The 21st century can said to be the ‘century of contrasts’ in more ways than one. On one hand, we are enjoying the benefits of technology. Smart gadgets have made our lives more comfortable. The Internet has really shrunk the world and turned it into a global village. On the other hand, job losses, wage cuts, freezing of benefits, and spiralling bills have made our lives more stressful than ever.
The average family size has also dwindled and consists of just the husband and wife and a single kid. But rising costs in every walk of life is leaving even nuclear families struggling to keep the wolf at the door. Many people are resorting to ingenuous ways to earn extra bucks to pay for the burgeoning expenses and rein in unwarranted expenditures.
Cash strapped individuals and families are walking the tight rope between balancing out of pocket or unplanned expenses and doing an extra job besides the regular one to pay for the increased outgoes. People are cutting down on utility bills by using energy efficient lighting fixtures, using discount coupons for food items, medicines, apparels and all other sundry necessities to make do with their disposable incomes.
We are so caught up with our jobs and keeping family commitments that we often fail to see or make use of the numerous techniques we can exploit to save money. Furthermore, if you do not have any idea of how much money you’re exactly making at the end of the month and how much you’re spending, you’ll always run short of money.
Therefore, the first and foremost thing you’d need to do is to prepare a financial statement of your expenses in much the same way a company does. All firms and companies, big or small, make a quarterly or annual budget of the likely earnings (credits) and expenses (debits) based on a system known as ‘double-entry bookkeeping’.
So, before you can start listing the different ways or techniques of saving money, you should primarily chalk out a financial planner every month, especially if you’re the only earning member that keeps you perennially on a tight budget.
Building a budget is hard and sticking to the same even harder but once it is in place, you’ll able to control your outlays more effectively and not run out of cash in the middle of the month. It is worthwhile to note that preparing a budget is not enough, you’d have to abide by it as well if you want to make ends meet until your next pay check comes in. Furthermore, staying on budget will also help you to contribute towards the nest egg you’re building that’ll come in handy for the rainy days.
The following guidelines elaborate on Ways to Save Money on a Tight Budget.
1. Focus On Building a Nest Egg and Adding to It
Once you have your budget you have a more or less clear picture of how much you’ll be spending on average for the entire month. This in turn, in will help you in getting an idea of how much money you’d be able to save at the end of the month after meeting all your fixed and variable costs. You should deposit the saved amount directly into your savings bank account or invest in a secured fixed deposit bond with a good rate of return.
You should make it a point to deposit money in your preferred account every month even if that requires you to make some sacrifices like foregoing the dinner you have with your family every Sunday.
2. Eschew Bad Habits
If you’re in the habit of smoking or drinking then perhaps nobody knows better than you that the amount of money you’d save if you gave up these bad habits altogether. If you make a monthly estimate of the amount that you spend towards smoking or drinking, you’d be in a surprise as it’d quite a sum.
You’d find it extremely difficult to give up your destructive habits all at once, so try to cut down on your smoking or drinking in a phased manner. Just think of the benefits that’d accrue to you if you eschew wasteful and harmful habits. Your health will improve on one hand and you’ll be more money to put in your saving bank or mutual fund.
3. Every Member Should Be Financially Prudent
Your sincere efforts to save money will go down the drain if your spouse or any other family member is spending money waywardly. It’d be an exercise in futility if your family members do not co-operate with you as far as building a nest egg is concerned.
You should sit down with your family members and discuss on how much each one of you can afford to spend so that you can keep aside the sum that you’d deposit in your account. Economizing should be a collective responsibility and not an individual effort.
4. Restrict Your Use of Debit/Credit Cards
Shopping for items of daily need or luxuries by just swiping your debit or credit card is undoubtedly very convenient, particularly when you’re not carrying cash. The upside of using credit/debit card is that you can buy something that has caught your fancy even when you don’t have enough money on you.
The downside is that you often end up spending more than your earnings would allow and by the time you realise your extravagance, the bills have already been dispatched. Another disadvantage of using these plastic cards is that you end up paying more for an item than you’d normally pay (had you used cash) as you’re shopping on someone else’s money (a financial institution or bank in most cases).
So the best way out would be considerably limit your use of debit or credit cards and keep a limited amount of cash in your wallet so that your urge to purchase just on impulse is contained.
5. Make Do with Only One Credit/Debit Card
The ‘more the merrier’ is one dictum that does not hold good for credit or debit cards. Having a multiple of credit cards might give you more spending power but then you’d also have to apportion a part of your earnings for paying interests.
If you surrender all your cards and retain the card that you use the most then you’ll obviously be able to save the amount that otherwise would have gone towards interest payment.
6. Trim Expenses Wherever and Whenever You Can
If you have already stretched your budget to inexorable limits, then you should be on the lookout for ways to cut down on expenses wherever and whenever possible. Keep track of all such expenses that you think you can cut down and rummage through your receipts to double check any expenditure that you think was profligate.
For instance, you can have homemade lunch at work or arrange for carpool with your office colleagues. This way you’d be saving a neat sum every month. Making a budget every month would go a long way towards helping you to tide over the uncertainties of day to day living and keep you ready for any unforeseen or out of turn expense.
Following the above guidelines will help you to save money especially when you’re under budget constraints.