In this interview I’ve shared a few tips on how to become a better saver. I’ve also shared a bit of my own personal story on how I was once $100,000 in credit card debt.
1. Automate your savings
Most people know that it’s a great idea to have money automatically transferred from their paycheck into their savings account each month.
But unfortunately, not everyone does it. In fact, about 1 out of 4 Americans employed full or part time have failed to take this basic step, which can make saving more money each month easy and hassle-free.
2. Comparison shop online
If you’re going to sock away your hard-earned dollars, you really want your money to work as hard as you do.
So leverage the power of the Internet and find the highest rates you can for your savings accounts.
The new InterestPlus Online Savings account offered by Capital One is great because it pays you an above-average interest rate, plus you can get a 10% bonus each quarter. So it’s basically like turbo-charging your savings, because you’re getting paid twice to save.
3. Start small if you must
Too many people make the mistake of not saving money because they say “I don’t have a lot of money to put away.”
Well, the truth of the matter is that every little bit helps. Even if you can’t afford $200 a month or $500 a month, you might be able to afford $25 or $50. Just get started. Whatever you can save, do it! Over time, even small amounts of money really add up.
4. Use the 24-hour rule
Controlling your spending is critical to saving money in this tough economy. I’m not a fan of telling people to deprive themselves because financial diets don’t work – just like food diets, they’re too hard to stay on for very long periods of time.
But when you find yourself out shopping, or at a mall, and you want to spend money on a whim, instead of spending your cash – or whipping out a credit card – give yourself a 24-hour cooling off period.
Try to just walk away from the item. If you’re still dying to have it a day later, you can go back and buy it. But a lot of times, people can really rein in their spending and save money just by avoiding impulse purchases.
5. Evaluate “wants” vs. “needs”
Sales are great. But sometimes we fool ourselves into thinking that “discounts” and “deals” are all smart purchases.
That’s not always the case. What good is it to get a $100 item for “50% off” if you really didn’t need the item in the first place…. or if you really didn’t have the 50 bucks to spend to begin with?
To avoid this pitfall, think about whether what you want to buy – even if it’s on sale – is really a “need,” or if it’s just a “want.”
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All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.