How to Save Money by Planning Ahead
Many people are wondering how to save money
as world markets slow down. Predictions were that there would be a rebound in 2010, which we all know didn't happen! There are a number of present economic factors that are preventing us from making much of the green stuff!
Without enough money to sufficiently pay our bills, many people are having to cut out unnecessary spending. However, if you can learn to stash a few dollars monthly and plan ahead, things can become more lucrative!
Never before have we had to juggle so much! We are overworked, underpaid, and are now being forced to pick and choose which bills we must pay, and which bills we must eliminate altogether. The good news is that it's never to late to understand how to save money!
Recently Ray Martin, a financial consultant for CBS News, asked a select group of people what their New Year’s Resolution was going to be. A lot of people told him they wanted to save more money next year. If you're one of the gang, cutting back right now is more imperative than ever before. Seems we all got used to the economy being stable and good, but are now having to relearn what most baby boomer's parents already knew! In order to save money for tomorrow, you can't spend it all today.
It really made me think about how to save money this year. What more can I do to save more money? What could we cut back on? Below are some suggestions for you.
How to Save Money in the New Year
That big tax refund - Most people like to have a big bundle of money coming in with their tax refund. That's not really how to save money though. One problem with getting a big fat check is that most people are not paying bills with their refunds. They are taking vacations instead.
Taking a vacation is only good if you're vacationing in the US. At least you're feeding local economies. It’s bad if you aren’t making ends meet during the year and you go spend the money frivolously.
When you increase your withholding taxes, you will have more money in your pocket during the year to pay off bills, especially credit cards. No, you won’t get that one big fat check after your taxes are done, but you will catch up on your bills!
Cut your insurance - Raise your deductibles on your insurance policies. Chances are you are paying out too much on insurance and never using it. You can raise your deductibles and lower your payments if you feel relatively safe where you live, drive defensively, and are relatively healthy.
Slow down - Not only will getting a speeding ticket cost you more money, you will also burn more gas by speeding. Cut your speed back to 55 mph on the highways and you’ll reap the monetary rewards in gas savings.
It's also a moot point to go the speed limit in town. I detest getting behind drivers who drive under the speed limit on the highway but then speed through town.
There may be children playing or people walking across the street in these areas and that's exactly why the speed limit is reduced! Slow down and pay attention to the speed limit signs! They're there for a reason!
Don't get stifled - Whatever you do, don't stop working harder to earn income. Sometimes a rotten economy can stifle people to 'not act'. When you don't act, you don't earn. Do everything you can to contribute to a strong economy by sticking to your goals and going after them. You might cut back on frivolous items you don't need right now, but don't keep all your cash in your pocket. To keep the economy rolling, consider your needs vs. your wants. Keep buying what you need to buy, and cut back on the stuff you just want.
Don't forget to donate - In order to get back, you have to give. That's the law of reciprocity. The more you help others, the more rewards you are destined to get.
Think about tomorrow - They should have given us all a course on financial planning in high school! Long term investments are necessary if you want to have some savings for when you retire, therefore understanding the concept of compounded interest is something you must grasp. A recent study found that most folks underestimated how much savings would grow and how much debt would end up costing. That's one reason why folks don't save. They just don't know how to save money!
People think in terms of simple interest, not compound interest. For instance, if your investments are 8 percent a year for 10 years, you don't earn 80 percent, as many people assume.
Rather, you would notch a cumulative 116 percent. The reason is that our returns are not only on our original investment, but also on the investment gains earned in earlier years. Similarly, with credit-card debt, we pay interest both on the original purchases and on any monthly interest charges you didn't pay off in full.
"People use simple interest because they don't know to use anything else," says Prof. Eisenstein, of Cornell University's Johnson Graduate School of Management. "The higher the interest rate and the longer the time horizon, the worse the error." He argues that this basic math mistake helps explain why people delay saving for retirement and why they postpone paying off credit-card debt.
Try budget billing - If the seasonal rise of your utilities makes it difficult to manage your payments, consider Budget Billing; a payment plan that lets you pay the same amount year round, regardless of the actual cost of utility services for that month. Your utility company takes the mean average for one year, then that amount becomes your monthly payment.
Participating in budget billing should make it easier to budget and manage your money. It’s important to note that budget billing does not reduce your utility bills, it simply enables you to spread out your costs over a 12-month period. At the end of the year, if your actual costs are more, the balance of the unpaid cost will be rolled over into a new level payment for the next year, which would be a little higher. If your actual costs are lower, the extra amount you paid is credited to your utility bill. Most states require utilities to offer this option to their customers.
Support local businesses! - If you keep all your money and just don't spend any of it in the world around you, our economy will tank and come to a screeching halt. The more money you part with, the more small businesses are spared failure. It's good to cut back on spending in a recession, but when there is no spending, there is surely a depression coming. Some people are not fully convinced we're not already in one. Do your part and make an effort to buy one thing every week/month, outside of large superstores like Walmart, where everything's made in China! Buy something locally and you'll do everyone a favor!
Here's some additional year end information on taxes that you might find useful.
This economy is a tough one! Its by far worse than anyone could have ever imagined. (At least for us sheep out in the field...) Now more than ever, it's important to know more about where you're money is going and how to save money on the things you do buy! We're all in this together and depending on each other to do all we can!
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Increasing Income to Save Money in the New Year
Seeking Work in Tough Economic Times
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