Saving money wisely is not rocket science. It’s smart and wise but that doesn’t mean it’s easy. It’s not – otherwise everyone would be doing it.
If you think about it, saving money should be thought of as super smart. Who can argue with having money to do with whatever you’d like? Celebrities are lionized for just this thing, but for some reason, the fact that they came upon their money by not saving it, allows it to get pictured as glamorous.
We’ve come to realize that something that can be difficult (saving money) coupled with the fact that there is no money to be made from selling common sense (or wasting money), has conspired to render saving unglamorous. This is too bad.
But, there’s hope…
How to Save Money Wisely
Here are three easy ways to save money wisely. You might not even know it’s happening.
1. Start Early
Yes, I’ve said this before, complete with a picture of our circa 1994 Lotus-123 spreadsheet, our getting started saving early and often was crucial. The earlier you start, the longer your money works for you.
This is so important because the habit gets set and the money has the chance to grow. As you can see from above, we weren’t saving huge amounts but we were consistent.
(Easy tutorial for starting early – with friends compounding interest and early/often.)
2. Stay Put and Stay the Course
Life will always bring unexpected changes – job losses, family crises, etc. – but these are all the more reason you should attempt to control the things you can control, now. The house you buy, if you are fortunate enough to purchase a house, has an inordinate effect on the outlook for your long term finances.
Consider buying a house that is less expensive than what the bank says you can afford. Once you do this, consider staying in the house. The compounding effect of not “buying up” and consistently paying off your mortgage can help provide a margin of error when the inevitable “unexpected” happens. And, as we all know, the unexpected usually does happen.
(Easy steps to helping you decide your debt level and why debt free living isn’t for everyone.)
3. Plan Ahead
Well, actually planning sounds too formal and difficult. Really, it’s about thinking ahead. Thinking ahead to next year and what “out of the ordinary” expenses will be coming. Those expenses always show up – new tires for the car, a major house repair, etc. Thinking ahead to the next 10-years when kids may be heading off to college or the next 20-years or 30-years when you may not want, or be able, to work to support yourself. By bringing these future “unknown” expenses to the present, it makes a more concrete and stark contrast for the hard choices of today.
(Easy steps to saving everyday – and it’s simple.)
Saving and earning are two sides to the same coin. Ben Franklin said it most succinctly and best, “A penny saved is a penny earned.” Everyone can try to earn more but there is almost always a way to save that same penny. Consider the “future” and on what or how you would rather spend your money today.
What’s your strategy for saving money wisely? How do you decide where to save?
Go Gingham related links:
How we budget complete with categories that spell out FAITH:
F – Food
A – Apparel – clothing for yourself and your home
I – Insurance
T – Transportation
H – Housing
More related links:
From The Wall Street Journal, “Simple, Bedrock Rules on Personal Finance” – an excellent resource with rules for managing your investments. These are great rules to live by!
Also from The Wall Street Journal, “How to Live a Happier Financial Life” – not simply what to do with your money but life strategies as well.
9 thoughts on “How to Save Money Wisely”
Very wise to start early. Good advice, Sara!
“Consider buying a house that is less expensive than what the bank says you can afford. Once you do this, consider staying in the house.” Amen and amen. This is NOT a popular move in our society. But it’s a good feeling to know that, barring unforeseen circumstances, our house will be paid off in another 2 or 3 years.
“By bringing these future “unknown” expenses to the present, it makes a more concrete and stark contrast for the hard choices of today.” Yes! Well said. I find that a couple of different things help me with this–one is to avoid comparison as much as possible. It’s so easy to check out HGTV and think “we HAVE to do XYZ to our home” or to go to a friend’s home and get envious–while I don’t want to avoid friends, I can and do try to control media which makes me feel sorry for myself or envious of others (whether internet-based or magazines). The other thing I try to do is to take time to think through a purchase instead of buying on impulse. In other words, I try to learn from past mistakes. 🙂
Great post. You are so wise!
Oh, Kris! Thank you – and I do those same things to avoid feeling like we ‘need’ new stuff. I used to get lots of magazines and catalogs that made our ratty-tatty stuff look even worse. Once I cancelled those snail-mail items, our stuff didn’t look so bad (ok, my eye sight isn’t nearly as good without reading glasses either 🙂 ) and I stopped feeling as if I needed to upgrade.
Nicely done on paying off your home, too! Thanks – as always – for your kind words!!
I love number 3. Planning ahead is so important! Once I started trying to figure out my finances, I made a spreadsheet for the entire upcoming year to see where I thought I should be each month. This has really helped me prepare for those one-off expenses, like renewing my insurance for 6 months, car maintenance and unexpected expenses. I feel so much better being prepared than just winging it!
Thanks, Kristin! It’s planning for the unknowns – because they always show up, don’t they? So glad you stopped by… 🙂
So happy we started our 403B accounts as soon as we started teaching. That has made a huge difference in when we’ll be able to afford to retire! Same with buying an inexpensive house and staying in it for 20 years.
I’d add buying a car and driving it ’til it’s dead to that list. Our 17 year old Honda isn’t the most beautiful car an I’d really love to have heated seats, but I definitely like no car payment and it’s still running like a champ!
Hah! True on those heated seats, Erin! Yes, you are absolutely correct – the car thing can make a huge difference. My next car might be a bike with a little power assist for getting up that last hill 🙂
These are great no-nonsense and yes easy ways to save money.
One I like to use is rounding up. When ever I have a bill or a purchase come out of my checking account I always round up the total. If it is $5.05 or $5.57 either way it comes out of my checking as $6.00. I then take the difference and move it over to my savings account. It has been a great way to save a little extra every week without feeling deprived.
P.S. I just discovered your blog and am loving it!
I’ve set up a Google spreadsheet for my savings and since then, it’s been such a huge help. Will definitely take note of that FAITH. Thanks!
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