6 Easy Money-Saving Budget Tips Everyone Should Try
Tip #1: Mind the Lights
Switch your incandescent bulbs to compact fluorescent lamps that are qualified by the Energy Star program. You'll save around $40 over the life of each bulb. Traditional incandescent lights are the least efficient type of household lighting, since 90 percent of the energy used is lost to heat, but if you're still using them you'll save energy, and money, by turning them off every time you leave the room. CFLs are a bit more complicated. You shorten their life each time you turn them on or off, so the U.S. Department of Energy advocates the 15 minute rule. If you're going to be out of the room for more than 15 minutes, turn them off. If you're going to be back in the room within 15 minutes, leave them on.
Tip #2: Pay Yourself First
Even small amounts put into savings on a regular basis can pay big dividends over the long periods of time, and the sooner you start, the bigger your nest egg can grow. If you squirrel away just $20 per week into your individual retirement account, you'll save around $1,000 per year. Do that for 10 years and you have $10,000 in a tax-deferred account. Now assume you don't contribute another dime for the rest of your working life. Your account will be worth more than $107,000, 30 years after you made your last contribution (assuming a 7 percent growth rate). Not bad for saving just $20 per week.
Tip #3: Pay Down Your Debt
You need to have an emergency fund so you won't have to go into debt if you blow out a tire or the washing machine dies. But once you have enough in savings to handle life's little emergencies, you'll get a better return on your money by paying off your high interest loans. Your bank savings account probably pays less than 1 percent interest as of 2013, but your credit card might charge 14 percent or more. Look at it this way: If you put $1,000 into your savings account at 1 percent interest, at the end of the year you'd have $1,010 while the $1,000 debt you owe on your credit card increased to $1,140. If you paid that $1,000 on your credit card instead of putting it into a passbook savings account, you'd be $130 better off at the end of the year.
Tip #4: Pay on Time
Chances are your phone bill is due around the same time each month. If you pay your bill late, you'll get hit with a late fee. That's just free money for your creditors. Paying your bills on time not only saves that late fee, but on-time payments are a major factor in determining your credit rating, according to Jana Castanon, community outreach coordinator for the credit counseling company Apprisen. "An improved credit rating means more than just getting better terms and lower rates on your future credit needs," she says. "It also affect things like the amount of your utility deposits, the premiums on your car insurance, and it could even impact your future job opportunities."
Tip #5: Track Your Casual Spending
Keep track of your daily spending. It doesn't have to be complicated. It could be as simple as using a personal finance app on your smartphone to record your expenditures for the day. This isn't the place to record your rent and utility payments; just your everyday expenses like eating out, buying a magazine or grabbing a cup of coffee on the way to work. At the end of the month you might be surprised to discover you've spent $100 at that gourmet coffee shop, or $200 eating lunch out. You don't necessarily need to cut out your luxuries, but knowing is half the battle, as G.I. Joe says. Once you know where your money is going, you can make an informed decision about any cuts you want to make.
Tip #6: Review Your Insurance Coverage
If you have your auto and homeowners or renters insurance with different companies, you might qualify for significant discounts by bundling your policies with a single company. "Check with your agent about any discounts you might qualify for due to changes in your circumstances," suggests Deborah Belknap, a claims specialist with The Crichton Group in Nashville, Tennessee. "Many homeowners insurance companies offer discounts for having a monitored alarm system in your home. Your auto insurer might cut your rates for insuring multiple vehicles. Most agents want to get you the best deal possible, but sometimes you don't know if you don't ask."