How to make your money go further
Not long ago, we put together a tongue-in-cheek article featuring some of the crazy lengths people will go to in order to stretch their budgets. Here at the The Calculator Site, we pride ourselves on listening to what you want and, from visitor comments and emails, it has become apparent that many of you want some real, actionable ideas. So, with those comments in mind, Iíve put together some real world, and more sensible ideas, guaranteed to make your dollars go that little bit further.
Get A Spare Change Jar
Yes, itís an old fashioned way of budgeting, but it works. Chucking all your spare change into a jar can be a very effective way of building up a nice little source of spare cash. Obviously, you will to exercise a bit of willpower in order to stop yourself dipping into the jar, but we know you have the resolve of a Spartan warrior, right?
Tip: donít be tempted to leave the money in the jar for too long or you might just find it becomes a source of easy cash for those indulgence purchases we swear ďwe needĒ. Do yourself a favor and form a positive habit of dropping all your spare change into the jar when you get home at the end of each day. Mark off a suitable day on the calendar and make this your cue to visit the bank.
I did this and, to my surprise, banked a little over $300 dollars at the end of last month.
Kill That Dirty Habit
Smoking! Sorry people, but itís dirty and does a pretty good job of making a mess of your body. But Iím not going to dwell on the health benefits - youíre all big boys and girls and can probably weigh up the impact to your health (without me sniping from the sidelines).
How much does a packet of cigarettes cost? $5.50, roughly? Letís say you get through thirty smokes a day. Now multiply that by 365 and you have the eye watering sum of $3,011.25. Ok, as an ex-smoker I know which Iíd prefer to have in my pocket.
Iím not going to preach - the figures are there in black and white.
Ditch Those Credit Cards
There are a number of excellent articles on this website that give you the ins and outs of credit cards and some recommendations on using them to help rebuild your credit score. Admittedly, in those articles we recommend keeping hold of cards that no longer carry a balance as they can be a positive influence on your credit score. But, sometimes you need to know when to cut and run.
Most card companies know how, as human beings, we can be incredibly weak-willed when it comes to seeing the money on the table. Theyíll smooth talk you with promises of redeemable points every time you pay with plastic or find ways to convince you to use plastic to pay for your holiday (and then spend your hard earned holiday fund on a house extension).
Show your personal finances a little respect: shred those cards and cancel your account (but only after youíve finished rebuilding your credit score).
Say Goodbye to Dollar Stores
Dollar stores have been touted as the answer to our financial woes. What people donít tell you is that an awful lot of what they sell wonít last more than five minutes. To add to that, branded products are often downsized. So, they may be cheaper, but theyíre also smaller. In the vast majority of cases, quality costs money and you expect to pay pretty close to top dollar to get that quality. Cheaper isnít always better!
Sure, dollar stores are good for some things (cheap toothpaste and, maybe, some unattractive, outsized underwear). But are you really going to buy your favorite niece a $1 birthday present?
Like I said, never totally discount using dollar stores but, if you want quality goods that last (and, ultimately, save you money) then you might just need to pay more premium prices.
Make Every Day Christmas Day
Youíve heard of banks that give savers a chance to use their 'Christmas Club', right? If not, letís do a quick recap - the club is effectively a savings account into which depositors make regular, monthly contributions. Just before Christmas the bank issues the saver with a juicy check (complete with a dusting of interest). All the saver has to do is spend it!
But do you really need a bank to help you save money? After all, Iím kind of hoping youíve already started throwing all your change into jar in the hallway so why not take it one step further? Commit to small, but regular amount of money you donít need.
Even saving a relatively trivial sum such as $10 will give you a healthy $500 to spend at Christmas.
Buy in Bulk
Remember how I said that paying premium prices can save you money in the long run? Well, hereís an even better way to stretch your budget - buy in bulk. The idea has been around for a long time and weíre all aware that big high street stores use bulk buying to drive down cost to the customer whilst maintaining a healthy profit margin. So why not copy them?
Costco is a prime example of where buying in bulk can slash your bills. But it gets better - companies such as Groupon.com now give you the option of pooling your resources with other online shoppers to drive down the cost of pretty much anything you want. Itís the power of group buying. Canít find what you want? Form a group of friends and family, or even the members of your neighborhood and use your collective buying power to drive down costs.
Tip: running your own group buying scheme can be a bit hit and miss if some members donít commit to buy - get a commitment from everyone before making your play for a $200 discount on a bulk order of flat screen televisions.
Track Your Spending
I can already hear the words falling from your mouth as you read this tip: ďOh goody, I get to fill out a spread sheet - canít wait!Ē But hold up! This works and if youíve ever tried to track your spending then you know itís a very effective way of controlling your spending. I know itís dull having to sit in front of your computer typing in long lines of numbers (I apologize to any accountants who love their job) and thatís why some bright sparks invented software to do the job for you.
There is a plethora of tools out there that take the mundane task of home accounting and make it look sexy. Weíve already covered some of the best budgeting apps for tablets; all you have to do is take your pick from either our iPad or Android articles. This really works! Write it down.
Plan Your Spending
This one goes hand in hand with using an accounting application to track your budgets and some might argue theyíre one and the same - but theyíre not. Tracking your spending is historical. When you plan you set yourself a target and a budget.
Sure, you need to understand how much you have to spend (and thatís where tracking comes into play). But, by planning youíre attempting to remove the curse of temptation. By writing down exactly what you need and sticking to only whatís on the list, you should reduce the temptation to impulse buy (which is one of the easiest ways to kill your finances).
Tip: knowing the layout of your local supermarket will help you navigate past those shiny yet very expensive temptations waiting to ambush you and raid your wallet.
Do a Sanity Check
Ok, so youíve used an app to plan your budget for the month. Then you wrote a shopping plan and, near as possible, you stuck to the plan. After all, how effective is a plan if you never set the wheels in motion. So whatís next? The sanity check, of course.
Donít worry - nobody is coming to get you. No, what you need to do is look at everything you bought on your last shopping trip and ask yourself if you really need it. And I mean Ďreallyí need it.
Definition of a bargain:
Something you really donít need at a price you canít possibly resist.
Toilet paper and clothes are pretty much necessary in modern society, but did you really need to buy a vase that vaguely resembles the profile of Harrison Ford? Probably not.
Impulse buys are named as such because the retailers know just how to sucker punch you into snapping up a bargain you never knew you needed.
Check your bags and receipts and if you donít need it then make a mental note not to get caught in that particular trap again.
Use All Resources
Letís say youíre really broke. I know itís not nice - Iíve been there myself (although that was about twenty years ago) and I learned some valuable lessons. The most important lesson was that weíre all far more capable than we realize. The second lesson is that, nowadays, thereís far more support for anyone who is truly in need.
If youíre living on the breadline and finances are really dire then maybe itís time to find your nearest food bank. Crazy idea? No, not at all. A 2012 report from the BBC found a significant number of US middle class families reliant on food banks. The worst part? The problem is growing.
Donít be ashamed - if you need it then ask.
I didnít say any of these tips would be pain-free; budgeting sometimes means giving up the little luxuries in life.
During the course of writing this article I thought about how the above tips could be condensed into a sensible and easy to remember checklist. I came up with a list of four questions which you can easily apply every time you have to deal with your finances:
Simple checklist for budgeting
- Do I really need this?
- Can I actually afford it without having to miss out on an essential?
- Beyond the essentials such as food, does it bring any value to my life?
- If you answer no to any of the above - put it back on the shelf.
I know itís quite harsh, but give it a shot - I guarantee itís very effective.
Written by James Redden.
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Last update: 02 May 2014
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