If you are one of the millions living paycheck to paycheck, then I don’t have to tell you about the effect record inflation has had on our economy. More and more Americans are feeling the cash crunch, and necessities are becoming more difficult to afford. To underscore that point, Marketwatch reports bankruptcies in August have spiked 18% over the previous year.
It’s no secret that wages while having risen since the COVID-19 pandemic, haven’t kept up with inflation. If increasing your income isn’t an immediate option, then your other option is to cut expenses. Easy, right? No. Changing spending habits is one of the most difficult things for people to do.
We as consumers have become accustomed to a certain standard of living, and many try to maintain that standard despite the financial consequences. But it doesn’t have to be that way. Some simple, but effective changes you can make can help you save money while minimizing its impact on your lifestyle. Instead of giving you an itemized list of money-saving tips, we’re going to start with your thought process. The truth is, much like dieting, if you don’t change how you think about spending, you’re bound to fall back into the same trap.
Want vs. Need
First, you must determine what expenses you need to fund, compared to what expenses you can live without. In other words, eliminate your discretionary spending. Your priorities should be food, housing, and utilities. Paying your electric bill is a need, but having cable with 150 channels is not.
So what are some other examples? The newest video games, new clothes, and tattoos are all unnecessary expenses you could put off. Limit online shopping sites to reduce the temptation to order novelty merchandise. Training yourself to hold back the “urge to splurge” is imperative, and blocking them out of your routine will help you resist.
Reduce the Cost of Need
Smart shopping can help you stretch your dollar by reducing the cost of the things you need. Shopping at discount grocery stores can save you big bucks on your grocery bill. Buying off-brand products can get you similar goods while keeping your wallet padded. Like those $7 specialty beverages from places from gourmet shops? Skip them and make coffee at home. You can buy a can of coffee for less than the price of two fancy beverages. Even if you’re only buying a regular cup of coffee at $2, the savings of making it at home is too large to ignore.
While the internet may be a need in this day in age, dropping to basic internet will usually do the trick. I like gaming as much as anyone else, but do you need a high-speed connection? Probably not.
Couponing is another way to save big bucks, but it takes some work. Locate a couple of websites that offer free downloads of coupons and look for the items you need at a savings. It may not be a ton of money, but every little bit helps. Another tip for couponing: Since many coupon offers require you to buy items in bulk, team up with a friend who can split the cost with you, and then split the haul. That’s a great way to cut the price even more!
Joining rewards programs at stores you frequent is another way to save on things you need. Getting points or cash back for things you have to purchase helps stretch your dollar further. Just don’t get caught in the trap of spending more to earn more.
Make it Last Longer
Keeping items longer will save you money in the long run. Having the latest cell phone may seem great, but if your old one is still working, why replace it? The same goes for your car, television, or laptop computer. “If it ain’t broke, don’t replace it”!
Generate Some Extra Money
Having a garage sale or selling unwanted items on eBay can generate some quick cash for you, even if it’s only a one-time thing. Unloading extra “stuff” you’re not using or likely to use again can be liberating in a way, and free up some much-needed dollars.
Here’s one that has flown under the radar. If you currently have some cash on hand, move it to a high-interest account. Several banks such as Citi and Capital One offer savings accounts with 4.30% APY. Yes, cash is king once again! All kidding aside, this is an easy way to generate income and not have to do anything to earn it. It’s not going to make you rich, but again, every little bit helps.
Pay With Cash
Last but not least, ditch the credit card. Unless you can pay off the balance every month, using a credit card is causing you to spend money unnecessarily. I realize not everyone can afford to pay cash, but at the very least, minimize the use of cards.
It All Comes Down to Discipline. While trimming the fat may not make all of your financial struggles go away, it can certainly improve your situation and may help you through some difficult times. Changing your spending habits has to be more than a one-time effort, it has to become a way of life.