Friday, March 20, 2009

Save Without Sacrifice

There's no question that saving for the future is critical. While some people save for retirement or to support their children, others seek a vacation or a down payment on a home. Whatever the case, putting income aside is part of life - and when it comes to saving, the sooner you start, the bigger the payoff.

But even if you have a specific goal in mind - for example, digging yourself out of debt - being a penny-pincher just isn't fun. Fattening your bank account may be a priority, but so is enjoying life. And although some people equate saving money with social suicide, a healthy bank account doesn't have to mean eliminating social engagements. Realistically, a "no expenses" diet is impossible unless you're a hermit - and that's why you should focus on slashing costs where you can instead of cutting yourself off completely.

Let's take a look at three things you can do to save, but without all the grumpy side effects.

1. Rethink the Luxuries
Our consumer culture is replete with new technologies and endless competition, which means nifty gadgets and superfluous luxuries have become par for the course. We're constantly bombarded with appeals to take part in the social ritual of buying products that look tempting, no matter how frivolous or unnecessary they may be. As for what we do need, advertisers are adept at selling consumers on cool-looking, costly brands, when their lesser-known, cheaper counterparts are just as good.

Of course, it's the buyer's prerogative to choose: you can go with the latest MP3 player, complete with video, email and color-coordinating accessories, or you can pick a basic, less expensive model - it might not be as fancy, but you still get music, right? Why not save your extra dollars for something that really counts?

Before you reach for your wallet, ask yourself whether the purchase is a need or a want.If it's a want, determine whether it's worth it: in the long run, would you rather have the latest iPod - and let's face it, you mostly want it because of the hype - or the peace of mind in knowing you've delayed gratification in order to afford something more meaningful? Apply this principle to every retail temptation you're faced with and you'll avoid needlessly dumping your money.

2. The Vice-A-Day Deal
We've all heard that the best way to save is to curtail extraneous spending - bring lunch from home, watch movies on TV and lose the daily latte. But cutting all fun food out of your life probably isn't the best way to diet, a bare-bones approach to saving likely won't last, either - and you'll be miserable to boot.

So instead of depriving yourself of spending money on anything, ever, try easing back: indulge in a vice a day, whether a morning cappuccino, lunch with friends, or a video rental. Not only will you save a ton by allowing just one daily extravagance, you'll appreciate the treat that much more. Take the money you would normally spend on the extra indulgences and put it into your savings account. You probably won't miss the extra dollars, but by the end of the year, you'll be rewarded with a significantly stacked bank account.

3. Trim Housing Costs
Bills are a fact of life, but that doesn't mean you can't reduce them. All it takes is a few household tweaks that can end up saving you hundreds of dollars every year.

When it comes to utilities, shop around: it's a consumer-driven marketplace and utility companies have to compete just like every other industry. Switch to a company that offers a low-cost plan that works with your lifestyle.

To avoid paying for "phantom loads", the small amount of electricity that many appliances consume even when you think they're off, take pains to unplug all appliances and electronics that aren't in use. That includes anything from cell phone chargers to your computer, DVD player and video game console.

Also, moving your thermostat a few notches creates a barely noticeable difference in temperature, but can make a significant dent in your monthly utility payments.

Another simple way to save is to install eco-friendly devices in your home, like low-flow shower heads and energy-saving appliances. With sustainability at the forefront of the social agenda, it's easier than ever to find green appliances at a low cost, and these switches will amount to a hefty reduction in your bills by year's end. While you're giving your home an energy makeover, exchange all those incandescent light bulbs for compact fluorescent bulbs; they use 75% less energy and have a much longer lifespan.

Start Today for Tomorrow's Savings
Whatever your financial goals, it's best to tailor spending habits to your individual lifestyle. Decide what can be reasonably cut from your budget: if you can live without a morning cup of java, for example, forgo it. If not, pack your lunch instead of buying it, or frequent the video store instead of the theater. And there's no need to pass up a social life when there's plenty of entertainment that costs nothing: bike rides, beach days, picnics in the park, even museums and art galleries. Get out there, explore your city, have fun with your friends and don't ever feel the need to sacrifice your life for your savings.

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