The new year is a perfect time to reflect upon the past year and resolve to make improvements in not only personal areas of your life but your financial matters as well. Here are several examples of how small changes can result in large savings.
De-Clutter Your Life
De-cluttering your life can not only feel liberating it can free up some money that can allow you to do other things. Do you really need four TVs all with digital cable boxes? Why not cancel a magazine subscription or two and stop by your local library and read the latest issue for free? It can also be a great way for your child to develop an interest in reading. If your closet looks anything like mine you may be able to thin out your wardrobe and donate items you've outgrown or no longer wear. Once you get accustomed to a more limited selection of clothing you may find that less is more, more cash that is!
Savings: $25 to $50 per month
Commit to Save on Food and Drink
Next to housing, food is the single largest budget item for most of us. There are many ways to cut down in this area and the easiest way that I have found is to make a grocery list and shop once per week. If the grocery item is not on your list think twice before you make the purchase. Like most Americans I enjoy eating out with my family. One of the easiest ways that I have cut my dining bill is to order water with my meals and skip dessert. You can save $30 or more just by cutting out drinks and desert for a family of four. By cutting out one fast food meal per week, a family of four can save over $1,500 per year!
Savings: $1500 per year
You can reduce your auto and homeowner's insurance premiums substantially, often by hundreds of dollars, by increasing your deductible from $500 to $1000. I would not recommend raising your deductible if you have a less than stellar driving record or you would find it difficult to part with the money to cover the new deductible.
Savings: $200+ per year
Invest as Much as Possible
The single best way to build wealth obviously is to invest as much and as often as you can. Find quality, low cost, index mutual funds or ETFs and dollar cost average each month. By investing in a diversified portfolio of age appropriate equity and bond fund, one can maximize returns for a given risk. As always, before investing seek professional advice.
Get Rid of High Interest Credit Card Debt
Paying the minimum on a credit card is never a good idea and paying a high interest rate on top of that means it will take years to pay off your debt. Why not swap your high interest credit card for a 0% credit card that can save you literally hundreds of dollars in finance charges over the year.
Savings: $200+ per year
Readers: What other ways have you found to save money and how have you used the savings to build wealth?