How can those who currently aren’t saving afford to save money? And how can those saving only a little save more?
Here are our top 10 tips for saving money when budgets are tight.
Cut Spending Painlessly
Tip 1: To find small savings that add up to big savings over time, keep a careful record of all (and we mean all) of your expenditures for a month. You may be surprised to learn how much you are spending on such things as a daily latte or restaurant meals.
Tip 2: For necessary purchases — such as food and transportation and insurance— comparison shop. Remember your Commissary and Exchange can offer you savings year-round. Utilize these savings opportunities as you would your other military benefits.
Tip 3: Restrain spending on birthdays and holidays, especially Christmas. A few well-chosen gifts are likely to be more appreciated than a more costly pile of gifts chosen thoughtlessly in a shopping mall foray.
Reduce High-Cost Debt
Tip 4: Interest rates on credit card debts and other retail credit lines can easily run 25 percent. You can save hundreds, perhaps thousands, of dollars a year by paying off these high-cost debts. If you are located at a military installation you can get assistance at the Family Readiness Center for free. Personal Financial Managers and Counselors are there to help and can be a great asset in getting a debt repayment plan in order. Another resource is MilitaryOneSource (1-800-342-9647) they also offer free financial counseling.
Save For Emergencies
Tip 5: Build an emergency fund to avoid having to take loans to pay for unexpected purchases. That fund is usually best kept in a separate savings account, despite the low interest rates such accounts pay right now. But do try to keep a high enough balance in the account to avoid monthly fees. Many on-base banks and credit unions participate in Military Saves Month and offer great savings options during the Month and throughout the year. To learn more on emergency savings, click here.
Tip 6: Set up an automatic transfer each pay period or month from your checking to your savings account or through an allotment. Even as little as $10 or $15 a month helps. After all, that’s $120 or $180 a year.
Tip 7: Put all your loose change in your savings account. For many people, that could add up to well over $100 a year.
Take Free Money and Save it
Tip 8: Low- and moderate-income workers qualify, each year, for an Earned Income Tax Credit that can put over $1,000, and often more than $2,000, in your pocket. The EITC Assistant tool provided by the IRS can help you determine if you qualify to claim the credit, or you can contact your local tax payer assistance center for in-person help. Then be sure to save at least half of this windfall.
Tip 9: Participate in a local Individual Development Account (IDA) program. In return for attending financial education sessions and agreeing to save for a home, education, or business, you typically receive $2 for every $1 you save through an IDA program. So, $25 that you save each month ends up as $900 at the end of a year.
Tip 10: Participate in the Thrift Savings Plan or Save at Work. While we encourage letting this money build up until retirement, it can be withdrawn, or borrowed on, to cope with serious emergencies.