Saving Money (For the Holidays)

Saving Money

My husband and I decided a few months ago to start saving money. We started out small, and then got really aggressive with our savings plan. There are three basic steps we went through and hope they will be of use for you too…just in time for the holidays!

1. Create your goal(s)

List out the things you would like to buy and how much they will cost. Be realistic in their costs and do homework if you need help. List everything and include incidental money for price fluctuations and emergencies.

2. Prioritize & Find ways to save

If you are like 50% of Americans you live paycheck to paycheck. Saving money is something you will have the hardest time doing, but it can be done. Track where your money goes in one month. Itemize everything!! This means keep receipts and list everything out. How much did you pay for rent, food, bills, & other expenses?? Other expenses are where you will find the bulk of your savings plan. Cut out anything you don’t need. Need, meaning you can’t live without. This is the most difficult part for everyone. You need to cut as much spending as possible without feeling like you are strapped. Remember, this is money you are saving for something in the future. Take pride in how much you are saving so you don’t feel deprived of anything. You’re not poor, but living like you are means more money saved at the end of the day. Here is an example:

Items Cut:

Cable TV (Replaced by Internet TV) = $80 per/month

Eating Out 3x’s a Week (Replaced by going out once a week) = $40 per/week

Buying new Media & Going to Movies (Replaced with Netflix) = $25-30 per/week

Eating Out for Lunch (Replaced by packing lunch everyday) = $25-40 per/week

Cut out All Non-discretionary Spending = $100-200 per/month**

Only Running the Heater/Air While We’re Home = $50-100 per/month

Buying Smart Value store brands instead of name brand groceries = $150-200 per/month

Total Saved a Month = $840-1000

**My husband & I are not big spenders normally, most family operate on more than $200 discretionary spending a month. Keep all your receipts from one month to find out how much you (and your family) spend on discretionary items.

As you can see these things start to add up. Just imagine what you could do with an extra $1000 a month! Just prioritize your spending and cut wherever you can.

3. Stick to the plan

There will be times when you will have unexpected needs, but don’t get discouraged. For habitual spenders, saving money is like dieting. It’s really hard to fall off the wagon and continue with bad spending habits. The trick is not to lose site of your goals. Recruit others to help you or talk to a financial planner. It’s always nice to have a coach or someone to keep you honest with yourself. Also, if you plan in advance for incidental money, you will be less discouraged if something bad were to happen. Spending can be an addiction just as bad as smoking or caffeine. It’s hard to break old habits, but the trick is to recognize what you are doing and make a conscious effort to break those habits. This doesn’t mean you can’t go out shopping or out to eat with friends. It just means that you are being smarter about where your money is going. Happy Savings!!