Tips on Saving Money
Going 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 was due to the booming economy, perhaps "keeping up with the Joneses", 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.
Try 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
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. An excellent resource for comparisons is Lending Tree, where you can submit one easy and quick application and within 3 business days get up to 4 offers from competing lending institutions. More information here.
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? With the vehicles that you do own, are you getting the best deal on your repairs, maintenance and insurance?
And the Smaller Ones that Add Up
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 insurance include:
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.