs, divide by 12, and budget for gift and travel expenses monthly. To reduce gift-giving expenses, take advantage of sales, and shop for gifts throughout the year.

"Pay yourself first" is a good rule to follow each time you receive money. Put money aside for savings before spending your income, and you will have a reserve to fall back on when needed.




Lynn F. Little is a family and consumer sciences educator with Maryland Cooperative Extension in Washington County.

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