Tips for Finding Savings Opportunities
Avoid budget busters – wants vs. needs
Did you know some of the biggest barriers to building wealth are “instant gratification” purchases?
Break down your budget, be realistic, and categorize your spending into four categories: essentials, secondary needs, nice-to-haves, and “un-necessaries.”
- Essentials: Are basic things that allow you to live your daily life. These include: Groceries, housing (including mortgage or rent payments, and maintenance), transportation, health care, basic clothing, utilities, insurance, and taxes.
- Secondary Needs: Are non-essential items that make life easier but are not extravagant expenses. These include: Cell phone and Internet service.
- Nice-to-Haves: Are things you like that make life enjoyable. These include: Vacations and travel, entertainment (including dining out, cable television, movies, and theater), pets, gym membership, and non-basic clothing.
- Un-necessaries: Are things you don't need and are often purchased on impulse.
Tips to help you grow your nest egg
There are lots of ways to start saving money. It all starts with spending less than you earn and asking, "What can you do without?" Here are some ways to start saving:
- Try to make it through one week without buying anything except absolute necessities.
- Make a shopping list before you go to the grocery store and don’t give in to impulse purchases that you don’t need. Use coupons and buy seasonal produce. Consider buying in bulk.
- Prepare meals at home and bring bag lunches to school or work. Avoid expensive take-out food and drinks.
Did you know: Buying a cappuccino or latte every day can add up to more than $1,000 per year?
- Take advantage of pre-tax savings opportunities, such as an employee-sponsored retirement savings plan. Many employers match your contributions in whole or part.
- Use the public library for family entertainment. Thousands of books, magazines, DVDs, CDs, and games are free.
- Lower your thermostat during the day when you're out of the house and at night when you go to bed. If you use an air conditioner, set it at a higher temperature than usual.
- When you can, walk, join a carpool, or take public transportation instead of driving.
- Compare prices from a number of businesses before you make a major purchase.
- Open a savings account that earns interest and schedule automatic deposits on payday that go to your savings account. Shop around for the best rate.
- Get rid of recurring expenditures that seem non-essential, like a gym membership you never use, an extra phone line, or high-end cable channels.
Which is greater: The amount of debt on your credit card or the money in your emergency fund or savings account?1
- 24% credit card debt
- 58% emergency fund or savings account
- 13% no credit card or savings account
This site is for education purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
Source: 2015 Financial Security Index, Bankrate.com