Get ready for some intelligence for your pocketbook! Here are some simple strategies that’ll trim your spending, courtesy of the Bottom Line Personal.
- Make your spending mantra “a penny saved is two pennies earned.” Ben Franklin’s famous saying “A penny saved is a penny earned” is outdated. When today’s taxes are taken into account, you actually need to earn between 1.3 and 2 pennies, depending on your tax bracket, to be able to spend one penny. That means you would have to earn as much as $20 to buy an item with a $10 price tag! So next time you eyeball something in the store, figure this extra cost and ask yourself if it’s worth it.
- Try not to spend a single cent for one week. Eat the food that’s in your freezer or in cans at the back of your cupboard, carpool or ride your bike to work to avoid buying gas, and play cards or take a walk rather than pay for entertainment. If you do this occasionally, you can permanently reshape your ideas about which expenses are really necessary.
- Make buying difficult. The best way to do this is to pay cash for everything. Handing over a credit card makes it too easy to spend without thinking. Take your credit cards out of your wallet, put your checkbook in a drawer and carry around only a limited amount of cash.
- Don’t sweat the small stuff. A lot of people try to save by eliminating the small, daily expenses that add up over time, but people who spend money on daily luxuries don’t usually go cold turkey. In fact, if they skip their $3 bagel, they usually waste that $3 on something else later in the day. Big expenses are easier opportunities for saving. For example, high-end vehicles are huge money-wasters. Cars lose value every day that we own them - and the more expensive the car, the greater the loss. So if you’re in the market for one, buy a reliable, affordable used vehicle, take care of it and drive it as long as it runs.
For more tips, check out The Ultimate Cheapskate’s Road Map to True Riches by Jeff Yeager.