Saving money is hard. Most people aren't willing to make the kinds of changes that are necessary to really make a difference in their budget. However, if you don't change your current habits, then your finances won't change. It's as simple as that. The first thing you have to do, in order to save money, is focus on your values and build motivation.
1. Write Down Your Values
This might not seem obvious, but writing down your top values is a great first step toward saving money. How? Simple. When you write down your values, you make them objective. When you don't write them down, they're subjective and - frankly - a little vague in your mind. Instead of having some vague idea of what it is you enjoy most in life, make your values explicit. You may be surprised to find out that, once you start to articulate what it is you value most in life, that you actually value things that you didn't know you valued.
Writing down your values does something else: it gives you a point of reference to work from. You can easily build motivation when you have something in front of you to look at. Start with your top five values in life, and then work towards achieving them to the exclusion of everything else. This, in and of itself, will help you save money since you will not be wasting money on things that are not as important as your top values in life.
2. Make a Budget
Making a budget is a must for anyone who wants to save money. Budgets serve the purpose of laying out all of your income and expenses while allowing you to plan for your future. Most people dread budgeting because they view it as restrictive. This won't happen if you build your budget around your top values in life. Rather than being handcuffed to your budget, you end up being guided by it. Budgets help keep you focused by tying your values to money.
For example, if one of your top values in life is working out at the gym, you would make sure that this takes priority over many other things you could do with your money. When push comes to shove, and you have to make a decision about spending money on a camping trip versus paying for new jogging gear or a weightlifting belt, you'll have a better guide to action and you'll be able to stay focused without any long-term feelings of deprivation. While you might enjoy going camping one weekend, you'll be reminded that working out is more important.
Another example would be an apparent conflict between going out to eat with friends on a regular basis versus taking up a new hobby. If socializing is one of your top values, a budget actually helps keep you focused on socializing because you'll consciously budget for regular social events. If there is ever a conflict between starting a new project or hobby, and socializing, you can stay motivated to stick to your budget without feeling like you're giving up anything important.
3. Ditch Unnecessary Services
Part of focusing on your top values means getting rid of unnecessary services you won't use or aren't practical to keep. If you rarely watch television, for example, shut it off. It might initially seem like a strange thing to do, but if it's not one of your top values then you're really not missing anything important by not having it.
4. Eat Healthy
Hippocrates once said "Let food be thy medicine and medicine be thy food." Being healthy is a value that most people pursue, and if your health is a top value to you, then take it seriously.
Take steps to learn everything you can about diet and nutrition and set challenging goals for yourself. Diets don't always have to be about losing weight. Diets can be an effective tool for reducing your body fat percentage, regardless of your weight. A good diet can stabilize your blood sugar (as many doctors have consistently discovered with diabetics). Sometimes, simply improving overall health is the primary motivation for adopting a healthy diet. Sometimes, food can help you cope with chronic illnesses and lower your risk of certain health problems.
The benefit of eating healthy is that you save yourself a significant amount of money on health care costs. Fewer doctor visits, and an overall improvement in your general health and well-being, will allow you to be more productive and miss fewer days at work.
What constitutes a healthy diet? Surprisingly, the latest research suggests that a "hunter-gatherer" diet comprised of starchy tuberous vegetables, green vegetables, a variety of lean and fatty meats, and monounsaturated fats from foods like nuts and olives has a beneficial effect on the cardiovascular system, is good for satiety, weight loss, and improves many other markers of health. You may also be surprised to learn that this type of diet is also relatively inexpensive due to its high satiety.
5. Pay Down Debt
Debt is sometimes necessary. However, debt can also become a curse. Once your debt levels exceed 40 percent of your income, it becomes increasingly difficult to service. Making a commitment to paying down debt can save you thousands of dollars in interest payments. Keeping debt levels low, or non-existent, can also help you save money if you normally go into debt to purchase consumable goods. Start with the highest interest debt, and work your way down to the lowest interest debt. This will ensure you pay the least amount of interest on your total debt.
6. Rent Instead of Own
It might sound crazy, but renting can save you thousands of dollars a year. When you rent, you don't have to worry about maintenance costs, your renter's insurance is often lower than homeowner's insurance, you never have to fix broken appliances, and many landlords are fair with rent pricing, allowing them to profit while you end up paying less on total housing expenditures than if you owned a home. Because you're not paying property taxes, you can invest the savings to help offset the cost of renting. If you're spending more than 30 percent of your income on owning a home, consider selling the home and renting. If you can spend less on renting than you can on owning, renting might be an ideal option for you.
7. Become a DIY Expert
Hiring experts is a good idea for complex jobs, but many jobs can be done by you for a fraction of the cost. Examples include changing your own oil (and doing other basic car maintenance), doing simple painting jobs around the house, and cleaning out the gutters or doing routine yard work.
8. Work Towards a Better Job or Start a Business
Getting a better job, or a promotion, will obviously help you make more money. However, starting a business can actually save you money on tax payments. Business owners get tax deductions for all business expenses. In fact, the number of tax deductions open to businesses is so great, that incorporating is sometimes considered the last great tax shelter available to the common man.
9. Switch Supermarkets
Do you shop at a high-end grocery store? If so, consider switching. You don't have to settle for lower quality. You just have to think outside the box a little. If you enjoy ethnic food, Asian, Indian, and Mexican grocery stores often sell high quality merchandise at a fraction of the cost of designer grocery stores. Even if you don't eat a lot of ethnic food, high quality staples like milk, eggs, salt, and butter can be purchased for a fraction of the cost from a smaller grocer - especially if the ethnic store services local restaurants. Sometimes, ethnic grocers are specifically priced for wholesale but will sell to the general public. Since they are often small and family-owned, they will welcome pretty much any business they can get.
10. Read More
There's no shame in reading. Books are a forgotten medium. With so many people surfing the Internet and watching T.V. or playing video games, good old-fashioned books need your attention more than ever. Reading fiction can, many times, be far more entertaining than any "me-too" reality show or sitcom shown on T.V. these days, and non-fiction or biographies (or autobiographies) can inspire you in ways that movies or video games sometimes can't.
Regardless of what you do to save money, it's important that you never sacrifice your values to save a few bucks. Many financial experts suggest nixing Friday-night movies or your daily trip to Starbucks, but if any lifestyle change feels like a sacrifice, you won't stick with it. You'll eventually buckle, and potentially put yourself into a worse financial position than you were in before (think of the failed crash dieter going on an eating binge).