10 Habits That Save You Money
You Have No Idea How Much More Money You Actually Have
Much like getting into better shape, saving money is the product of a lot of small effective habits practiced regularly. We asked our readers and compiled information from all around the web to find the best practices you can adopt that will help you save money. A lot of us tend to unconsciously scale our spending habits with our income, and the result is that even when we’re earning significantly more money than we used to, it doesn’t feel that way. Doing an overhaul of your financial hygiene is the simplest way to make whatever you’re earning today go a lot further, and it will have a serious impact on your long-term financial future. So what are you waiting for? Let’s take a look at the most effective habits you can practice.
Thinking In Terms Of Hourly Pay
A lot of the time, when we’re evaluating a potential purchase, we make the mistake of assessing the cost against our total available funds at the moment. This is a practice that leads to overspending, and is the quickest way to unwittingly see your bank account drain down to nothing. Instead of thinking, “Can I afford this right now?” when making a non-essential purchase, try asking yourself, “How many hours would I have to work to pay for this?” This will help put into perspective the real cost to you of a purchasing decision. That cab ride home at night or those new Bluetooth speakers might not seem too significant, but when you consider how long you would have to work to pay for them, you might change your tune. Get in the habit of doing this regularly and you’ll be more likely to make prudent financial decisions.
Tracking & Budgeting Your Spending
It’s hard to make good financial decisions when you don’t even have a clue where your money is really going. One of the best things you will ever do to save yourself money is to start tracking where your money is going, and then decide where you can start to reign in spending. We recommend Mint.com as an easy and free tool to help you do this. It makes it easy to track spending across credit cards and checking accounts so that you can more easily spot the holes in your sinking financial ship. Oftentimes, the biggest drains to our bank accounts aren’t the obvious big-ticket items, but the small, frequent spending habits that add up over time. Perhaps you’re spending way more on cab rides, restaurants, or at the bar then you are actually comfortable with, and the only way to find out just how severe the impact really is means finding out how much each of those categories add up to. Start tracking your spending first, and then once you’ve figured out where it’s going, create budgets for yourself to help you get your spending under control.
Learning to negotiate is an incredibly valuable skill, and a habit that when practiced at the right times will have an unimaginable impact on your financial future. It might not seem like negotiating plays a large part in the average 21st-century man’s life, but the few times when it does just happen to be the most important times of all. When you’re buying a new car, a house or getting a new job, negotiating will play a huge role. In some industries, the difference between poor and fantastic negotiation skills could mean a 50% difference in pay.
It may seem out of place in this list, but we’re actually quite serious here. Getting your birth control situation handled is the only way to prevent a $241,000 mistake — the average cost of raising a child over 18 years in the U.S. (That number doesn’t even include college, by the way.) While there is obviously nothing wrong with having a child, doing so on your terms is critical for your financial future. It would be silly to spend your time trying to build positive financial habits only to throw it all away because you ignored a $2 solution to a $241,000 problem.
Cooking Your Own Meals
Learning to cook is a skill that is valuable for more reason than just your financial well-being, but that alone is enough reason to make it worthwhile. Eating out at every meal is one of the easiest ways — short of developing a drug addiction — to drain your bank account. A coffee and a breakfast sandwich on the way into work. Lunch with your co-workers. Take-out at dinner. Does this sound familiar to you? If so, you’re the prime target for savings here. You can start small with only one meal a week and slowly build up the habit — and your cooking skills.
Using Online Resources
Chances are, whatever is is you are trying to accomplish right now, there’s probably a free or cheaper online resource for it. A good way to cut back on your expenses is to do your best to seek out tools online to replace the things you might normally pay more for. A Netflix account, for example, costs about 1/10th of what your cable bill probably costs. A free Spotify account could likewise save you a ton if you’re a serial iTunes purchaser. While not all of the alternatives might be as palatable to you, it’s at least worth checking out the options so that you can make the call yourself.
Waiting A Week
As obvious as it may seem, the best way to limit the amount of impulse purchases you make is to take the “impulse” out of the equation. A good habit to get into is waiting a week before making any purchases you would have otherwise made on the spot. By the time next week rolls around, chances are you will be much less inclined to make that purchase at all. Most of the things we end up impulse buying aren’t things we desperately need right now anyway, so this shouldn’t negatively impact you in any way.
Paying Yourself First
It’s one of the most tried-and-true pieces of financial advice anyone will ever give you, and for a reason. Paying yourself first means putting money into your various savings and retirement accounts before you put that money anywhere else. By taking the money out of the equation right away, you will literally be saving yourself a lot of money, but you’ll also get a much more candid perspective on how much money you actually have available to you. Make this easier for yourself by setting up automated deposits to happen lockstep with your payday. You’ll thank yourself, trust us.
Dividing Your Accounts
If you frequently find yourself living a little more paycheck-to-paycheck than you’re comfortable with, it’s probably a good idea to divide up your accounts. At the very least, you should break up your main account into one devoted to bills and utilities, and another for discretionary income. This is, of course, assuming that you’ve already paid yourself first. Doing this will give you an immediate perspective on how much money you can actually afford to spend between paychecks, and it will make it easier to re-evaluate a lot of your purchases.
Saving Your Savings
This entire exercise would all be for naught if you didn’t actually save any money with your new-found financial habits. Reducing spending in various areas of your life is great, but if you don’t earmark those savings for beneficial purposes then all you have really done is free up more money for additional frivolous purchases. When you start to build positive spending habits, start to track how much money you are saving as a result, and make sure you put that money to work by investing it, putting it into savings, and working on your retirement account. You are, of course, free to do with your money as you wish — but this is the single greatest step towards long-term financial success.