The first step in improving your personal finances is finding ways to save back more money than you currently do. This extra money can be set back for unexpected expenses or invested to generate additional income for you. Many people, however, struggle to find ways to save money in their daily lives. Fortunately, with a little creativity and some planning, there are almost innumerable ways to manage this. Here are five of the simplest and most effective ways for you to tighten your budget and build your savings.
Switch From Name Brands to Generics
Whenever you buy groceries, consumable goods or practically any other common product, there's a good chance you're overpaying. This is because most people pay a premium price for name brands, even though their generic equivalents are just as good. Most generic products are up to 30 percent cheaper than name brand counterparts, so making the switch to generics can help you save a substantial amount of money compared to your current expenditures.
Pay Off Your Existing Debts
If you carry credit card debt, a car loan or even student loans, you're paying interest that could be put to better use in your savings or investment account. Try to pay down your debts as quickly as you can, since this will prevent you from having to make the maximum interest payments over time. Though this approach to saving will require you to put out more money in the short term, it will produce considerable savings in the long run.
Cut Out Restaurant Meals
Even if you only go out to eat once a week, the expense involved in going to restaurants can add up over months or years. For instance, if you go out to a mid-priced restaurant once a week, you might spend $30 for dinner, a couple of drinks and a tip for your server. Extrapolated out over the year, that seemingly small weekly expense would amount to $1,560. Avoid restaurants as much as possible, and you can see remarkable increases in your savings over time.
Take Advantage of Available Tax Credits
When tax time comes around, you might be surprised at just how many tax credits you could be eligible for. From the EITC for low-income families to the solar tax credit for people who power their homes with solar panels, federal and state tax agencies make many different types of credits available. Find out what you're eligible for, and you could easily reduce your tax bill.
Keep Your Old Car as Long as Possible
Buying a new car when your old one is looking worn out can be very tempting, but it's a temptation you should resist if you want to improve your financial well-being. Keeping your old car is an easy way to avoid new debt and delay the expense of making a down payment. Even if your old vehicle needs routine maintenance more frequently, it's likely still less expensive than actually purchasing a new one. The longer you can keep the old one going, the better off you will be.
By using these simple tips, you can reduce your cost of living, build up your savings and prepare yourself for any financial challenges life may throw at you. Once you have enough money saved to cover emergencies, you can even start investing the extra money you aren't spending, thereby increasing the amount of income you generate each year. Remember that saving money will require building long-term habits. By taking small steps now, you can begin to develop habits and ways of thinking that will improve your finances for the rest of your life.