By Julie Ann
The Times Square ball has made its decent into a sea of confetti, calendars are turning over to welcome a fresh start and millions of people are making – and perhaps already breaking – their New Year Resolutions.
According to national polls the second most common resolution people make is to manage money better (behind improving health). As young women, one of the major things we should be considering as we start a new year is getting into the lifelong habit of saving money, which will, in turn, keep us from living in debt. I challenge you to save $100 dollars a month this year. (Already saving that much or more? Then add $100 a month more to your savings.) I wouldn’t issue that challenge without giving you some tools to make it so. Even if you’re a poor, unemployed college student, these practical tips will help you meet this financial goal by December 31, 2012.
The first thing you need to do is to create a budget – get a handle on your income, spending and the difference between the two. On My Own Now’s Matt Fraser has written an excellent primer on how to develop a budget. Once you see where your money is going, you can decide where to make cuts, what things are draining your checkbook without you realizing it and what wants you are confusing with needs. Also, don’t neglect to budget ten percent for church and charity, as well as budgeting for your savings.
Now that you’ve taken a hard look at where your money is going, you need to get out your figurative scissors and cut. Let’s say you discover that you drive through the gourmet coffee shop for a $3 cup ‘o joe every day. Now practice your multiplication and you’ll see you are spending $1,095 per year on coffee! I’m picking on coffee, but the same principle can be applied to soda, manicures, cell phone plan add-ons or just about anything. Once you take a hard look at your money outflow, you can determine what you can live without or adjust (i.e. buy an awesome travel mug and bring your coffee from home, buy soda by the case, instead of stopping at a convenience store, or do your health a favor and just give it up, etc.) These potential savings could help you put away anywhere from $20 to $100 dollars per month.
So what about things that you can’t cut out altogether like clothing, electricity and food? Just because you can’t cut them out, doesn’t mean you can’t cut them down. Single! fashion columnist Tamara Jane has a bunch of great ideas for looking great on less. In “Saving Pennies and the Planet” you’ll learn some quick and easy ways to reduce your utility bills. When grocery shopping, take a calculator to make sure you are getting the best deal and buy larger quantities if you get a price break, never shop when you are hungry, use coupons and shop sales, and equally important, always eat all the food you buy, including leftovers. If you pay $1.99 for a red pepper, use half of it and let the other half rot in the veggie bin, you’ve just wasted $1. Freeze what you doubt you can use before it spoils. Learn more ways to save on groceries in “The Grocery Gauntlet.” Each of these articles I’ve linked here are short and packed full of great info. Take the time now to click through and take notes of ways you can save. You’ve got to put a little time up front into planning and creating new, money-efficient habits if you want to get anywhere on this savings resolution.
Finally, there are plenty of other sneaky ways to save money. Pay cash for almost everything and then drop any change into your piggy bank. Every so often count up the change, roll it up in those paper sleeves and deposit it into your savings. If you don’t use cash, look into getting a debit card that will round up your purchase to the next dollar and put the difference in savings.
If you earn extra cash babysitting, doing odds job or you receive cash gifts on your birthday and holidays, resolve to put that money directly into the bank. If it’s not a part of your normal income that you haven’t included in your budget (by the way, when creating your budget don’t count on these windfalls) you won’t miss it if it goes directly into savings.
All these small steps can add up to saving big bucks. Maybe you only need to change your daily coffee routine to save $1,200 this year. Maybe you need to attack all these areas of spending to eek out $10 a month savings from each budget item. Maybe you’re living so close to the bone, that doing all these things at once will still only save about $50 a month. In that case, let me give you a secret weapon for doubling that savings: IDAs (Individual Development Accounts). We’ll be talking more about IDAs in future issues of Single!, but for now, just let me say that with an IDA, every dollar you save for school, car purchase, starting a small business or other significant goals will be matched (one for one) by the IDA program. Find one near you today and get started now. You have to be of moderate to low income and agree to take some money management classes, but that’s a small trade-off for doubling your money. If you can trim $100 a month from your budget, an IDA will give you $100 more and this time next year, you’ll have $2,400 toward that new car, college, tech school or more.
No matter how you decided to save, I think by this time next year we can be in better financial shape. Now quit watching those college bowl games and go work on those budgets!