If there is a hidden drain in your bank account, it may be time to draw inspiration from the mentally strong money-savers among us. Let’s take a look at five ways you can save money. These will take practice, but the payoff will be … well, an actual payoff.
1. Learn to Live Below Your Means
One of the most classic examples of living below your means is Warren Buffet, who still lives in the $37,000 home he bought over half a century ago. He also pays for McDonald’s meals with coupons. And this isn’t some billionaire’s eccentricity — it’s a way of life.
Without diving into too much math, try the 50/30/20 rule. Of your post-tax income, 50 percent should go toward your living expenses. After that, it’s 30 percent on “wants,” or the non-essential things that make life sweet. Then, 20 percent should go into savings and repayment of debts.
2. Make Bulk Purchases
This is a rule straight out of the smart savings handbook. If buying deodorant in bulk will save you 30 percent of that cost over the next few years, then do it. It isn’t fun to spend more money up front, but it certainly feels good later when you’ve got extra cash off the deal.
3. Pay Off Bad Debt First
There is good debt and bad debt. Good debt includes things like a mortgage on a home, a vehicle loan, or a student loan — all of which tend to carry low interest rates.
Bad debt, on the other hand, is debt acquired on items that quickly depreciate and do not generate income. The most common form of bad debt is credit card debt, which can come with astronomical interest rates. Payday and cash advance loans are even worse.
If you have credit card debt, pay it off first. Then move onto your good debt.
4. Create and Adhere to a Budget
A budget is a deal you strike with yourself and possibly your significant other. In it, you have a certain amount of money to spend each month on necessities, a bit more for savings and debt payment, with a bit left over for luxury and fun. Remember the 50/30/20 rule here.
Note: The more bad debt you have, the less you should be spending on wants. Yes, it takes self-control. But it is so worth it to get rid of this crippling form of debt.
5. Cut out Certain Vices
Of course, “Quit your bad habit!” ranks among the most useless pieces of advice ever offered. But depending on your income, these habits could actually be burning through your savings. Try cutting back on these habits if not quitting them entirely.
Build good habits and remember: your hard work will pay off.
Brenoff, Ann. “The Amount Of Money You Spend On Drinking May Blow Your Mind.” HuffPost, HuffPost, 27 Apr. 2018, www.huffpost.com/entry/money-spent-on-drinking_n_5adf49d9e4b07be4d4c54401.
“Millennials Are Spending More Money on Coffee than Retirement Plans.” Fox News, FOX News Network, 18 Jan. 2017, www.foxnews.com/food-drink/millennials-are-spending-more-money-on-coffee-than-retirement-plans.