Tuesday, January 17

Realistic Savings Tips

After setting up a savings account over the weekend, I decided it was time to take a better look at what my spending habits have been like over the past few months. 

As luck would have it, Apartment Therapy recently featured an article with realistic tips to help everyone save money.  I've listed some of my favorites here and added a few of my own.  I'm by no means a great saver, but I have picked up a few things that I think work well for me.
  1. Catalog Your Expenses Each Month: Go back through your finances for a month and catalog all of your expenses.  I think the easiest way to do so is to create general categories.  I separated my expenses into the following: rent, utilities, student loans, transportation, home, groceries, eating out, clothing, entertainment, and health & beauty.
  2. Pinpoint Categories for Improvement: Go through your finances and figure out where you are spending too much.  I found that I have been spending more on eating out and clothing (surprise, surprise) than I would like to.  Try to also pinpoint small, daily expenses that are starting to add up like coffee, soda, magazines, bagels, etc. 
  3. Make a Realistic Budget: When you first start the budgeting process, it's easy to make your plan too strict.  For instance, if you currently spend $150 a month on eating out, you will have a difficult time getting down to only $50 a month.  When you make more realistic goals, you will be more likely to adhere to your new budget. Try reducing your spending by 10% the first month, 15% the next month, etc. until you get to a number you're comfortable with.
  4. Make Substitutions: I think this is the most exciting part of the budgeting process!  Find ways to do what you love without spending as much.  For example, if you love to read magazines, buy a subscription instead of individual issues, or stop in a bookstore or library and read them there.  If you love coffee, try getting a French press or taking your own mug into a coffee shop.  Some stores will charge a fraction of the price if you bring in your own cup.  Laurent and I love to go to standup shows, and we found a free one every Sunday night hosted by Hannibal Buress.  Embrace no money fun!
  5. Seek Out Discounts: Clip coupons, print off rebates, ask retailers if they have any special discounts.  I'm not the best coupon clipper, and frankly TLC's Extreme Couponing scares the shit out of me, but I always do online surveys for retailers like Gap and Banana Republic.  Just for filling out a quick 2 minute survey, you can get 20% off your next purchase.  Also, ask around for student/teacher/military/senior discounts.  J.Crew and Madewell both give 15% off your entire purchase, which can be pretty substantial.  However, you should never buy something on sale that you wouldn't buy at full price. 
  6. Embrace the Generics.  Figure out where you can buy store brands and where you would like to buy name brands.  Target's Up and Up brand is pretty great and I truly can't tell the difference on most items.  Trader Joe's also has some pretty delicious, inexpensive items under their store brand.  And if my father has taught me anything, it's to look for generic options for pharmaceuticals like Claritin.  Often you'll find options with the exact same ingredients for a quarter of the price.   
  7. Add it Up as You Go:  As a young child, I never found myself in debt.  Not once.  I can attribute this to three things: I had fewer expenses, I didn't know Anthropologie existed, and when I wanted to buy multiple things, I added the prices together in my head.  That practice has somehow slipped away, especially at the grocery and at Target.  I look at the individual prices, but I rarely keep a mental tally going.  When you're first starting a budget, try writing down the cost of each item you throw into your cart so you can edit your purchases before you get to the register. 
  8. Set Up Auto Savings at Your Bank:  Automatically diverting money from your checking account every month is a great way to limit your spending.  You can always change it or cancel it for a period that you will need more money, but I think it's important to have separate accounts for your spending money and your savings.  You should always try to save as much as possible, but a good rule of thumb is to have money set aside for an emergency (experts say at least 6 months' of salary) and then any savings beyond that can go toward a vacation, a car, a house, etc. 
  9. Treat Yo Self: Sit down and determine a few things you would like to do if you meet your budget.  For example, if you cut $30 off your grocery bill each week, find an inexpensive trade-off that you can look forward to, like a matinee play or a weekend of yoga.  If you set a small price limit for your rewards, you will have a net financial gain and you'll be much more likely to stick to your goals. 
I know keeping track of your finances can be daunting and time-consuming, but once you figure out a system that works for you, it can become really rewarding.  And if all of this is too overwhelming, you can always take my father's advice and simply spend less than you earn! 

Photo Credit: Vernacular Typography

*These goals were found on Apartment Therapy.  I've added my own content, but the inspiration was directly from this article.

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