Money Matters: Top Five Tips for Saving

I talk about shopping a lot, but I definitely have experience saving as well and thought I should share that side too.  In most years (non-grad school years) I’ve saved over 50% of my net income and this has enabled me to pay for my own wedding, support myself through my last year of college and all of graduate school, and contribute financially towards my family.  I have been able to spend my money on fun things that matter to me – handbags and trips across the world of course top my list.  I’ve also managed to build a large cushion that would enable me to cover rent for a a few years (but having money in savings vs. investments, like real estate, is another post!)

Here are the top 5 ways that I’ve managed to save.
1. Save every chance you get
Where can you save a few dollars a day?  Start with the small manageable things: bring lunch at least once a week instead of eating out, think about taking public transportation or carpooling, and look for coupons when you shop in-store or on-line (my links at the right side help you save almost every single time you shop online!).  Those few dollars definitely accumulate over time and can be put towards your nest egg (because it’s always good to have extra savings!)

2. Track your spending (esp. your cash spending)
It’s really important to be aware of your spending.  Do you know how much you spend on food every month?  What are your entertainment expenses?  It takes more work to note down all your expenses, but the insight into your money management is totally worth the effort.  We’ve used quite a few money management softwares and are now using both ibank and mint.com to track our foreign and US expenses, respectively.  Once you know how you are spending your money, you can start scaling back or reallocate your spending to categories that matter more (e.g. if you love shopping, but spend a lot on eating out, why not cut down your dining expenses so that you can put it towards saving and shopping!)

3. Budget for the short and long term
Budgeting isn’t just for the hares, it’s for the tortoises as well.  Make a budget and try to stick to it.  But don’t deprive yourself of spending or else you might unexpectedly splurge way past your budget.   Budget what you feel comfortable spending in different categories and know that it’s ok to splurge a little in one month as long as you save at other times.  Just remember how it effects your longer term savings goals. *Ahem* so more than one Chanel reissue a year may be a problem if your shopping budget is $100/month!
Remember my ideal wardrobe list (shopping for the long term, not just because you like something?)  Saving and spending are both long term issues and should be planned accordingly.

4. Prioritize payments
What are your regular expenses every month?   You likely have some form of housing expense along with a transportation expense as well.  This may be coupled with student loans and credit card expenses.  Pay off the charges with the highest interest rates first (e.g. your credit cards, unless you have a 0% trial interest rate).  Remember that expenses like the interest on your student loans may be tax deductible so it’s ok not to pay that all at once.

5. Live within your means
A credit card shouldn’t be an excuse to spend more than you have.  Some people limit themselves to spending only with cash (it’s a good savings tip and reminder to “spend what you have”).   Sure you may want to live in a larger apartment or have the newest pair of Louboutins, but can you realistically afford it?  Over time, your income will vary (hopefully to your benefit) and you should remember to adjust your spending accordingly.

Hope this money matters post helps!  If not, I’ll be back to fashion and design posts tomorrow anyway 🙂