How to Save Money When Times Get Bad
Increasing your savings is often the last thing you’re thinking about when times get rough. It can seem like the only advice you’ll ever see are from people explaining how you should be putting money into your savings account at the end of every month. Unfortunately, many people simply aren’t able to follow this advice.
Let’s look at the facts:
-The typical household income in 2007 was only slightly more than $50,000. In some regions, that’s much less than it might be in other regions due to differing housing costs, etc.
-Almost 40 million people live below the poverty line in the US, with a median income deficit of almost $9k. An income deficit is how much one’s income is below the poverty line.
-Nearly 46% of Americans live without health insurance.
The above truths show us that there are an incredibly large number of Americans who are unable to currently store their savings away because they just don’t have the money in the first place. Whether or not you are a part of these categories of Americans, or whether or not you are in the top 1% — you can save money. Remember, when it’s about personal finance and financial planning, almost anything is possible. You can almost always save money, even if your situation is tough and your prospects are dim.
Remember the childhood story The Little Engine That Could? In the story, there was a little blue engine that was charged with the great task of pulling a heavy train over a mountain. The little struggled and strained, but ultimately made it over the mountain by repeatedly saying, “I think I can.”
Think back to the stories you learned as a child, such as the little engine that could. In the parable we read of the little blue engine that was charged with the great task of taking a large train of toys over a mountain to the children on the other side. The little engined struggled, and it seemed impossible to achieve its goals — but in the end the train succeeded because it refused to accept defeat, and told itself, “I think I can, I think I can.”
Think your chances of saving are good? If you answered that question with a no, then your chances of saving aren’t good — it’s a self-fulfilling prophecy. Whether you think you can or you think you can’t, you’re right. Want to increase your chances of saving? Start by telling yourself that you can.
Want to save hundreds or thousands? Start by tracking your spending. Unless you are incredibly disciplined in your spending habits, then there’s almost always a loose end somewhere. What might feel like an occasional expense or a necessary evil can often actually be a well-disguised frivolous expense.
Then, go back through your expenses and categorize your spending. Then, add up what you spent in each category. Take note of any categories with high spending, especially for things like entertainment. That kind of spending can easily be diverted to savings.
When you look at your budget, the numbers might indicate that you couldn’t possibly save a single penny. And based on your current expenses, that may be true. But, there are ways you can cut back your spending, even on things you need to spend money on.
When it comes to cutting back, sometimes you have to make some tough decisions about what you’re spending money on. For example, you can’t just ditch your car note, but maybe you can trade-down to a cheaper model. The same thing goes for your mortgage payment. While you can’t just stop paying your mortgage, you may be able to shop around for a home with a lower mortgage payment.
Look at every single expense in your budget and evaluate whether you could switch providers for a lower monthly cost.
