Don't feel alone. Many people let spending get out of control. Living in a culture that constantly tempts us to live "la dolce vita," it is easy to see how it happens.
But, by taking a few steps to rein in spending, watching where the money goes and steering it in a sensible direction, you will increase your savings in the long run. As Benjamin Franklin (and our grandmothers) once said, "watch the pennies and the dollars will take care of themselves."
Set priorities
It is easy to confuse "needs" with "wants." Retirement? Need. New DVD player? Want. The first step to reining in spending is to get a clear understanding of which is which. List your fixed expenses and discretionary spending. If you want to spend money on one thing, then you need to spend less somewhere else. If you don't have enough to fund your "needs," you need to spend less on your "wants."
Make a Budget
Those no-foam decaf vanilla lattes sure add up if you have one every day! Keeping track of every cent you spend will help you bring your spending under control. Commit to tracking all your purchases for one month. A pain? Yes, but the results will be eye opening. You'll see once and for all where your money is really going.
Banking Basics
Set up three savings accounts with goals attached to them. Designate one for emergency cash, another for unexpected bills, and the third for investments. Whenever you're paid, put only what you need to live on for one month into your checking account.
If you can, put one month's expenses into your expenses account for unexpected bills. The idea is to build at least a small stash so you're less likely to use your credit card if your car needs a new tire.
Begin building your emergency cushion by depositing a portion of each paycheck into the emergency savings account. If your goal is to have three months' living expenses, you could reach your goal in 30 months by saving 10% of each month's pay – or in 15 months by saving 20%. See our article in the eNewsletter archives for even more tips about getting out of debt.
Put whatever is left into your investments account, including found money such as birthday and holiday checks, bonuses, or money made from a garage sale. If you get a raise, put the difference into this account on a regular basis.
Shop Around
Whether shopping online or in line, there are always discounts to be had.
Ask the store employees about any unadvertised coupons or sales starting up that week. Many retailers offer special discounts and coupons through customer loyalty programs.
