When we first started to "save", I read as much as I could on frugal living, and got my hands on as many books as I could about saving money and living frugally. I think the best all in one book on this subject bar none is The Complete Tightwad Gazette by Amy Dacyczyn. I've had this book forever, well, since I started my "Journey to Reality" and it's held a special place on my bookshelf for many years. I'm thinking that it's about time to 'reread' it because with our budget cut, we're going to really need to cut back. Anyways... onto make a goal.
Quick tip to failure: Make a goal SO HUGE that you feel you'll NEVER see any progress.
Don't start out with a goal that is so massively huge so it seems like you'll *never* reach it. Start small and go from there! I see some goals that are as high as my husband makes in 3 years for 6 months of 'bare bones' living expenses on some blogs. Obviously, we're not going to follow this because it's not reasonable for *our family*. You need to find a goal that is reasonable for *your family*. If you're making $40K/year, it's doubtful you're going to be able to save $20K unless your living expenses are dirt cheap! But maybe you could aim for an ending balance of $500-$1K over the course of a year? If you're making $120K, maybe $5K is acheivable. The point i'm trying to make here is to be realistic & honest with your situation. :)
When I started to save money my only goal was to have a balance in my bank account, to have a few bucks in the bank at the end of the week. I wanted to build up to a $200 balance. Not a lot by any stretch of the imagination, but it was a goal, and one I could achieve. From there my goal got higher and higher. It rose to $1K, then $2K, and then $3K in order to save our bank fee's. It's now sitting at $4K, soon to be $5K after we receive our income tax refund. We still have a ways to go, but slowly & steady, we're improving!
In my experience, I find that the very best way to add money to your savings is to live *under* your means, and treat your savings as a bill. That means your savings gets paid right along with your mortgage, rent, insurance, hydro, gas, etc... It's not "optional", it's not treated as a "well if we have any left at the end of the week, we'll tuck some money in the bank" type of thing. The money comes right off the top. If that means scraping together $10.00 a week by cutting down your variable budget, then that's what you do. If that means working an extra hour at work, you do it. If you have a budget for "entertainment-eating out-clothing-hair-nails" etc... you have $$ to save. Do you have "stuff" laying around your house that you're not using or could do without? Sell it and start up a savings account!
Now, when that savings account is starting to build up nicely and you see that nice fat number in your account, leave it alone. Do not dig into it for a "night out with the girls". Do not dig into it for a new iGadget. Do not dig into it, period. Unless you're having to use it to put food on the table because you have no food in the house, or to keep a roof over your head, you're undoing all that hard work you've put into saving that money! If you want a new "fill in the blank here" save up for it! Open a new account and work towards that goal!
By just looking around my living room I can see almost everything that we worked hard for and saved up cash to purchases! What is in our home, we *own*. We're not "borrowing it" while we pay off a credit card. We didn't buy these items all at once, it wasn't overnight... it took many years. Yes, it would have been nice to go out and furnish an entire room at once, or buy all of my camera gear at once, but that just wasn't going to happen for us.
- Dining room set
- Coffee table with leather stools
- 55" tv
- Entertainment stand
- DSLR Camera
- 5 DSLR camera lenses
- Surround sound system
- Blu-Ray player
- PVR box
- and misc. smaller items... all paid for in *cash*. We "made do" until we had enough money to buy what we wanted, and had "hand me down" furniture and tvs for most of our marriage.
There is nothing wrong with wanting "stuff", but set a goal and work your way towards it instead of slapping it on a credit card! :) You'll feel great when you've saved enough to reach your goal and go out and purchase your item in cold, hard cash instead of slapping it on a credit card and having to pay it off for the next year. And yes, some of this stuff was unnecessary (I'm sure a few of my blog haters will pipe in with the tv purchase, lol!) but the point is, it was saved up for and paid for in cash. It did not replace saving money for our emergency fund, nor replace paying the bills, nor clothes that our kids needed. It was a goal we wanted to reach, and we saved for many months to reach most of them.
I find that having several savings accounts is the way to go. Set up seperate accounts for special purchases and build them up the same way you you're building up your emergency savings. We have our main account which houses our EF. By doing this, it saves us bank fee's, no bank will pay us $13/month in interest, so I keep this money in our main account. It's saving us $156/year. Again, another "saving" there if you can find a bank account that saves bank fee's by having a minimum balance, or just not having bank fee's!!. Our fixed bills are paid through this account each month. I see the $4K sitting in there now as our "zero balance". We also have an account through hubbys work which holds our Christmas savings, and we have another savings account which holds our slush fund. Our slush fund seems to get the most use.
I realize not everyone has "extra" money to save in order to add to a savings account. It's then when you need to take a good, hard look at your budget and be honest with yourself. Can you cut down/out anything? Are you wasting money each week that would be put to better use in a savings account? If not, can you find a way to earn some extra income? If you blog, there are blogging programs that allow you to earn income, do you have any personal hobbies that you could use to generate some income, can you offer childcare, pet sitting services, pick up a few extra hours at work?
I have to tell you, it took me years to get to this point, it definitely did NOT happen overnight. lol!
- I changed the way I shop, $80 brand new jeans vs. $80 jeans found at Talize or on the clearance racks for $6.99! Buying the girls a full seasons wardrobe for $40.00 gently used or on sale, rather than just one outfit.
- By learning to cook from scratch and substitute foods rather than buying everything 'premade' for my convenience. That change alone can save you a LOT of money! I hear many saying they don't "like" to cook, well, neither do I. However, I do like to feed my family healthy food without a tonne of chemicals & preservatives in it, and the savings are incredible!
- By following the "time of use" rates for Hydro, it's cheaper to do laundry, run the dishwasher, etc.. in the evening hours and on the weekends. Take advantage of that!
- By mostly *really* thinking over purchases before we splurge. (Hubby.. hint.. *Chameleon*... lol!!!) ;) lol!!
Take a good look at your budget, set an acheivable goal with an end date and see if there's anywhere you could improve and see what savings you can come up with to meet your goal!
Do you see anywhere you could improve in order to reach your goal?
Do you have any books to suggest that set you on the right path to saving money instead of spending it?