“Money will buy you a pretty good dog, but it won’t buy the wag of his tail.” – Henry Wheeler Shaw
With all the hype surrounding the state of the world economy at the moment it can be easy to get swept up in the frenzy of it all. But of course money isn’t everything. You can still go for a walk in the park with a loved one for free. You can hug somebody for free. Life is a wonderful thing regardless of the state of the economy.
But when you have financial worries hanging over you it can be very stressful and difficult to maintain a positive outlook on life. So here are some financial principles I stick to, followed by some practical ways to save money.
Get out of debt – Work out how much you owe and make a plan to pay it back. It doesn’t matter if its going to take you weeks or years. Make a plan and start working towards it right away.
Live within your means – Cut up your credit cards. Pay them off and tell you bank to close down your credit card accounts. Do the same with all store cards etc. If you don’t have the money to pay for an item, don’t buy it. The consumer culture around us really promotes the idea of credit. Banks and stores make it really easy to get credit and buy things we can’t afford. But don’t get sucked in! Marketers are very crafty. They’ll catch you at a weak moment, and the next thing you know you’ve got a new TV that you didn’t really need.
Play it safe – By this I mean don’t be tempted by get rich quick schemes. If it seems to good to be true, then it is. Keep your money in the bank. Think carefully about what you do with your money. Despite what experts may tell you, they simply do not know what is around the corner. Few would have thought it would get this bad, so no one really knows what the future holds. Take a conservative approach.
Here are some practical ways to save money:
- Only shop at the supermarket once a week – Plan what you’ll eat and make a list. When you go to the supermarket stick to the list. Avoid shopping when you’re hungry, have a snack before you go. Buy specials and give up your name brands for the generic ones, chances are they’re made in the same factory anyway.
- Take your lunch to work – I often buy my lunch at work and my boss, who brings his lunch from home, delights in asking me how much it costs. He says he does it “just so I know how much money I’m saving”.
- Reassess your mortgage if possible.
- Avoid bank fees – Look at how your bank fees work and see if you are using your bank in the most efficient way.
- Reassess your plans – Make sure you’re on the right plan for your phone, electricity, mobile, internet, insurance etc. These companies often come out with new plans and it may be that you can save a lot of money simply by switching to another plan. Especially if your circumstances have changed since you signed up for them.
- Save money on fuel – Make sure your tyres are inflated to the correct pressure (and check this regularly), don’t speed, and accelerate smoothly rather than suddenly.
- Transport – Carpool, get the bus, ride a bike, walk.
- Save electricity – Spend less time in the shower, insulate your hot water cylinder, switch off stereos/TVs etc at the wall and lights when you aren’t using them (if a little red light is still showing it’s using power), dry your washing outside instead of using the dryer, make sure your hot water cylinder temperature is set at the right level, don’t use heated towel rails, use energy efficient light bulbs, close your curtains before dark to keep the heat in. These little things can save a surprising amount of money.
- Don’t impulse buy – Only buy things you actually need. If you find something you really want then go home and have a think about it first.
- Cancel credit cards and store cards – Having these is just asking for trouble!
- Pay your bills early to get a discount – My electricity bill is always cheaper if I pay it by a certain date. Over the course of a year the difference is around a month’s worth of power. Definitely worth doing.
- Plant a vegetable garden – Even if you haven’t got a green thumb, it’s pretty easy to grow the basics like potatoes in your backyard. GetRichSlowly.org has some tips on how to start your own vege garden.
- Get friends around to your house instead of eating/drinking out – It’s way cheaper and you get to choose the music.
- Record where your money goes – If you’re struggling it can help to write down what you spend your money on. Keep a record of what you spend for a week, including the afternoon snack or the magazine at the train station. The amount you waste may surprise you. Once you know where it goes you will be able to see where you need to make changes and you can then…
- Make a budget – It doesn’t have to be a complicated thing, just some basic guidelines about how you’ll spend your money. Here some ideas on how to make a budget.
For an perspective on financial matters check out George Clason’s brilliant little book The Richest Man in Babylon, first published in 1926. Despite it’s simplicity, it is the book that has had the most significant influence on how I manage my finances.