I’m not a financial expert. I don’t even play one on the Internet (or anywhere else, for that matter). But, like most people out there, I worry about money — how to earn it, how to save it, how to manage it, how to get as much as I can while spending as little as possible.
I’ve found that, for my family, the most straight-forward and simple money-saving tricks work well but, at some point, “just spend less money” isn’t helpful advice. How do you spend less money when you’re spending it on essentials? What if you can’t tighten the monthly budget by cutting out cable because you need to have high-speed internet access for your job?
Here are a few of the tips and techniques that work for my family:
1.) Use credit cards wisely. Most get-out-of-debt experts urge you to freeze your credit cards (often literally, by putting them in a zip-top bag filled with water and stowing them in your freezer, so you have time to rethink your impulse purchase while you wait for the plastic to thaw). It’s great advice if you’re stuck in a deficit-spending rut, but if you choose a credit card with some sort of bonus — cash back, points, frequent flyer miles — and you pay the bill in full each month, you’re getting more for your money than just the stuff you had to buy anyway. Paying my youngest kids’ daycare tuition with my frequent-flier-mile credit card gets us four round-trip plane tickets a year.
2.) Get an enormous freezer and buy in bulk. We have a large family — five kids, ranging in age from 14 years to 17 months old — and having a chest freezer in the basement means that I can take advantage of sales on otherwise expensive things (like meat) that my family eats most often. But even if you have a smaller family, a chest freezer can still work for you. Make meals ahead of time and freeze them; on nights when you have no time to cook, heat and eat something from your own frozen restaurant instead of spending money on unhealthy fast food.
3.) Clip only certain coupons. Yes, I clip coupons — I work for a newspaper, they’re easy for me to get a hold of. Why spend $4.99 on something when I can buy the same item for $3.99? But I only clip coupons for things I’m buying anyway. So, cheese sticks for my preschooler’s lunch box, yes; yogurt in a tube, no.
4.) Take advantage of pre-tax opportunities. Any time your employer offers you the chance to put money aside (dependent-care or medical spending accounts, for instance) or pay for something (like your health-care premiums) on a pre-tax basis, do it. It lowers your taxable income, for one thing and, for another, you end up paying less out-of-pocket in the long run. Think of it this way: If you’re in the 28-percent tax bracket, you have to earn about $139 in order to spend $100 in post-tax dollars. Wouldn’t you rather put that “extra” $39 to good use?
5.) Keep track of your spending. You need to do more than simply balance your checkbook these days. Tracking your spending can help you stick to your budget, and it also helps you understand where your money is going, so you can adjust when you need to and plan when you’re able. The tools at Mint.com are great for this. After tracking four months worth of our credit card spending, I discovered that we’ve actually been spending more money on gas lately than we have on food. Time to figure out a way to start saving up for that hybrid!
How do you make the most of your money?