2 Basic Money Savings Tips for Dummies

It is difficult to achieve peace of mind and quality of life if you are constantly struggling to save money and feel constant stress due to overwhelming debt. Starting small to achieve financial success is possible for anyone, no matter how small their income or how big their debt.
 

Cut down on your spending by clipping coupons for groceries and othe rpurchases. Even a 5 to 10 dollar savings per week adds up over time. Stop spending your money foolishly. If you are addicted to drinking expensive coffee from a coffeehouse enroute to work, invest in a gourmet creamer in a comparable flavor and an insulated coffee cup. Taking the coffee from home helps put money in your pocket and soon you may actually prefer the homemade version to the more expensive. Cutting corners in this way adds up to a large amount of extra money over time.

Make a budget that curtails frivolous spending for everyone in your family. Do not make the budget so rigid that there is no room for fun purchases. Allocate each person a small amount of cash to spend however he or she desires each week. If the individual has his heart set on a high price item, tell him that he then has to save his money until he has enough for the purchase. One of the most important categories in a budget is the savings account. Treat this just like a bill and if possible, have the money automatically deposited each time you receive a paycheck.

Concentrate on building an emergency savings account for car troubles, house repairs or other inevitable problems that pop up. Once you have the savings in place, you no longer have to resort to credit cards to pay for these money crunches. A wise amount for an emergency savings is about $1000. After building this type of savings, strive for a larger savings of 3 to 6 months of living expenses.

Pay the minimum on every credit card you have each month to avoid late fees. Choose the credit card with the lowest balance to pay any extra cash you have on hand on each month. Soon the balance will be zero and you can take the money you were paying on that credit card and apply it to another one. Following this method steadily and consistently enables you to pay off the credit cards. It also enables you to avoid the high interest rates on these accounts. Never buy a new car unless you can pay cash for it. If you need a relatively new car because you transport clients or drive long distances to work, purchase one that is at least two years old. Once you drive a brand new car off the dealer parking lot, the value diminishes rapidly.

Save up so that you have a hefty down payment for a house. The bigger the down payment is, the less your mortgage payments will be each month. Make it a goal to have enough of a down payment so that you don’t have to buy private mortgage insurance – or PMI. This protects the lender against default if the homeowner does not make the payments. This type of insurance is costly. In most states if you put down 20 percent or more on your home, you are not required to have the PMI. In addition, purchase a home that you can easily afford on one salary is you and your spouse both work. This prevents unhealthy financial stress if one of you is laid off, fired or disabled.