Wouldn’t it be great if money grew on trees? Seriously, if I could plant a “money seed” for it to grow into a giant Sequoia tree…umm…that would be wonderful! Well, we know money does not grow on trees. We have to earn it one way or another. And working for your money can be hard work. Keeping your money can be hard work, too. Americans used to be terrible at saving. In 2005, according to the Bureau of Economic Analysis (BEA), our national annual personal savings dived to -0.4 percent (yep, you read that right, the minus sign means negative). This was the lowest since 1933. As a nation we were not saving enough for retirement nor for an emergency fund. For many people, their home equity line was their emergency fund. Moving forward to 2010, “personal saving as a percentage of disposable personal income was 5.8 percent in August 2010,” according to the BEA. That’s an improvement. It seems we are learning to become frugal and to make better financial decisions. At least, we are more aware of the importance of saving our money. So, to help out with this trend I have listed 4 strategies that can easily be implemented. Before you begin with implementing any of these strategies you will want to consider a couple of things:   • Figure out how much you need to set aside every pay period to pay your bills   • Design a strategy of how much your paycheck should be allocated each pay period.

Strategy 1: Envelope Strategy

For one week, write down everything you spend your money on. From coffee

For one week, write down everything you spend your money on. From coffee stops to dining out to grocery shopping, write it down. This will help you to identify where you spend most of your money. Most people tend to spend the bulk of their money on food purchases, whether it’s dining out or grocery shopping. You can cut down on dining out by cooking more of your meals. However, for other people it could be the various forms of entertainment where their money is being spent. Come up with an amount of money you would like to save every month. Then grab some envelopes and write on each envelope a category, such as Grocery/Food, Gas, Rent/Mortgage, Entertainment, Shopping, Baby Items, etc. Place a specific amount of money in each envelope. You cannot spend more than what is in each envelope. However, let’s say $400 is in the Grocery Envelope and $200 is in the Entertainment Envelope. Once you have spent $200 in the Entertainment Envelope you have run out of funds. Unless, you feel you want to tap into another envelope to pull the funds, say the Grocery Envelope. But this would mean you will have less money for groceries. As you can see, you will be forced to make the appropriate decisions. Resultantly, you will know where dollars are going.

Strategy 2:80/20 Rule.

See if you can live on only 80% of your income while saving the other 20%. If 80% is truly not enough to live on then try 90% and save 10%. However, if you discover then you can live on less than 80% then go for it!

Strategy 3: Changing your mindset.

Gain an understanding for yourself. What causes you to spend more

Gain an understanding for yourself. What causes you to spend more then you need to? Do you recognize that you may be buying on impulse or is it that you may not recognize the little items that are being purchased are adding up? Recognizing your spending habits is another strategy. Really, you are evaluating yourself. And sometimes, checking up on you is the hardest thing to do. Before you make a purchase, ask yourself if you really need that item. And I mean REALLY need it. For instance, if you are buying work clothes, do you really need another pair of black pants? Can you mix and match what you currently have in your closet to design a “new” outfit. Personally, mixing and matching my clothes has saved me for spending more money. Strategy 4:Automatically pay yourself.
Set up an automatic deduction from your paycheck or from your bank account to allocate the money to your savings account. This way you will never know what you were missing and become accustomed to living on the adjusted amount of money.Do you have a strategy that you use to save more money? Leave them in the comments; I would love to read them.

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