Five Simple Saving Strategies Part 1

The following post is excerpted, with permission, from Beyond Paycheck to Paycheck, by Michael B. Rubin, named one of five books to help your career by Careebuilder.com.  Michael Rubin’s recently published book, The Savings Solution, discusses the following saving strategies extensively.  Both books (and ebooks) are true conversations and are available at Amazon.com

Five Simple Saving Strategies Part 1

Here are the first five of ten easy strategies to increase your savings level without becoming cheap.

Saving Strategies

Saving Strategies

Strategy 1:  Don’t become emotionally separated from your money.

Remember when a grandparent or special aunt gave you a dollar bill?  As a child, you enjoyed simply having the money, looking at it, and even counting it.  You knew exactly how much you had and you planned exactly how you were going to use it.

How things have changed!  Now your paycheck is direct-deposited and you charge most every expense. You don’t have a clue how much money you have in your wallet until you find yourself at a place that doesn’t accept credit cards.

This emotional separation from your money makes it much easier for you to spend more.  Try using cash instead of credit cards for a while.  Keep track for a couple of months and see if your expenses decrease.  Handing over six hard-earned twenties is far more difficult than charging $119.40 on a credit card.

Strategy 2:  Understand and be honest about expense classifications.

Think of discretionary expenses as “wants” and nondiscretionary expenses as “needs.”  But be careful.  Frequently, people categorize wants as needs. Incorrectly labeling your expenses limits your ability to take advantage of additional savings opportunities.

Think about decisions you make every day. Are the bulk of your purchases legitimately needs, or do you just view them that way? Eating is a need. Eating out is a want.

Strategy 3:  The time to lower your “needs” spending was yesterday.

Despite successful efforts to limit discretionary spending, many people still struggle with saving.  Typically, this is because their nondiscretionary expenses are just too high for their income level.  The best way to handle this is to avoid the situation in the first place.

It is you who must care enough to review your spending priorities before you make a commitment to an apartment lease, mortgage, or car. Just because someone will sell you something doesn’t mean you can actually afford it. You determine your nondiscretionary expenses when you sign your name. Keep that point in mind next time.  Knowing that additional nondiscretionary expenses could take a significant part of your monthly income for a year or longer just might motivate you to not choose the one with “all the extras” for “just a few more bucks a month.”

Strategy 4:  Enjoy free stuff.

Depending on your interest, you can go on a long hike, sit in a park, talk with a friend, read a book or newspaper, lie on the beach, or play sports with friends without spending a dime.  Many people think they can’t have a good time unless they spend a fair amount of money.  But that belief is based on what has been successful for them in their recent past, not on reality.  When you were younger, there were hundreds of days in which you had no money to spend, yet you were as busy and as happy as ever.  Can you try just a day or two like that this month?

Strategy 5:  Major on the major.

Don’t spend much time evaluating minor expenses, such as where to buy pizza. Rather, put major focus on major purchases.  A car and a place to live are obviously major expenses.  What else is major?  Regardless of your age, financial aptitude, or income, a good rule of thumb is to treat anything you can’t pay for entirely when you buy it as major.  Spend serious time evaluating those purchases to ensure you can afford what you are buying, and you value every feature you’ll be paying for over the upcoming months and years.

Check back for part two of simple savings strategies soon.

 

Michael Rubin

Author of the bestseller Beyond Paycheck to Paycheck, and the upcoming The Savings Solution, Michael B. Rubin is a Certified Public Accountant (CPA) and a CERTIFIED FINANCIAL PLANNER professional. In addition to his experience providing sophisticated financial advice to affluent clients, Michael has been a key source of information for over a decade to countless others. He speaks passionately about and provides guidance on virtually all personal financial planning topics. Michael has appeared in various media, including radio and TV stations across the country, plus national media such as CNN Money.com, latimes.com, The Wall Street Journal, SmartMoney.com, Chicago Tribune, Financial Advisor Magazine, and Investment News. Prior to founding Total Candor LLC, Michael worked in the personal financial services practices of two of the former "Big Six" accounting firms. Subsequently working for several years as a new venture executive for Toys "R" Us, Inc., he made sure that he never actually grew up. He holds an undergraduate business degree from the Ross School of Business at the University of Michigan and an MBA from the Kellogg School of Management at Northwestern University. Michael lives in New Hampshire with his wife and children.

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