The recession taught us more than a few lessons, but one of the most important is to always be financially prepared. This means always being diligent in managing your expenses. The question arises, are you a savvy saver?
Take the time to plan ahead - start by asking questions about budgeting and the future. Asking these questions now may help you avoid asking questions about how to get out of debt later. Follow the budgeting tips below, and learn how to become a proactive saver.
Set Short & Long Term Goals
It is important to determine and evaluate both short and long term goals. Are saving for a summer trip to Europe or for your children’s education? Maybe it is both. Estimate how much each goal will cost and how much money you need to put away each month to reach that goal.
Track Your Expenses
If you don’t track your expenses, you may not realize where your money is actually going. Start by adding up your fixed expenses (rent, insurance, loan payments, etc.) and track your variable expenses (utility bills, food, transportation, etc.) for each month. Carrying around a small notebook or logging daily expenses in your phone is an easy way to track this and it may cause you to reconsider your day-to-day purchases! When planning ahead, take into account specific splurge periods. The holidays, for example, lead to higher spending habits.
Cutting Unnecessary Costs
After looking at your monthly spending, ask yourself “where can I cut costs?” The coffee you buy twice a week can start to add up!
Here are some easy tips for cutting costs:
- Buy frozen non-perishable food to avoid having to throw away expired groceries
- Compare your current homeowners or renters insurance - there may be less expensive options that were not available when you initially signed up for coverage
- Look at options for internet, phone lines and cable/satellite. Again there may be cheaper options you have not heard of!
Bargaining on Purchases
Although we are not bargaining on most of our daily purchases, the operation isn’t completely dead. You still might have the power to actually lower prices, especially on larger purchases. Do your homework and be prepared, research the market price and find out what you should be paying. When you do arrive at the store, it never hurts to ask the salesperson if an item has coupons or if there are similar items on sale - the worst they can say is “no.” Finally, if it’s a larger purchase, such as car, be comfortable with walking away from the sale if you are not getting the price you want. In today’s economy, more often than not the merchant will want your money. And, if they do not stop you, you can always go back.
Remember your budget will not be set in stone. Life happens and you will have to make changes occasionally, but taking the time to budget now will help you stay prepared for the future and for your trip across seas!