Easy Ways to Save Money

Here are a few simple ways to start saving money. I follow, or have followed, or will soon follow all these ways.

Start small
Most financial experts feel that we need to save at least 5 percent, and preferably 10 percent, of our income and place it into an interest-bearing, liquid savings account. However, don’t give up if you’re not able to put aside 5 or 10 percent. Establishing a saving habit and saving consistently will eventually add up; even as little as $5 per pay period will accumulate. Once saving becomes a habit, set as your savings goal a maintained savings account of at least three to six months’ income. This will prevent borrowing when unexpected expenses arise or in case of a period of illness or unemployment.

Put money into a retirement account
If it is available, sign up with your workplace’s 401(k), 403(b), or similar retirement plan in which your company will contribute matching funds to the plan in your name. The most common match is 50 cents on the dollar. If this is the case for you, you will get an immediate 50 percent return on your contributions.

Monitor ATM withdrawals
Decide how much money you will take out each week or each month and make it last; discipline yourself to stick to your decision. Try to decrease the amount withdrawn every month. If you discover that you have money left over, deposit it into your savings account.

Pay off charges and loans
With the desire, discipline, and time, anyone can pay off his or her charges and loans and stay out of debt. There are four basic steps to eliminate charge and loan debt: (1) Transfer ownership of every possession to God; (2) Allow no more debt (no bank or family loans and cut up the credit cards); (3) Develop a realistic balanced budget that will allow every creditor to receive as much as possible; and (4) Start retiring the debt. Begin by first paying extra on the debts with the highest interest rates. If interest rates are comparable on all of the debts, first pay extra on the one with the smallest balance. After this first one has been paid, apply the regular payment as well as the extra money that was going to it toward the next highest balance. After the second is paid off, apply what was being paid on the first and second to the third highest, and so forth.

Pay extra on home mortgage
You will add equity to your home, reduce the amount of interest paid over the term of the loan, and reduce the length of the loan if you pay extra monthly on your home mortgage. If you consistently pay $100 extra each month on a $150,000 loan at 6 percent, you will save almost $73,000 in interest and shave more than 7 years off the original loan. If you can’t commit to an additional $100 each month, just round your payment up to the nearest hundred.

Pay off car loan
Interest on your car loan is not tax deductible and the rate is generally higher than on your home mortgage. Pay it off as soon as possible by rounding up your monthly payment to the nearest hundred and then add $50 (or as much as you can afford) to that amount.

Open an IRA
If your funds are limited, open an IRA only after you have maxed out with your company’s retirement plan. If you do not have a company retirement plan, open an IRA immediately.

Evaluate life insurance
If you’ve had the same term life insurance policy for five years or more, you can possibly cut your premiums by changing policies. If you apply for a new policy and get a new medical exam, chances are the insurer may feel that you are a better risk than fixed insurance health assumptions indicate, which means that you will qualify for a lower premium rate.

Be accountable for your money
Know where your money is going by establishing a budget and sticking to it. If the expense is not budgeted, the money should not be spent. Keep a small notebook with you to record miscellaneous budgeted expenses.