7. Saving Your Savings Goals for Last
Many of us are in the habit of paying outside bills and obligations first, and then relegating any leftover cash to savings, whether it’s for an emergency fund, a wedding, a down payment on a home or a trip abroad.
What we probably fail to take into account is that saving money should also be an obligation — to ourselves. If we don’t prioritize it, all too often it doesn’t get done.
The fix here is a simple habit that only requires periodic action: “Pay yourself first” by setting up an automatic contribution straight from your paycheck into your savings account, either through a direct deposit coordinated through your employer or an automatic transfer from your checking account. You won’t miss the money you don’t see, and you may be inspired to tweak your budget to accommodate those savings. “It may take some adjustment at first,” says Brewer, “but you’ll feel great when you see that account increase every month with minimal effort.”
How Much You Can Save: The great thing about paying yourself first is that the potential for saving is just about limitless. If, for instance, your goal is to save $10,000 for a wedding over the course of two years, you’ll need to automate about $417 per month. So you’ll set up your automatic transfer for that base amount, and if you get a raise or your living costs go down and you rebalance your budget, you can increase your savings amount.
8. Overpaying on Entertainment
We’re all probably guilty of this potentially budget-tanking habit: A coworker tells you about this amazing new book that he’s reading, so you pop online and download it to your Kindle. The next day, your cousin emails you about a movie recommendation, so you order it from Amazon. Sound familiar?
“I’ve seen a number of clients who unknowingly spend hundreds of dollars a month on digital media — everything from iTunes to Amazon books and movies,” says Brandie Farnham, CFP with LearnVest Planning Services. “I recommend creating a separate folder in the LearnVest Money Center specifically for this spending to see just how quickly all of these little purchases add up … and then rein it in!”
So instead of buying the latest titles, look up free audio and digital books on Amazon, Books Should Be Free and Open Culture. If you still can’t find what you need, Farnham recommends signing up for Scribd, a service for ebooks that’s akin to Netflix. The price: $8.99 a month.
As for movies, look into such free services as Crackle and YouTube (you can find a handful of free movies by filtering your search to show only videos over 20 minutes). Or consider joining Student, Mom or Amazon Prime to watch movies and TV episodes for free. If you aren’t a big movie-watcher, most iTunes movies offer a limited-time streaming “rental” at a fraction of the purchase price of around $5.
How Much You Can Save: Let’s say that you’re a modest reader and movie-watcher who downloads two films a month from iTunes and three books a month for your Kindle. At approximately $15 per movie and $10 per book, you’re laying out $60 a month. If you were to sign up for Amazon Prime instead — which also allows you to read free books with your membership — for $6.50 a month, you’d save $641 over the course of a year.