Saving money can sometimes seem like a nearly impossible task. Mortgage payments, car notes, credit card debt, and other bills can make you feel like you are stretched to your limit. Instead of focusing on ways to cut expenses, try implementing new strategies that will help you stretch your income. Even in today’s economy you can do a lot to make your money go farther than normal. Once you start forming these good habits, it will come naturally to you. Here are a few tips that will make paycheck last longer and help you attain your financial goals:
1. Ditch Your Debit Card (or credit card)
Whenever you need to make a purchase, drive to the bank and take out cash. I know that using a debit or credit card and cash have the same effect, but the psychological effect is not the same. Swiping a card doesn’t have the same mental impact as having to use cash. For example, if I am making a $200 purchase using my debit card, I find it easy to just swipe it and forget about the transaction. If I am using cash, however, I have to take 10 twenty dollar bills out of the bank, and I tend to think more about whether or not I really need to make this purchase. Using cash feels more like I am using my own money, whereas using a debit or credit card feels like I am using money that is not mine.
2. Save Your Raise
Did you recently get a raise or a bonus at work? If so, what did you do with the extra money? If you aren’t sure where it went, then it’s the same effect as if you didn’t get a raise. Start saving your raise. You were able to pay all of your bills before you got your raise, so keep doing the same thing. Take your extra raise and put it to work by increasing your 401(k) contribution or adding money to your savings account.
3. Increase Your Withholding Allowances
Do you look forward to getting a sizable tax refund every year? Getting a large tax refund is not necessarily a good thing. It is often a sign that you are overestimating your tax liability. Overpaying your tax liability is an interest-free loan that you are giving to the government. You could put that money to better use during the year by earning interest on it. If you increase your withholding allowance, the less you will have to pay in federal taxes. Many individuals that claim just one withholding allowance normally end up receiving a tax refund. The best use of your money is to pick the right number of withholding allowances so that you end up about even at the end of the year. There are some tax credits and deductions that might still cause you to receive a small refund, but if you’re getting over 1 or 2% of your yearly income back in the form of a tax refund, your withholding allowance number isn’t high enough on your W-4. Simply talk to your boss or HR representative at work about making a change to your W-4.
4. Get A Savings Buddy
Just like you have a workout buddy, you can get a savings buddy! A savings buddy is a partner that will help keep you accountable about reaching your long-term savings goal. Your savings buddy will keep you motivated to make sure that you are sticking to your financial commitment. Let’s say you have a goal of saving $200 a month. Your accountability partner will check in with you each month to make sure that you have contributed the $200 dollars. Your savings buddy will keep you encouraged during those months when you feel like slacking off. You are much more likely to stick to your goals with a financial accountability partner. And you can help out that person as well!
Money has been tighter lately for a lot of us. I am sure you all have done some creative things to stretch your income a little bit farther. What ideas do you have?