General Tips For Saving Money (Pennies Do Add Up)
The following tips are likely to help you save money:
Consider "Real Cost" when buying something
Calculate the real cost of what you're buying. In general, this means to think in terms of pre-tax dollars. If you're using a credit card and have a balance, add the interest you'll have to pay. For example, a $50 sweater might cost you about $80 before taxes (depending on your tax rate). Plus, if you don't pay off the cost during the year, it could cost another $10 in interest! The $50 sweater might not seem as attractive at $90, no matter how good it looks on you.
Calculate "Expended Energy":
- Calculate the number of hours of your life you have to spend working to earn that amount of money.
- If you use our handy tool to help you calculate "Real Earnings," you'll find out how much you're really earning per hour (which is probably a good deal less than you think you're earning per hour.) To learn more, see Real Earnings.
- Once you know what you're really earning per hour, you can then determine whether the item you are considering purchasing is worth that many hours of your time. For instance, if you determine that your Real Earnings equals $10 per hour, the $90 sweater means that you have to spend 9 hours of your work week to purchase that sweater. Is the sweater worth that many hours of your time -- especially now that time is so valuable to your post-diagnosis eyes?
Limit Use Of Credit
A good general rule is not to use credit unless you absolutely have to. It is better to save money for an item you want to purchase and then pay for it in full. Plus if something happens that you need the money to take care of your health, you have it. If you must use a credit card, use the one with the lowest interest rate.
One major exception: if you have a life expectancy on a statistical basis of two years or less, or if you have little cash and the purchase is essential, make the purchase on credit, insured -- if possible -- by credit life insurance.
It never hurts to ask for a discount - even in a setting you wouldn't think to ask for a discount. For instance, in a retail store you can ask to speak with a person who is in charge. Then ask the person something like "Can you help me out with this price?"
The worst that can happen is the person says "no." We've never heard of an instance where asking for a discount is then asked to pay a higher price.
Keep Your Financial Goals In Mind
Last but not least, make a conscious decision about whether the value of what you are getting is worth the loss of money you'll have to achieve your financial goals -- including money for unexpected medical expenses.
While we're on this subject, if you are saving up for something, put a picture or drawing of it somewhere you will see it every day. The image will help you save for your goal and pass up impulse purchases.
Keep Track Of Your Spending
One easy way to keep track of your spending is through a free website such as Mint.com . Mint organizes and categorizes your spending for you.
kIplinger's Personal Finance offers the following tips to help save money without feeling any pain:
- Start now. Do not wait until you make more money. The more you make, the more you spend.
- Start small. Even $50 per paycheck will add up over time.
- Keep your budget and your goals simple.
- Write down specific goals. That makes them more real.
- Set up an account for each goal or for large, recurring expenses such as health insurance premiums.
- Have your boss (or your bank) take money off the top of your salary.
- Toss spare change into a bank or glass jar.
- Give yourself an instant reward. Each time you brown-bag your lunch instead of eating out, toss the savings into your cash jar.
- Keep writing the check after you pay off a loan or a bill and send it to a savings or investment account.