Today’s society tends to struggle more with saving money and sticking to a budget than ever before. Cost of living increases that do not coincide with raises are only part of the problem. Most people between the ages of 20 and 40 were never really taught how to save money or to handle money responsibly. In generations before, it was reasonable for kids to get a job if they wanted a car. It was possible to earn enough to buy a car on an after school job. This hasn’t been the case since the eighties, and many adults today didn’t experience part time jobs for the purposes of learning how to handle their money.
Therefore, today’s 20 to 40 year olds are learning the hard way exactly how far a dollar doesn’t stretch. Budgeting money and saving money are priorities that simply can no longer be overlooked, and here we will present a few simple ideas to get the ball rolling in the right direction.
It may seem simplistic, but budgeting money begins with knowing how much comes in and how much goes out. Not just a weekly or biweekly paycheck amount, but how much does it cost you when you call in sick or leave a few hours earlier than normal. When figuring out how much goes out, it’s a question of more than just bills. How much is spent on food, nights out, daily little things that are picked up at the local corner store, doctor visits, dentist bills, vet care, dog food and associated expenses. One of the best ways to do this is to keep all your receipts for a month, including that $3.63 receipt for coffee, and tally them up on the last day of the month. This can give you a very clear picture of how much money is being spent every month.
Eating at home is one of the fastest ways to save money. Dinners out can add up very quickly to two or even three times the normal food budget. A steal dinner at an average restaurant can run between $16 and $22. Most people go out to dinner with at least their significant other, so that’s two average dinners. Add drinks and a tip, two sodas or iced teas at $1 to $1.50 a piece plus 15% for the wait staff and you are already up to $40 to $50 for the evening. That’s just an average chain restaurant.
Now, if you’re one of those people who never seem to have money regardless of how much you earn, then your saving plan should start with every paycheck. Some people will simply spend what they have no matter what. Opening a savings account and immediately placing just $50 from each paycheck into that account will start a small savings plan. As time goes on, you may want to try adding larger amounts.
Single people who want to save money may want to try the room mate approach, although this should be entered into carefully. Unless you are willing to run credit checks on people, you may very well end up paying more money than originally planned. Additional people always mean higher household bills. But, if you’re willing to do your homework, you may very well find a perfectly good living situation that eases the financial strain from your shoulders.
Online bank accounts are excellent ways to save money. Most of them offer higher percentage rates than tradition bank savings accounts and they are not immediately accessible. Not having instant access to savings accounts can make it much harder to spend the money frivolously. It requires effort and consideration not only to open an online savings account, but to retrieve the money. Even putting aside nominal amounts of money this way can really add up into a nice little buffer between you and financial devastation. A good friend of mine opens an online savings account every time she there’s something she wants over $1000. She labels each account as that item and when she reaches 100 over the cost of the item, she pulls the money out and gets her new toy. This works much better than the impulse check card spending method she used to use buy her toys.
Take advantage of company stock options if they are offered. A little of your paycheck and a little of your money heading into stocks that are simple to sell is a nice little savings account with typically a better interest rate than even online accounts.
Budgets and saving money are typically made or broken in the little decisions. Whipping out the Visa check card for every little impulse $10 impulse purchase, because it’s only $10, gives you the illusion that you are sticking to a budget and not overspending. People know when they are breaking their budget by hundreds of dollars on a large purchase. They are unaware when they are breaking the budget on numerous small purchases. People with little self control on items under $50 should rid themselves of the convenience of a check card and go with strictly cash. Holding cash in your hand makes it more obvious that you are spending money, and how much of it you are spending. That’s why casinos don’t operate in cash. One small purchase here and there may not seem like, but when you’ve accidentally depleted your self-set weekly allowance in one trip to Wal Mart, the light bulb usually goes on and those four things that made it to the cart that weren’t on the list now suddenly broke into your gas budget.
Finally, set rewards for yourself. If you’ve saved $500 by cutting out dinners out, go out one night to celebrate your new found responsibility. Set goals, reach them, and then find little ways to reward yourself. It takes work to learn how to manage money responsibly. Like many difficult habits to change, the little steps add up into the big reward.