When you are struggling to pay the bills, saving money for later seems silly. You are occupied with surviving this moment right now. Taking some time to study your money flow both in and out of your wallet can be eye-opening, especially if you find ways to make your life easier today and more prosperous down the road.
Taking from the taxman Do you look forward to a nice, fat refund every April? You shouldn’t, because that’s money You are loaning the government interest-free. The ideal situation for annual taxes should be zero, with no paying in and no refunds, just you and the government coming up even. If You are getting back multi-thousand-dollar refunds, contact your workplace’s HR department and adjust your withholding tax to a lower rate. Once you know the exact amount of extra money in your paycheck, you can set up a savings account and have that automatically withdrawn every month into an interest-bearing account. The money will be there when you need it, instead of you waiting like a kid for an allowance every tax season.
What do you really, really want?
The Spice Girls may not be savings experts, but they have some sage advice about stripping away needs vs. wants. Keep track of your extra expenses, like entertainment, for a couple of months. Do you have the premium cable or satellite package but never watch it? Do you have to own the latest bestselling book immediately, or could you wait until it became available at the library? Be honest about what you want and need; if you adore collecting vinyl records, scale your hobby back with a smaller budget and less frequent outings. Also take a look at your bank statements for subscriptions. You may have lost interest in French lessons or multi-player gaming months ago, but forgot you still pay a monthly fee for online access.
Breathe in the savings If you quit smoking, give up pricey cupcakes and coffee drinks and eat out less often, you’ll have more money in your pocket. You are likely to be healthier, too, which has several advantages. You’ll prepare meals at home with better ingredients and less fat. You may lose weight, and need to see the doctor less often. Your workplace may offer incentives such as lower health insurance premiums, and there could be a promotion or raise in the cards when you have more energy. The money You are not spending on these habits adds up quickly, but it is still tough to break addictions and bad habits. Check your health plan or local clinic for help with healthy living; you may reap rewards from your employer just by starting down the path to a better you. The only extra bill you need is a clean bill of health.
From little acorns grow mighty habits
If the thought of starting a savings account and changing your life is too overwhelming, start small. You don’t have to do it all at once. Think up one way each month that saves you $10, and sign up at your local bank for a Christmas club account. Each bank is different, but many have a very small minimum requirement each month, like $5 every two weeks. You can’t take the funds out until the end of the year, and you can challenge yourself to small tasks, like recycling cans, cleaning out closets and taking clothes to consignment stores, selling on eBay and more. A Christmas club account is like a regular savings account with training wheels; they’re not a permanent fix, but it’s an excellent way to learn and build new, responsible habits. At the end of the year, you’ll have enough saved to roll over into a regular savings account. The rule of thumb is that any new behavior takes three weeks to become a habit, good or bad. Once you discover ways to set aside money that work for you, get the whole family involved. Even simple things like passing on those donuts or giving up unworn outfits is easier when it becomes a team effort.
Beth Bartlett writes about pop culture, frugal living and online reputation management at reputation.com