Start the Year Off with a Bang by Giving Yourself a Raise
Do you wonder how to get ahead in today's economy? Chances are, your spending doesn't seem to be excessive given your take-home pay. Yet, your finances seem to be dwindling rapidly.
What can you do to improve your financial situation if you're unable to ask for a higher salary at work? Give yourself a raise, of course!
Here’s how with a combination of two actions:
1. Minimize your spending. Trimming down a shopping habit and eating out a little less are clearly good steps, but get creative on ways that you could back on your regular monthly bills.
· Some routine expenses that most people can do without are premium television packages or pay television altogether. You can watch your favorite TV shows for free with an antenna or very inexpensively on Hulu.com (the non-LIVE version). Lose the landline phone if you have a cellular phone. And minimize your utility bill by going on your provider's monthly budget plan.
· If you're a dog owner, you can save on your pet expenses in several ways. Minimize your visits to the groomer by learning to groom your pet yourself. Purchase heartworm and flea preventatives at stores like Petsmart or Chewy instead of the vet. Purchasing these monthly treatments on autopay will also save you money. You can save money by switching to dry food rather than canned and cutting back on the treats (which will keep your dog healthier in the process).
· Change your cell phone plan to an MVNO. MVNOs are smaller carriers that utilize the towers of big cell phone companies. You pay much, much less than you would with one of the big carriers and you get essentially the same service. Bonus - there’s no contract and none of those “extra” fees – so if you find you’d like to try another carrier, just switch next month. Setting your cell phone bill to autopay will save some money as well.
· If you don’t already have one, call an independent insurance broker that handles multiple companies (rather than a captive agent who is tied to one company) and get new quotes on your car insurance, life insurance, disability insurance, and homeowner’s or renter’s insurance. Since rates fluctuate quite a bit from year to year, and between companies, you may be able to get the same coverage you have now for much less.
· Call your credit card companies and ask them to lower your interest rate. It helps if you have a long-standing relationship with them and have been a good customer (i.e., you pay your bills on time). If you get a “No”, ask to speak with a supervisor or the customer retention department, and let them know you are prepared to go elsewhere. If you get a “No” again, try again in a week.
2. Ramp up your savings. Place every last dollar you save on monthly expenses into savings. Yes, it will be tempting to indulge in purchases you'd like to make. But remember, each dollar you save today builds your financial security and stability, and keeps you out of debt.
· Treat your savings as a monthly expense. Just as you would never think of not paying your mortgage or car payment, don't shortchange your savings account either.
Overall, if you implement only the tips mentioned above, you can likely save around $200 per month or $2,400 per year. What can $2,400 do for you? It can cover you for a while in case of a job loss or medical emergency or it can pay for unexpected car repairs. Essentially, by saving $200 per month on your routine expenses, you're giving yourself a $2,400 raise each year!
Why It's Important
Making a considerable deposit into your savings account each month is just as important as making your car payment, paying your mortgage, utilities, and buying groceries. Without the security net of savings, you'll be living paycheck-to-paycheck for years to come.
It’s like giving yourself a raise because you'll have a considerable amount of money at your disposal without having to work any harder.
The Savings Plan
Vow to deposit 3/4 of your disposable income into your savings account - along with the amount you've saved on your monthly expenses by implementing the money-saving strategies above and make it automatic. Let to our own devices, it’s easy to find other uses for money that we intended to save.
If you're able to save $150 on your expenses by taking the steps above, and you have $800 of disposable income each month, you would deposit $750 into your savings account each month.
By doing so for just 12 months, you'll have $9,000 at the end of the year. If you continue this savings plan for 5 years, you'll have $45,000. After 10 years $90,000, plus a chunk of money from interest on your savings will be yours!
Based on the above scenario, this savings plan leaves you with $200 of disposable income each month. While it may seem like a small amount, you can find fun and inexpensive (or free) activities in your community to help cut entertainment costs. Get creative. Instead of meeting friends for dinner and drinks at a restaurant regularly, have pot-luck dinners at each other’s homes. When you’re tired after a long day of work, instead of ordering take-out, have some quick meals in the freezer like frozen pizza that will let you relax and save money.
Other money-saving entertainment ideas include attending a matinee rather than an evening movie or going to a drive-in which charges a flat fee per car or only charges for adults. Share an appetizer with your spouse when eating out or skip the dessert and dig into some Rocky Road with chocolate sauce when you get home.
Yes, you'll have to live below your means. However, is having $9,000 at your disposal worth it to you? If not, does $45,000 make it more appealing? What about a $90,000 savings after ten years... or even a six-figure savings of $135,000+ within 15 years?
Once the long-term effect is considered, it's more than worth sacrificing a few luxuries now. When something unexpected happens that could cause damage to your finances or put you into debt, you'll be glad you did!