(This is a guest article by Raine Parker*)
By now, no one needs to be told that the national economy has seen better days. Although there are signs that the recession might be bottoming out, it's too soon to tell. But the slowdown in the market has been a reminder that saving a few bucks here and there is a good idea, and there are great ways to save money even when the economy starts to pick back up. With that in mind, here are five simple ways to pinch pennies and make sure you're prepared for a rainy day:
- Take your lunch to work. This is a quick way to see savings. It can cost between $150 and $200 a month to eat out every day, and that's way too much to spend on daily meals. Instead of going broke by eating out, try taking a lunch to work instead. The cost of groceries for a week of meals is far below that of eating out, and as a bonus, you'll be able to pack yourself healthy lunches that are better for you than fast food. You'll start to feel the financial difference immediately.
- Make a monthly budget. A great way to save money is to first see how and where it's being spent. Plan out everything: Make a list of all your revenue sources, and then make a list of your expenditures. Be as accurate as possible, and don't leave anything out. Account for major bills like rent and utilities, car and phone payments, and an approximate grocery cost. If your expenditures are higher than your income, that's a big problem, and even if the two figures are close, it's not good. Your list of expenditures will be able to tell you where you can start cutting. Do you really need that DVD or trip to the mall? It's better to think twice and plan your purchases. You'll be less likely to make impulse buys.
- Pay yourself first. Take 10 percent of your paycheck and put it in savings right away. It's the best way to start building a savings fund that can be used for emergencies or large planned purchases or investments, but you'll be less willing to do it if you start spending your check right away. If you take 10 percent off the top, you won't even feel it, and before you know it you'll have a comfortable cushion you can use if something unexpected happens.
- Don't use credit cards. At all! Plastic money is a wicked gimmick, and though there are benefits to very controlled spending, like improving your credit rating, it's almost never a good idea to just put things on the card. You're less likely to keep track of how much you spend, and before you know it, your interest rate has skyrocketed and your monthly minimum payment is crippling you. If you don't have the money, don't buy on credit.
- Set small rewards. This isn't counterintuitive to saving. In fact, small rewards can help motivate you to keep saving and spend wisely. It's that little light at the end of the tunnel that can keep you on the track to smartly dealing with your money. Go out to eat with your partner or spouse; pick up the new album from your favorite band; enjoy a night at the movies. You'll feel the happiness of being rewarded and the satisfaction of knowing you earned it by making the right choices.
These are just a few ways to save money, but they'll get you started on the path to short-term and long-term savings.
*About the author: This guest post is contributed by Raine Parker, who writes on the topics of online accounting degree. She welcomes your comments at her email Id: raine . parker6 @ gmail . com
*Image Credit: Photograph by happyhaggis [via Flickr Creative Commons]