One of the most important things you can do with your money is save it. But, starting to save in a recession can put a damper on your plans since the gap between income and expenses is closer than ever. Don’t let a difficulty in saving money keep you from getting started. Here are seven ways you can save money, even during a recession.
Make a Budget
Recession or not, a budget is a good way to get your spending under control and look for ways to save money. A lot of people put off budgeting because they think it means they have to start being frugal. Frugality is a choice, budget or not. A budget is just a plan for how you’re going to spend your money.
Once you have a budget in place, you can then take a hard look at where you’ve been spending money and decide if it’s worth it to keep those expenses. If you’re looking for ways to save money, always start with your budget.
Set Up Automatic Savings
One of the things that makes it hard to save money is having to part with it. Knowing you’re taking money out of your checking account and getting no immediate tangible benefit takes the excitement out of saving money. It’s much more fulfilling to spend the money on something.
When you’re having a hard time saving money, making it automatic is a good idea. With automatic savings, the money is transferred into your savings account without you ever having to touch it. Once you set up a recurring transfer, you save money every month without having to actually let go of the money.
Go on a Staycation
Instead of spending thousands of dollars on a family vacation this year, you could take your family on a staycation – a vacation at home rather than out of town. You could even spend a weekend in a hotel and visit some of the local sites to get the feel of a vacation, for less. Make sure you cut off work just as you would if you were leaving home. That way your staycation is like a real vacation. What should you do with the money you save by going on a staycation? Keep saving it, of course.
Eat Out Less
If you eat out everyday, you’re wasting hundreds, maybe even thousands of dollars, every month year. Consider that the average meal is $10, eating out just once a day costs $300 a month, or $3,600 a year. You could easily slash that amount in half by buying groceries and making your meal.
Don’t let not knowing how to cook be your excuse for spending money on costly restaurant meals. Between the internet, the library, and cooking shows on television, there are plenty of resources out there to help you learn to prepare your own meals. You could even invest in a cooking class, get a hands-on demonstration, and use that knowledge to save money in the months ahead.
Clipping coupons from the Sunday paper might be a little old-fashioned. Who cares about being old-fashioned if it means you’ll shave some money off your spending each month?
You don’t have to wait for coupons to come in the paper or the mail to get the same amount of savings. You can print your own coupons right off the internet from coupon sites like Coupons.com and Valpak.com. You may even be able to go directly to the store’s website to find coupons for that store. If either of those fails just do a Google search for your store’s name + coupons. For example, if you were going to Sears, you might search for “Sears coupons. You might also search for a specific brand or product by typing in something like “Crest Whitestrips coupon.”
Be careful that you don’t spend more money buying things you don’t need just because you have a coupon for it.
Change Your Tax Withholding Status
If you typically receive a tax refund each year, it’s a sign that you’re having too much money withheld from your paychecks. By changing your withholding status – increasing the number of exemptions – you would have less money withheld from your paychecks each pay period. That means you’ll receive more money in your paycheck. Since you’re accustomed to having this money withheld from your paycheck anyway, you could simply have it automatically transferred into an interest-bearing savings account. Be careful that you don’t adjust your tax withholding status too much. Otherwise, you could end up owing taxes when you file your return next year.
On the other side of the equation, if you find yourself owing taxes each year, you can save money on your tax bill by having more money withheld from your paycheck. To get get the most accurate withholding status, you can use the IRS Withholding Calculator. Ask your human resources or payroll contact how to submit a new W-4 form to adjust your withholding.
Get a Part-Time Job
If your current income is stretched as far as possible, you may consider getting a part-time job and saving all or part of your second income. Since the recession makes job hunting more difficult, you may do some contract or freelance work for some extra money.
The tendency is to spend more money as you make more money. So, once you have some extra income, be careful that you don’t increase your income.