7 Tips on How to Save Money by Thinking Differently
Many people ask about how to save money. I believe that they already know the action that it takes to save money – not spending money. It sounds very easy, but in reality it is not. Saving money is not only about not spending money. It starts with changing your mindset about money. This is especially true and essential if you are married and have kids! Here are 7 tips on how to save money by thinking differently.
#1 Have The Talk
When was the last time you sat down with your spouse and talked about your household personal finances? Last week? Great! Every month? Perfect. Keep it up. Never? Oops, not good, but that’s okay. You can start now. In order to have a happy marriage, both spouses have to be on the same page about their money. Not on the same page? Don’t panic, yet, there is hope…my wife didn’t have a clue about managing money at first. Now, she is a pro! Let’s talk about what this really means and how this will help you save more money in the long run.
#2 Get on the Same Page
Do you and your spouse know how much money you and your spouse will spend in a particular month together as a household? You may not be able to answer this question, but your goal is to be able to. You know the saying, “It’s our money.” Well, it’s true, and things can be rocky if this isn’t understood. Buying decisions have to be made mutually. This doesn’t mean every purchase, unless it’s a big purchase. However, you can start treating your ordinary purchases like big purchases. This will help you and your spouse to get on the same page. Communication is key. If saving money is important to you, but not your spouse, help your spouse to find something that is important to that person to save for. Maybe a dream vacation or new house or the kid’s college fund. This may be the motivation your spouse needs.
#3 Before You Buy, ask Yourself Why (Needs Vs. Wants)
When buying stuff, ask this question to yourself: “Am I buying this because it is necessary or do I just want it?” Needs vs. wants. If it is a “needs” item (and your spouse agrees), then buy it if there isn’t a better deal somewhere else. If you wait one more extra day, then you may realize that you really don’t need it. If it is a “wants” item, then wait and walk away for now. If you are only buying it because it is on sale, don’t walk away….run!! This needs vs. wants concept will eliminate the majority of things you are trying to buy, I hope! Cha-ching! You just learned one very important concept of how to save money. Now, let’s discuss budgets, and you will find a spot for some of those “wants.”
#4 Create a Budget
I want to give you a few examples of what my wife and I do that have been very successful for saving us money. Creating the budget is the first step. We have about 20 different categories and assign a maximum dollar amount to each category. Some of the categories include the following (in no particular order): Grocery, Entertainment, Baby items, and Gasoline. We stick with our budget and spend no more than the set amount for the grocery category for that month. We also track and add up how much we spend as we go, so we know exactly how much is left for groceries each shopping trip. We do this for all of the categories we created.
Even though you create your categories, you may not know how much dollar amount to allocate. That’s okay. Start paying attention to your receipts and start tracking where your money is going. As you collect more data on your spending, you will see a clear picture of how much to allocate to each category. I would say 2-3 months will give you enough data to create your budget.
Also, you can create a category for some of those “wants.” For example, my wife has a category for house décor. Do we need it? Nope. It’s a want, but putting it on the list makes her happy, and helps to avoid overspending in this hobby-category. Today, you and your spouse can start by creating the list of categories (without budget amounts). Even if you know all of them, it is important to create the list together as a team.
#5 Be Content with Life
Living a life in contentment is the next step. You may get a promotion or raise because of your good work recognized by your employer. Congrats! But what does this extra money really mean to you? Is it going to be for a huge flat screen TV that you have always wanted to buy? Or are you going to spend that money on a set of new rims on your Camaro? What about this? Continue to live your life as if you never received that money. Living in contentment means that extra money you receive will have no effect on your life. There is a reason that you want to save money, right? Why don’t you use that extra money to plan for your future that you are trying to save money for in the first place?
#6 Spend Less or Earn More
At the end of the day, there are only two ways to save money – spend less or earn more. At some point, you will feel that saving money is fun because not only you are saving up for your future, but also you will be better at managing your finances. If you can feel this accomplishment with your spouse, I am pretty sure that it will be one of the greatest rewards you may experience together besides having kiddos.
#7 Show and Teach
Speaking of kids, they learn from their parents very quickly. If you and your spouse can demonstrate the importance of saving money in front of your kids, then they will learn about it at an early age. As parents, we have an opportunity to teach our kids things that we had to learn the hard way. The value of a dollar. Does Johnny want a new video game? Instead of just buying it, have him to save some money that can go towards the purchase. Maybe, he can do extra chores. Parents always want their kids to live smarter when they grow up, right? Let’s start now and start saving money with the right mindset.