Do you run out of money before you run out of month? Do you wonder where your money goes each month? Do you struggle to find money to invest for retirement, emergencies and other financial goals? Here are 10 tips to cut your spending and stretch your dollar to the max:
1. Consider dropping your home telephone line. Your cell phone is probably all you really need, and most likely it has free long distance. You could save $30 or more per month by dropping your “land line”.
2. Cut back on trips to Starbucks or other premium coffee shops. Often called the “latte factor”, spending several dollars per day on luxuries like premium coffee can really add up. For example, if you spend $4 for a cappuccino five times a week for 50 weeks out of the year (you’re on vacation the other two weeks), you would spend $1,000 in a year. Try treating your trip to Starbucks as a treat instead of a habit. You’ll save money and probably lose weight too!
3. Pay your mortgage payment bi-weekly instead of monthly. You’ll pay less interest and pay off your mortgage faster.
4. Carry cash instead of credit cards. Psychologically it’s harder to spend cash than it is to use the credit card. You’ll spend less and save on interest charges.
5. Use the “envelope system” for groceries, dining out, entertainment, and other discretionary spending categories. This will help you track how much you spend in these categories as well as prioritizing your spending.
6. Raise the deductible on your homeowners and auto insurance policies. It’s not wise to file claims for small losses anyway (insurance companies love to raise rates after you file a claim), so a higher deductible will save you money now and in the future.
7. Buy regular gas instead of premium. Most cars don’t need premium gasoline. Also, take public transportation if it’s available in your area. Take advantage of “park and ride” and carpooling options.
8. Plan your purchases to avoid impulse buying. Take a list with you to the grocery store and stick with it. Studies show that impulse buying can add $10-50 to your grocery bill - ouch!
9. Go to the library instead of the bookstore. If you’re an avid reader, give yourself a book budget for books that you will want to keep, and go to the library for everything else.
10. Take a vacation at home. Check out all the local sites and happenings. You’ll rediscover your hometown and save on travel and hotel costs.
These are just a handful of ways you can cut spending and stretch your dollars, but if you follow these tips you’ll discover you have more money at the end of each month to apply to other financial goals, such as saving for college, retirement or just for a rainy day.
About the Author
Kristine A McKinley, CPA, and Certified Financial Planner, is a fee-only financial planner.
For more personal finance and tax tips, please visit our blog at http://beaconfinancialtips.typepad.com/financialtipsforwahms/
Posted on April 9, 2007
“Your cell phone is probably all you really need… You could save $30 or more per month by dropping your “land line.”
Actually you could save a great deal more by dropping your cell phone and keeping your land line.
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“Use the “envelope system” for groceries, dining out, entertainment, and other discretionary spending categories.”
Last time I checked, food isn’t “discretionary”.
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I’m sorry, but most of the strategies described above are nickel/dime and won’t amount to squat over the long haul. There’s nothing really wrong with them… they just won’t change anyone’s life in a significant way.
How do I know? Because I retired early with well over a million dollars in assets three years ago - at age 51. And I never earned a big salary. Nixing lattes had absolutely nothing to do with it. If anything, it might be better to keep the lattes so you’re more psychologically inclined to hold the line on big ticket items - that’s where the real money is.
There is far too much to cover here, but suffice it to say that achieving truly life-changing financial goals is not a game for sissies. And if you’re going to be chained to a corporate desk until you die, you may as well spend every dime you make along the way on things you enjoy… because ultimately, that’s the choice you’re making.