Tips on Saving Money
hand and hand with an effective household budget is saving money on those things that you truly need. To start
saving, take an inventory of your needs to see where you can shave the dollars. Begin with the biggest items first,
where the most potential for savings is, and move down the scale to the less expensive items. A moderate savings
on one of the big items (houses and cars) combined with savings on the smaller items
(food, clothes, etc.) can reap a large reward in your total budget. The following are some thought starters:
Distinguish between Wants and Needs: You will save a ton of money if you don't mistake wants
for needs. Needs are pretty simple to identify--those items that are necessary to sustain: Shelter,
food, clothing, transportation. Wants are those things that enhance or possibly improve our family life. A car
is a need. Unless necessary for your business, a $40,000 Sport Utility Vehicle is a want, even if a lot of people
don't see it that way. Have you ever heard (or said) "I absolutely need...?" when the
actual meaning was "I really want?" This is not to suggest that you shouldn't be able to have
the things you want--only that to delude yourself into believing that a want is a need--and busting your budget
in the process--is a recipe for financial disaster.
Is less better? Perhaps it is due to the booming economy, perhaps "keeping up with the Jonesism",
maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost.
When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle.
We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a
$20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see
if there couldn't be savings found with minor changes in habits.
before you Buy: This goes a long way
in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially
items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored
with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you
will definitely be bored with it, or find it not that necessary, after!
Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is
before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying,
"geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)
The Big Ones
Debt If you are paying
high interest charges for credit cards, auto and personal loans and other debt, you could be wasting lots of money.
Many homeowners have taken advantage of home
equity loans and lines of credit to consolidate
their debt into a single, smaller payment, often with considerably less interest charges, and one which may be
tax deductible. More information.
House Mortgages. In all
probability, your mortgage will be the largest single expense in your budget. Obviously, getting the best deal
here is of ultimate importance. Not comparing could cost you thousands of dollars over the term of the mortgage.
Have you checked into refinancing lately? Quicken Loans allows
you to make free comparisons (you'll get up to 4 bona-fide offers from lenders competing for your business) by
submitting one simple loan request form. Click here
or for more information see the section
devoted to refinancing.
Cars. For most families,
the next biggest expense is their car(s). Mistakes made here can often be as costly (on a monthly basis) as mortgage
miscues. Take a look at the vehicle(s) you presently own. Do you own too much vehicle for your needs? Do you have
equity in a car that you no longer use frequently? Could you downsize and save money, not only in monthly payments
but also in maintenance, insurance and operating expenses? Are you getting the best deal on your insurance and
repairs and maintenance? A valuable resource for saving money on your vehicles is Corey Rudl's best selling Car Secrets (the largest selling automotive book on the Internet) which gives
hundreds of tips on getting the most for your money, avoiding car repair and insurance rip-offs and lots more valuable
information on saving money on your vehicles.
And the Smaller
Ones that Add Up
Banking and Financial.
This is one area that many of us simply "pay the tariff"--whether it is in high monthly fees or lower
interest rates--simply due to habit. There can be big variances in what your banking can cost you. For example,
if you are paying $15 to $20 a month in various fees that $180 to $240 a year could be put to better use on other
necessities--or in a savings account! Shop around to see if perhaps you aren't overpaying for your banking--there's
a lot of variations in fee structures from bank to bank.
Insurance. Most of us pay
our automobile and homeowners insurance premiums by habit, rarely if ever making comparisons. With many families
insurance costs totaling over $2000 a year, even a 15% savings equates to $300 annually. Some hints from the Insurance
Information Institute on saving money on your homeowners
- Be sure to shop around. It may take a little time, but it could save you money. The insurer you select should
offer both a fair price and excellent service.
- Raise your deductible. Deductibles on homeowners policies typically start at $250. By increasing your deductible
to $500, you could save up to 12%.
