Real-World Money Saving Tips
So, you want to have a lot of money someday. You’re not alone, but many people never get a good start on any serious accumulation of funds. Check out these real-world money saving tips!
Have a Budget
Start by figuring out how much money you earn every month, whether from a job, allowance, or other sources. Now figure out how much of that you want to spend on a monthly basis on food, clothing or entertainment. What’s left over can be put into savings. It may not be a lot, but it adds up over time.
Keep Track of Everything
Keep a record of everything you put into savings or withdraw, and for what purpose. There is software designed for this purpose, or just get a $.99 spiral notebook. The first thing you can write down is that you spent a buck on a notebook.
Make a Plan to Save…
What are you saving for? College? A car? An iPod? Or do you just want to be rich someday? Make a detailed plan for what you want and why you’re saving money, and write it down.
…And Stick to It
Consistency is extremely important when it comes to saving money. Even if you only
put away a few dollars at a time, it can really add up to a significant amount over the course of several years. Plus, it helps you get into the habit of saving. At first, it’s hard not to think about the money you promised yourself you wouldn’t touch, but you’ll get used to it.
Don’t Buy Junk
Once you’ve decided to start saving, you’re going to notice that you can’t just blow money on stuff like you used to. So you’ll have to actually shop around for bargains and make careful decisions about purchases. Read online reviews, ask your friends for their opinions, pay attention to quality. Stop. Think. Buy. Or not.
Earn Interest
If you put your savings in a jar, in one year you’ll end up with exactly as much as you started with, unless you lose the jar and wind up with nothing. If you put your money into an interest-bearing savings account at a financial institution, you’ll end up with more than you started with. You also earn interest on the total amount, not just what you started with. That’s called compound interest. And a financial institution is a whole lot harder to misplace than a jar.
Be Careful With Credit
You’re going to start getting offers for credit cards within the next few years. Credit cards can be good things to have in case of emergency, or even to occasionally use for less pressing concerns. They’re also a great way to get into an unbelievable amount of financial trouble. Credit cards are not free money. A credit card purchase amounts to a loan that you are required to pay back, and sometimes the interest rates are very high. For example, if you take a year to pay off a $1000 purchase with a 25% APR (annual percentage rate), you’re going to end up spending $1250 on it. If you take three years, you’ve already doubled your original expense. The best thing to do if you use credit cards is to pay your balance off in full every month and avoid the trap of only paying the minimum payment every month. There’s nothing worse than spending the rest of your life trying to whittle down $75,000 worth of credit card debt and never having any cash left over.
Be Realistic
Reality check: you’re probably not going to save up a million dollars by the time you’re 18 (if you do pull it off, please share your secret with the rest of us). But saving up a few thousand dollars isn’t unrealistic at all if you get in the habit and start now instead of later. Plus, once you’re in the habit you can continue when you’re older and have a career, and save even more every month. Sooner than you realize, becoming a millionaire won’t seem so far off. That’s when you set your sights on “multi-millionaire.”
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