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Archive for June, 2009

The Importance Of Saving Money | How To Apply Money Saving Techniques

Importance Of Saving Money

Most people want to save money, but their main problem is that they don’t know where to begin. Unfortunately there’s no way you can manage your money soundly if you don’t know the importance of saving money and have a plan to do so. We’re not talking about living in miserable conditions in order to scrape some dollars, but we’re talking about being able to shop around, plan and implement a system so that you can save money, both for short term and long term purposes. One the most important short-term reasons to save money is so that you can build that emergency savings fund, for those unplanned expenses that come out of nowhere. In the long term, saving money provides you with the foundation for your financial goals, such as financing a college education, buying a home, or saving for retirement. There also are intermediate goals that you may want to make come true, such as a long-awaited trip with the whole family or replacing the old appliances.

If you happen to belong to the category of people who spend less than they earn, it’s time for you to start looking into ways to invest your surplus. If, on the other hand, you have no idea whether or not you’re overspending, you need to start learning about the advantages of budgeting so you can correct that situation. If you’re in debt, whether it be medical debt, college debt, or credit card debt, you need to start doing what you need to do to pay it off. People disagree on whether to build your emergency savings fund before or after paying off your debt, but they do agree that you need at least three to six months’ worth of living expenses. Once your debt is paid off and your emergency fund is well-funded, then you can really start looking into ways to invest your money and achieve financial independence.

It’s good to talk about the importance of saving money, but I like to tackle things hands-on. With that in mind, here are a couple of areas where you can literally trim the fat and save money to achieve your financial goals.

Money Saving Technique 1: Saving on groceries

Most of the tips for saving money on groceries are common sense and I don’t think you’ll find anything groundbreaking here. But it’s good to bring them back to mind if you’re looking to save as much money as possible when you go shopping.

• Do not go to the supermarket hungry. You’ll tend to buy everything in sight
• Look at all the shelves. The most expensive items are strategically placed at eye level, while the cheaper, generic brands tend to be on the lower shelves
• Shop by yourself. Kids tend to make you buy more than you normally would. Even spouses can join in and make you spend more than budgeted.
• Use coupons, Buy in bulk & look for sales. Self explanatory…

Money Saving Technique 2: Saving on gas

• Take public transportation or ride the bus. Depending on where you live, that may not be an option for you, but for some it is really a viable option. It can also be an opportunity to multitask — get ahead of your reading. Even if you can’t take public transportation, how about carpooling?
• Investigate gas prices. The internet is filled with websites that track gas prices. Do your research before you fill up and try (within reason) to make your itinerary match a gas station that has low prices.
• Idle no more and get a tune-up. The running engine is just burning gas — wasting money — if the car is idling; consider turning off the engine in those situations. Efficiency is lost if the car hasn’t had a regular tune-up and you can substantially improve your gas mileage with a tune-up.
• Drive the speed limit. It’s been covered time and again: driving smoothly (avoiding fast accelerations and brutal braking), as well as sticking to the speed limit improve your gas mileage; they also account for a much smoother and safer ride, so what’s there to lose?

Money Saving Technique 3: Saving on utility bills

• Winterize your home. Initial cash outlay for it is high, but the it will pay for itself many times over.
• Use wood stoves to heat your home. If you live in a colder climate or just have harsh winters — this can really save you on your heating bill and efficient wood stoves can warm up the house quickly!
• Weather-proof your home. If you live in a hot climate, use window shades and instead of warming up your home even more by using your oven, use crock pots, barbeques etc. so your air conditioner doesn’t have to work even harder in the summer.
• Clean the vents in your appliances and electronics. Your heaters, air conditioning units, hair dryers, laundry dryer, under your fridge, all have areas where dust and lint particles can accumulate and reduce their efficiency, causing them to use more electricity. Clean them to keep your electric bill down.
• Save on your water bill. Use less water!

Money Saving Technique 4: Saving on entertainment

• Take advantage of anything that’s free. Once in a while, free concerts are held, take advantage of them. If you are still going to school or know someone who is, many schools offer free entertainment through exhibition of plays, sports events, dance recitals, art exhibits, or film festivals. While most of them are free, there are those that charge affordable ticket prices.
• Change your viewing habits. To get free DVD movies, you can look to the local library in your neighborhood or nearby area. This is a thrifty way to entertain yourself and your family and friends
• Indoor games. You can do puzzles and board games with family members. This might sound boring for some, but once you get started playing, you will find yourself hooked. This is a perfect opportunity to spend time together on a particularly boring day.
• Join clubs. Whatever your interests are, you are bound to find an organized group that caters to your interest. This is a fun way to meet new people. Membership fee for most of these groups are quite affordable, while others require no registration fee. This is not just a cheap way to entertain yourself but is quite fulfilling too.
• Watch out for discounts. If you want to watch theater productions, go to a museum, or partake in any form of entertainment, you can invite your friends to join you and ask for discounts for buying tickets in bulk. Aside from that, you should take advantage of other forms of discounts. For instance, if you are a student, you can get discounts by merely presenting your ID.
• Head outdoors. Most people’s idea of entertainment are confined to malls and movie theaters. These forms of entertainment are often quite expensive. Therefore, you can go outside and experience fun outdoors. Not only is it a cheaper way to have fun but there are limitless activities to explore. You can go hiking, picnicking, fishing, camping, kayaking, bird watching, visit a park, or walk on the beach with friends. This is a perfect way to get re-acquainted with the outdoors and be treated to the beauty of nature. This type of activities are quite calming and relaxing. Aside from that, most of these parks or reserved areas are open to visitors for free.

Money Saving Technique 5: Saving on finance costs

• Repair your credit. If your credit score is higher, then the cost of credit is lower for you: you get better interest rates across the board, from your credit cards to your home loan to your auto loan. Credit is just cheaper and that can save you a lot of money.
• Refinance your home. If you bought your home at a point in your life where your credit was not-so-good, and/or rates have gone down to the point where you might secure a substantially lower rate on your home loan, it might make sense financially to refinance so you can lock in a lower rate and save money.
• Consolidate your debt. If you can get a loan that pays off all your high interest debt, while offering you a lower rate than you were previously paying, you will be saving money by consolidating your debt into a lower rate single loan and only have one (lower) bill to worry about.

The Importance Of Saving Money | How To Apply Money Saving Techniques

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