- Beef up your home security. You can usually get discounts of at least 5% for a smoke detector, burglar
alarm or dead-bolt locks.
insurance the Insurance Information Institute recommendations
- Shop around. Prices for the same coverage can vary by hundreds of dollars from company
to company, so it pays to shop around. Surf the net, ask your friends or call your state insurance department for
ideas about companies and agents to contact.
- Ask for Higher Deductibles. By requesting higher deductibles on collision and comprehensive (fire and
theft) coverage, you can lower your costs substantially. For example, increasing your deductible from $200 to $500
could reduce your collision and comprehensive cost by 15% to 30%.
- Take Advantage of Low Mileage Discounts. Some companies offer discounts to motorists who drive fewer than
a predetermined number of miles a year.
Homeowner Insurance Resources
|Netquote.com Since 1989, NetQuote® has provided consumers with a free, simple, and effective way to fulfill
their insurance shopping needs
With one simple application, InsureMe will get you insurance quotes from
top-notch insurance companies.
Food. Not only do you need to eat food to live, the expense of it for
the average family can eat you alive! Since food is a necessary and recurring expense, just saving, for example,
$20 a week on your purchases can convert to over $1000 in savings over the course of a year.
- Try to plan in advance. By knowing what you need, you will be able to buy in larger quantities (almost always
less expensive) and cut down on convenience food purchases (always more expensive).
- If you use national brands, spend a little time clipping and using coupons. $1.50 invested in the Sunday
newspaper could save you $20 or more at the checkout. Organize the coupons by type, so as you develop a shopping
list you can make a notation if you have a coupon.
- Consider store brands or generics. You may find the quality is equal to (and sometimes better than) the national
brands, and store brands/generics are generally considerably less expensive.
- When it is on sale, stock up. Of course this only applies to those items that you use on a regular basis.
Stocking up on an item which you use once a year doesn't make sense (and robs you of spending money, not to mention
- Shop at the store that is the cheapest overall. Surveys have shown that there is sometimes as much as 10-15% difference
on identical grocery orders at 2 different stores in the same area. If you spend $500 a month on groceries, that
can equate to $600 to $900 a year in savings. Don't throw away your money just because it is your habit to shop
at a certain store.
Clothing. Although many
consumer items have actually reduced in price over the last few years (most notably, computer and electronic items)
the cost of clothing has seen a continuing upward spiral. In addition, a purchase price that not too long ago bought
a good quality garment now seems to buy virtually "throw away" clothing. With some planning, though,
it is possible to maintain clothing purchases that are in line with your family budget.
- Buy separates that coordinate. You can make numerous combinations with a few well matched items. For women,
jackets, slacks, skirts and blouses can be mixed and matched to create many different outfits. Plus you can change
the look of these outfits with accessories such as jewelry or scarves. Men's clothing offers a wide variety of
separates that can be coordinated: blazers, slacks, shirts and ties can all be interchanged to create a versatile
wardrobe with a minimum of expense.
- Buy a season ahead. Buy next year's winter clothes at the end of this season and save. The styles won't change
that much (if at all) and you will pocket a big difference in the price.
- If you are "hard" on clothes, buy quality. Buying an $80 pair of shoes that will last saves money in the
long run instead of having to buy 3 pairs of $35 shoes that don't hold up.
- Stay away from trendy fashions.
Stick with the basics. You can always be sure you clothing styles will last from year to year when you buy perennial
stand-bys such as medium length A-line skirts and solid tailored blazers for women or neutral color shirts and
tailored to semi-tailored sports coats for men.
Comparisons. It used to
be that comparison shopping was a long and drawn out process. Driving from one store to another or making numerous
phone calls could be a real time waster. Even if you were able to make an adequate comparison, sometimes it wasn't
worth the hours you needed to invest to get the comparison. The Internet has changed much of that. Now you can
make quick comparisons on most items, usually within a matter of minutes. What would once have taken hours to accomplish
now happens at the click of a mouse, a real time and money saver.