How to save Money ?
I have always feared running out of money or not having some when I need it the most. A few silly experiences (like the ones below) in the past have gotten me this way.
1. As a student studying in a different town, there was this time when my bus ride home broke down in the middle of nowhere. I had wiped my purse clean to pay for the bus ticket. I had no possible means of getting a taxi or even calling my father to let him know where I was. (Pre credit card era, pre mobile phone era). This scared the S#@% out of me and I thank god that I reached home safe and sound.
2. After 6 months of a well-paying IT job, I had to move to another location. I had 0 in savings and had to borrow money from mom to pay the deposit at the working women’s hostel. Asking money from anyone embarrasses me (I can ask money only from my better half and even that takes some serious effort). That was the last time I asked anyone for money since I started earning.
I had never had problems saving money in my home country as my job was one of the better paying ones. Then I moved to the US of A for job and that is when crazy money habits sprang out of nowhere. I fell a victim to the bling and glitz of the marketing industry and soon I had a bunch of things that I did not really need (2 years ago, I retail bought a brand new quesadilla maker that till-date hasn’t seen light of the day). The only thing that saved me from going overboard was the fact that I have a thing against loans and credits. If left by myself, I shall always live within my means which results in never having a credit card debt.
At the end of year 01 in the USA, I had not met my yearly savings goal, which should not have been too difficult had I paid any attention to my finances. Instead I had a meager amount in my account. I justified the lack of funds by saying I had seen a lot of the country and I had a lot of one-time purchases for setting up my rented apartment. I had seen most of the east coast – all the way from Niagara Falls and New Hampshire to Universal Studios at Orlando, Florida. But a midway budget exercise through year 02 pointed out that I was headed out for a year like the first.
Since then, the following steps have put me on my path of attaining my savings goal. I expect the savings to provide me with some emergency cash should I ever be in need. Following rules helped me a lot and by end of this year.
1. For every new purchase that will go into your wardrobe, 1 piece must be discarded. This applies to dresses, t-shirts, pants, tops, socks, and even shoes etc. There shall be no exception to this rule.
2. For every purchase that costs over 100$, research the following. And once the product has been purchased, do not upgrade till it becomes non-usable. (My Samsung Note 2 lasted me 3.5 years and never needed an update till I tried something silly and broke it.)
Do you really need it?
Price Trends for the past year.
Possible offers on any site.
Quality of the product and an option of purchasing it used from Craigslist.
3. Food – If it comes in a packet and will be ready to eat in minutes, DO NOT BUY IT. Learn to cook from scratch. It is simple, easy and does not take a lot of time. If you live alone – You will be cooking for 1 which is easy. If you live with others, they can help with the Prep and clean part of cooking. Either way, a grocery bill for a family of 3 will never exceed 100$ per week (even if you purchase organic food). In other words, if there are 3 mouths to feed and you eat food 3 times a day, it will be 63 plates of food at 100$. This comes with 2 benefits,
Your health will improve significantly.
Your finances will improve significantly.
4. Pay off your credit card completely every month. This is the only way to live a debt free life. Regardless of your income, credit card interests are in the NOT AFFORDABLE territory.
In the end, the money is always spent on the following 4 categories – Food, Clothes, Shelter and Miscellaneous. I have learnt how to save on the Food, Clothes and Misc categories. However the part where savings come from ‘Shelter’ is a new concept to me and I am still researching Buy vs Rent.