Write a budget and identify your spending.
If you want to make your money go further, the first thing you need to do is write up an accurate budget that details what you have coming in and what your expenses are. Write down every single purchase and savings contribution your household makes in a month regardless of how small it may be.
Are you living within your means?
Reduce your overheads.
Once you know where your money is really going, you can look at areas to make spending cuts – if necessary. The obvious things for many include the fancy coffees and eating out.
Try looking at your grocery bill as well and cut out the convenience food. Buy staples and make simple meals, they’re cheaper, bigger, taste better, and are healthier.
Do you need the fancy cable package? Do you need cable at all? We ditched our four zillion-channel cable package one day because the product had disappointed us everyday for years and then rubbed salt in the wound with an ever-climbing bill. We instead use an Apple TV for most viewing and an antenna to receive local channels. We now get far better programming and save $70 a month.
Never pay the full retail price. Use coupons enthusiastically and shamelessly ask for discounts. Often prices are negotiable, even if they don’t offer a standard discount (such as for students or the elderly). Every time a person pays full retail price for something, they are subsidizing the people who get a discount or use a coupon.
Is there anything you can do to save on gas, electricity, and water bills?
Use your credit card, liberally.
Many credit cards come with a rewards program. I recommend getting a credit card that offers a rewards program and doesn’t charge an annual fee. Purchase everything you can with that credit card but always pay it off at the end of the month to avoid paying interest.
Our credit card gives us what amounts to a 1% cash-back for every purchase we make with it. 1% doesn’t sound like a lot of money but it adds up quickly. We would get nothing back if we paid with cash or check. 1% of $5,000 = $50 back in our pocket.
You may be surprised how many places will take your card, including your monthly phone and health insurance bills. Down payments or large purchases are perfect for credit cards. If your rewards are greater than any fees charged directly to you, use your card.
Never pay fees or interest, let the bank pay you for spending your own money.
Examine Your Debt Situation.
I’m a big fan of paying off debt but do the math first. How much are you paying on that car loan at 2%? Now, what are you making on that $30,000 that you have sitting in a mutual fund that returned 10%-20% last year?
If in doubt, clear your debts quickly and avoid further debts in the future. When you pay off a debt, continue making the monthly payments but put them into a savings vehicle for your own benefit. Let it generate interest for you. You won’t miss it; you’ve been doing without that money already.
Think what your life would be like without a mortgage, student loan, credit card debt or car payment.
How much money would you need to bring in every month?
Stock up on goods when they are at their cheapest. It may feel expensive at the time, but in the long run it pays off. The more you can do this with, the greater your long-term savings will be.
Past seasons and recent holidays are great opportunities to buy ahead for the next year.