Thursday, August 06, 2009
Build Savings by Plugging Slow Leaks
Most budgets have room for more saving. It's just a matter of identifying the behaviors that contribute to the drain on your finances.
"Nearly everyone has spending holes--leaks in their budgets that drain money with them hardly noticing. These small drips can add up to big bucks" writes Erin Burt for the August 2, 2009 edition of Kiplinger's Personal Finance.
Burt identifies several common ways that people waste money.
"Buy new instead of used," she says. "Cars lose most of their value in the first few years, and so recent used models--less than five years old--can be a real value. And you'll pay less in collision insurance and taxes, too. Also consider pre-owned books, toys, exercise equipment and furniture."
Impulse buys also contribute to savings drain. Burt writes, "Go home and sleep on the decision. If you still want to buy, do your comparison shopping, check your budget and go for it."
Try to pay off your credit cards each month. By carrying a balance, Burt advises, you're blowing money on interest. If you must carry a balance, look towards a card with a lower interest rate and fewer fees, then transfer your high-rate card balances to this card instead and make regular payments.
Reserving dinning out for special occasions can also net big savings. "A habit of spending $10, $20, $30 per person for dinner can be a huge drain. Throw in a $6 sandwich for lunch and a $4 latte in the morning and you've got quite a leak," says Burt.
Lastly, put the savings you do have to work for you. Burt recommends stashing your savings in a high-interest savings account and getting paid to save.
To access the complete Kiplinger's story, click here.