A lot of time is spent thinking about how to increase wealth — shrewd stock investments, clever real-estate strategies, the best exchange-traded funds. But what’s often overlooked: how to wring enough money from our lives to take advantage of those smart ideas.
The simple art of saving isn’t really so simple, as most of us have learned. We need constant encouragement and prodding to stick with our savings plan.
Easter is an excellent time to think anew about becoming a better saver. The holiday coincides with the coming of spring, a period of renewal and regeneration. In a real sense, the story of Easter is about starting over with a clean slate.
So with that in mind, let’s figure out some sensible ways to fill the cookie jar.
Get on a budget. For the personal-finance writer, this is a bit like recommending that people floss more. Fact is, everyone hears about budgeting, but very few actually do it.
The key is to start simple — and keep it simple. Don’t let minutia deter you from getting the budget down in rough terms. You have your income: salary, after taxes. And you have your biggest expenses, such as housing, food and transportation.
Ideally, the difference between those two is positive. If it’s not, then you know you’re bleeding money, and we haven’t even gotten to fun things like movies, trips or new clothes!
A number of Web sites, such as Quicken.com, provide budgeting help. Smartmoney.com (a part of News Corp., which also owns The Wall Street Journal) also has a raft of budget-related worksheets that can help get you started on the numbers-crunching game.
Reduce the cost of a common thing. Once you’ve got a budget, look for a common thing (meaning something you do often) that could be done cheaper.
For instance, I plan to start riding my bike to work as it gets warmer. A friend of mine says she is opting to walk to the coffee shop rather than drive. These small actions save money on subway fares or gas. It may not sound like much, but it adds up over time.
Other options to consider:
- Pack a bag lunch rather than go to fast-food joint.
- Don’t eat dessert.
- Buy quality private-label products instead of brand names.
Shop at a second-hand store for basic household tools and gadgets.
Energy costs are another way to built-in savings. Energy costs can fluctuate. Up north, winter is usually costlier. Down south, the summer, especially if you have air conditioning, can be more expensive. Take the peak months and maintain a budget that handles those peak months. As the costs come down in nonpeak months, move that extra money into savings instead of blowing it on something frivolous.
Delay gratification. This morning, a lot of kids are gnawing on chocolate or hunting colorful Easter eggs. But this doesn’t happen everyday. In fact, it happens roughly once a year (depending on the lunar cycle).
It’s not hard, nor is it horribly expensive, to provide chocolate and colored eggs to the kids every morning. But we don’t do that. Rather, we defer that impulse until Easter morning. To add to the fun, we hide the eggs and bury the chocolate in that strange, green frizzy paper.
The result: Kids LOVE Easter and all that the bunny brings.
In the same way, we should think about fancy dinners out or tickets to a ballgame as special things that should be deferred and earned. As my grandfather often said: We work first, then we eat.
Have a garage sale. This time of year also is associated with spring cleaning. So, as you do the big clean of the season, identify useful things that you no longer need. Then, hold a garage sale.
You may not make a ton of cash, but it will all be “found money,” or money that you didn’t realize you had. You also could donate the spring-cleaning detritus to a favorite charity and file for the deduction, but you might have more fun selling old stuff to the neighbors.
Develop an accountability strategy. When you commit to something — exercising more, eating better, saving money — it’s often challenging to stick with it. Whole forests have been felled in the name of books meant to help us stick to self-improvement promises.
A powerful tactic is to share your goals with someone you trust so that this person can hold you accountable. It’s easy to tell ourselves that we’ll “get to it tomorrow.” It’s tougher to confess letting things slide to someone holding you accountable.
Share your budgeting and money-saving strategy with your accountability partner and then schedule check-ins on a weekly or monthly basis. Ideally, your accountability partner helps get you back on track in case you fall behind.