by Anza Goodbar
(last updated November 22, 2011)
The first step in making a savings plan a reality is to set up a budget. It is important to fully understand the income coming in and the monthly payments going out. Most families do not realize the frivolous purchases that are money wasters until they see it in black and white.
The easiest way to monitor incoming and outgoing money is by keeping a spreadsheet. This tool can be updated monthly with cash, check and credit card purchases. At first, it may seem restrictive; however, it is a powerful tool for helping achieve financial goals.
Once you have set up your monthly budget, take a look at areas that can be cut. Most families have discretionary money that is used for dining out, shopping for clothing or going to the movies. One simple way to saving money is to cut down on some of the extracurricular activities. Instead of eating out five times a week, only eat out three times and put the difference into savings.
An easy way to save is to set up auto deduction through your payroll department. Some financial planners suggest taking 10% of your net pay and putting it directly into a savings account. If this money never enters your checking account, you won't miss it. Some banks offer Christmas funds that won't allow withdrawals until the holidays, so if saving for the holiday's is difficult for you, this might be a solution for cutting down on holiday stress. Some banks offer a savings plan of rounding up your charges on your debit card to the nearest dollar and depositing the difference in the purchase price into a saving account.
Buying things in bulk and watching sales can also reduce costs. The more raw foods are when your purchase them, the lower the costs. Of course there is a price to pay for convenience foods like pizza or ready to heat meals. These costs may still be substantially less than eating out.
Research prices before making a purchase. Purchases are often a result of an emotional impulse. Shop around online before actually stepping foot in a retail environment and make a smart choice. Sometimes a sale is simply a great marketing gimmick.
Save money on credit card interest by paying of the balance each month. If you must make monthly installments, make more than the minimum payment to pay off the debt more quickly. Once you have paid off a bill, put that monthly payment amount into a savings account rather than accumulating additional debt.
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