June 24th, 2013
Use These Little-Known Budgeting Tips to Help You Save Money
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**Today’s guest post is contributed by Kayla.**
While the amount of money you’re earning every month is important, it can become just a minor part of the equation if your budget is lacking teeth and your savings are small or nonexistent. If you’re not saving money each month, you won’t be able to succeed in paying off credit card debt, building a retirement fund, or achieving any of your other financial goals.
Aside from the run-of-the-mill budgeting advice geared towards saving money – cutting unnecessary expenses, living below your means, etc. – there are a few lesser known tips that can help you rearrange your thoughts and actions so that you save more money. We’ll take a look at them below.
1. Think Like a Bank
When you take a loan from a bank, they charge interest in order for the exchange to be mutually beneficial. So why not do the same when you borrow from yourself? After all, if you knew that pulling money from your savings account every month (or failing to save in the first place) would result in an interest charge payable to your own savings account, you might think twice about the importance of those purchases you were making.
Action: Keep track of each and every time you have to pull money from your savings account in order to make a purchase or “re-fill” your checking account. Then calculate the interest on the money you’ve “loaned” to yourself. On an ongoing basis, consider whether each purchase seems worth it considering the total cost (the original cost plus interest)?
2. Give Yourself a Buffer
If I’m craving something that I know I’ll seriously regret eating later, I’ll sometimes attempt to wait at least 15 minutes and check in on the craving again. If it’s still there, I’ll allow myself to give in to it – but that’s rare. Usually, the craving loses its power after the 15-minute window. Most of the time it’s gone altogether, meaning I can avoid making an unfortunate food choice.
Action: Apply the same concept to making purchases. Whether you wait 15 minutes, a full day (better), or even a week (best), you’ll reduce your chances of engaging in unnecessary spending. That immediate urge to buy, and any emotions tied to purchasing the item, will likely be far less powerful once the “buffer” period has passed.
3. Keep Fewer Accounts
Unless you are fully in control of managing your money, having lots of accounts is more trouble than it’s worth. For one thing, multiple accounts are hard to track and even harder to utilize in a way that will aid your money saving efforts. Different accounts have different balance requirements (and fees tied to them), so if you are already struggling to keep money locked in your accounts, multiple accounts aren’t going to help. Dealing with them is overwhelming and distracting. Plus, progress toward your financial goals is easier to recognize if you can easily see it.
Action: Streamline your finances so you can quickly get an updated snapshot of where you stand. Avoid getting paralyzed by too much paper. Being able to see your progress at a glance will encourage you to strive for more of the same.
4. Pay Your Future Like a Bill
Once you’ve determined how much your bills total every month and how much is left over, consider that “leftover money” to be another bill – your savings and/or retirement fund bill. Without a change in your psychology, it may be difficult to consistently save up for your future. But if you treat it like something that can’t be ignored, then you’ll be more likely to have success.
Action: Pay that bill first every month by depositing it into a savings account that isn’t readily accessible (i.e. directly attached to your checking account). Better yet, if your employer offers direct deposit into multiple accounts, take them up on it – that way the employer will essentially be paying this particular “bill” before you can consider using that money elsewhere.
5. Pay Your Bills All at Once
When it comes to paying bills, we’ll often trick ourselves into believing we have more money to spend on day-to-day life when we know that those funds are already earmarked for expenses due at the end of the month. That’s why paying all bills at the same time (and same day) can help you get a better sense of how much money you have available. It can also help you avoid failing to make a credit card payment. You’ll get a firm grasp on where you stand at this current moment by paying all of your bills at once, while reducing the likelihood of late or missed payments.
Action: If necessary, rearrange your due dates to make it possible to pay all your bills on the same day. Ask your credit card company, utility company, etc. to change your billing date so that each of them occurs simultaneously. Usually these service providers are willing to make such a change. This will quickly cut down on the “oops” moments that often come later in the month when that extra, easily forgotten bill comes due.
6. Try a One-Day Spending Fast
If you’re used to spending money on a daily basis, it can be incredibly hard to break the habit cold turkey (not to mention that it’s not a sustainable way of changing behavior). Instead, try committing to a spending fast for just one day a month (like the 1st or the 15th). This will open your mind to new ideas and ways of getting what you need from places and things you hadn’t considered before.
Action: Decide on the one day per month when you will absolutely not spend any money. Then circle it on the calendar and stick to your promise. If that’s successful, add another day. And another. Challenge yourself to filling the month with as many spend-free days as possible.
We hope these little-known budgeting tips are helpful in your journey to take control of your finances and conquering that credit card debt interest for those of you who are in debt. Do you have your own unusual budgeting tricks you use in order to save more money? If so, share them in the comments below!
Kayla Albert is a proud Colorado native and personal finance writer for ReadyForZero, a company that is helping Americans manage and pay off debt on their own. She enjoys sharing tips on saving money and getting out of debt.
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