Tuesday, March 4, 2014

How to save money.

I wouldn’t say I’m spectacular at saving money. Whenever I come across a “good deal,” the money comes flying out of my wallet. It could be a dollar off of already-expensive nail polish, or a 2/$5 deal on snack food or candy (that I don’t need to be eating), or a Groupon for something I wouldn’t have even done otherwise. While I don’t buy expensive things, I do make a lot of trivial purchases that eventually add up to a lot of money.

Still, since starting my job in April 2012, I’ve managed to build up $6,000 in savings. When I told people that I had saved $5,000, everyone asked for my secrets. This struck me as odd because first of all, I didn’t think I had saved THAT much, and secondly, my “secrets” are normal habits for me. But I suppose they aren't normal for everyone, so I compiled a list of the things that you might consider tips and tricks.

There are a few disclaimers because there are certain things in my life that make it easier to save:
  1. I still live at home with my parents, and though I pay “rent,” it is only around $200 each month (it’s more of a contribution to utilities/groceries/toiletries than rent).
  2. Up until this year (January 2014), I didn’t pay for health insurance because I was still covered under my dad’s plan.
  3. I don’t have any major recurring bills to pay, other than an annual car insurance payment and the aforementioned rent to my parents.
That being said, let's get down to business.

Set up an automatic transfer from your checking to savings. This is the biggest and, for me, the easiest way to watch my savings grow. I am absolutely terrible at saving money outright because once it’s in my hands (or in my checking account), I see it as spending money. When I started getting my paycheck directly deposited into my checking account, I set up an automatic transfer online that occurs the following day. Right now it’s at 15% of my gross income (about 20% of my actual paycheck amount), but find a number that works for you, even if it's only $50 or $20 a paycheck.

Stick to using either credit cards (or cash) and TRACK IT. I word it this way because many, many people will advise that you stay away from credit cards (unless necessary) and stick with cash because you will track it better. For me, I find credit cards SO much easier to keep track of because I know I have to make sure my records match my statement. It’s a personal choice, so figure out what works best for you. Once you do, create a basic Excel spreadsheet that has three columns: date, description (for example, “Target - lipstick, yogurt, candy, gift card for mom”), and the amount. Use the sum function to keep a running total.

This habit is all about being accountable for your spending. When I use cash, I don’t hold myself accountable, which is why I stick primarily with credit cards. If you can’t be bothered to track this yourself, Mint.com is pretty handy especially with credit cards - you can link up your bank accounts and credit card accounts and they'll keep track of your money for you, breaking your purchases down into specific categories (don’t ask me what my Coffee Shop expense is, because it’s sad).

Use reloadible gift cards to stick to a budget. When I started working, I got addicted to coffee. Left unchecked, I could spend upwards of $50 every month going out for coffee every day at lunch and occasionally on the weekend. I have very little self control, so simply telling myself not to get coffee wasn’t working. Instead, I decide on my budget and load up gift cards for Dunkin Donuts and Starbucks. Once those are used up for the month, I’m done, so it forces me to spread it out a little better and make coffee at home a few times a week. (Also, now both Dunkin Donuts and Starbucks have rewards plans, so using a card builds up towards free drinks and food!)

Check for sales and coupons before going shopping. This one is a bit more popular and well-known these days, but when I was in college, I was the only one checking the weekly flyer before heading out to the grocery store with my roommates. My mom is a notorious coupon-cutter and sale-shopper (she’ll actually buy things we don’t need, “because it was on sale!”). I don’t personally have to do much grocery shopping right now, but I buy a lot of my own toiletries and snack foods, so I scout for coupons and sales. Do some research for the stores you shop at - for example, CVS has a good card program with lots of deals, coupons, and cash-back bonuses, while Target has the Cartwheel app with store coupons.

Don’t buy clothes/shoes/bags until you need them. This is a habit grown out of going to private high school where I wore a uniform every day and never really fell prey to the idea of having the “it” jeans/bag/shoes. Last year, I only bought new flats because the other two pairs I had were super worn out - like, the material was peeling off of the shoe. I got two new pairs of jeans in the past year because I hadn't bought any since college (I graduated in 2009). I have not purchased a new purse with my own money for years, thanks to having some gifted to me or using gift cards, and I use them until they are falling apart. The same goes for makeup, really - I don’t buy new concealer, blush, or mascara until I’m running out (or if it’s really old and needs to be replaced).

Additionally, when I do shop for these things, I don’t buy super expensive brands. This isn’t going to be the case for everyone - there are people who love buying good-quality products in any of these categories, like cosmetics from Sephora or designer bags. That’s okay; I’m not saying you can never have nice things ever again. But if you’re trying to save money, examine your shopping habits and see if you can get an extra few months’ use out of your purse or if you can go without buying another nail polish/blush/eyeshadow.


Those are my major tips for saving money. If you want any more information on these or have another topic I didn't mention, feel free to ask in the comments or shoot me an e-mail! Again, I don't consider myself a pro but enough people have asked me for advice that I feel like I have information worth sharing.