Wednesday, October 17, 2007

5 tips on how to save money

Here are some quick tips for saving money.

  1. Pack your lunch - Going out to lunch everyday can get expensive - real quick. For example let's say you go out to eat 4-days a week and buy the $6 combo meal with a drink at the local fast-food restaurant by work. And on Fridays you and your work 'clique' go out to eat at the sit down restaurant that costs about $12 a pop. That's $36 a week, $144 a month, or $1800 for a year (when you take out 2 weeks for vacation). If you Pack your lunch instead, paying say $3 max a day for the contents of the brown bag you pay $15($21 saved) a week, $60($84 saved) a month or $750($1050 saved) a year. So that $1050 saved you could actually use to take your 2 week vacation out of state.
  2. Direct Deposit Savings - Talk to your HR department or your primary bank about signing up for having a portion of your income 10% -20% (or more) depending on what you can live without - taken out of your bi-weekly check (assuming you get paid that often). Let's say you put away
    $25 a paycheck; That's $50 a month, $650 a year. $50 a paycheck; That's $100 a month, $1300 a year. $100 a paycheck; That's $200 a month, $2600 a year! $200 a paycheck (I envy you); that's $400 a month, $5,200 a year!

    And obviously I haven't even factored in the benefit of compound interest. If it were me I would put the money in a money market account that gains about 4-5% on average right now compared to your bank savings account which average yield is about 1% or less. The only caveat about Money Markets is while they are a pretty sure bet, they're still a bet because they are not guaranteed to always go up like savings accounts are.
  3. Use coupons - Coupons will save you bit by bit. I personally don't use them that much for groceries but for admission to theme parks, restaurant bills and other things that cross the $10 threshold they can end up saving hundreds of dollars over the years.
  4. Go to the dollar movie - This is a big one. If you pay $10 a week (or $20 if you're the gentleman) for a 1st-weekend movie, you'll save $450 (or $900 for the gentlemen) by going to the 3-4week old $1 movie.
  5. Cut out the $5 coffee, go for $1 convenience store coffee -
    If you forgo your daily $5 latte for a $1 convenience store knock-off you'll save about $1,000 after a year. If you cut your coffee habit completely you'll save $1,250
So if you think about it very small lifestyle changes can save you up to $8400 or more a year. I'd start saving now.

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