The year is about to come to a close and we are no closer to an economic recovery than we were in September 2008 when the fiscal crisis first began. Whether you are employed, underemployed or unemployed, here are some tips that might be helpful when trying to save money in difficult times.
Take a look at your current situation. The moment I first became unemployed, I immediately took a financial snapshot of my life, at the present and moving forward. I looked at my savings and then added up how much I would be making on a weekly basis in unemployment. I added up all my bills and estimated how much I would spend on groceries every week. Seeing what you have, what you will make and what you will be spend allows you greater insight into your economic future. Make a chart if you have to. It is very helpful and will prepare you for what’s next to come.
Cut back on expenses. After you see what you are spending your money on, it’s time to make cuts. You have to start asking yourself questions. “Do I really need HBO? Do I even need cable at all? How often do I use my Netflix account? Is there a way to cut back on my cell phone plan? How can I save on electricity? How much will I save if I start cooking more often and making coffee from home?” The idea is to save as much money as you can without ruining your life if possible. You are allowed to still have fun, but during tough times, sacrifices are necessary. It allows you to last longer in your current economic situation.
Budget better. The initial cutting back on expenses needs to be followed by continued budgeting. Create a plan of action on how you will pay for expenses and figure out a way, if possible, to save what you can for a rainy day. Knowing what you can and cannot spend on a weekly basis is important, because you don’t want to overspend on something and freak out when you realize you don’t have enough money to pay the electric bill that month.
Automate your savings. If you budget your money and know you can save even $50 a week, don’t let that money tempt you by sitting in your checking account until you manually move it into savings. Find a bank that offers a great interest rate on your savings and then set your account up where it automatically takes the $50 from your checking and moves it into savings every week.
Stop paying with debit cards. It is so easy to just whip out your debit card for every little purchase you make, but you realize quick that all those little things add up. I got a new credit card recently with the goal to use it so I could acquire miles for a trip I want to take next year. Instead of using the debit card I had, I used the credit card and when I received my monthly statement, I was pleasantly surprised at how many miles I accumulated, yet disturbingly shocked at how much I spent when not paying attention. It was a big wake-up call. By taking out cash and sticking to your budget, you will never over-spend.
Decide on big goals. I knew I was going to be unemployed (read the story here). I decided I wanted to enjoy one last trip. I had six months before my job ended, so I saved as much as I could and then looked around and found cheap flights and hotels for Las Vegas. I booked a small trip with my girlfriend and we had one last hurrah before I became unemployed and needed to really buckle down. The best part was, I didn’t use all my savings at all and barely gambled any money away. I just had as much fun as possible and during my bout with unemployment, I looked back at that time and it helped me get through a rough year. Some people cannot do this. It’s just financially impossible. But you should always have some goal and try your best to save for it. This way, if your financial situation improves, you can celebrate a little. After roughing it, an opportunity for a little frivolous fun is something you earned.
--Jon Minners, Vault.com