There is so much uncertainty about the fate of the economy in the next few years that is hard not to feel some level of stress. Between the high inflation rate, wars raging around the world, and fears about how artificial intelligence could impact the job market, we are right to be concerned.
These issues are mostly out of our control, though there are things we can do to prepare for financially turbulent times. While making career changes and trying new investing strategies can certainly help your chances of weathering any potential storms, they are time-consuming tactics that may not be realistic for many of us.
On the hand, anyone can find ways to live more frugally and save money. Building a “rainy-day fund” is a great way to hedge against possible financial hardships, especially if you put those savings to work in low-risk, high-liquidity investments. Below are some tips for saving money that you can implement today.
1. Make a Monthly Budget
Just the act of going through all your monthly expenses and creating a budget can make a big impact on your finances. As you start monitoring your spending, you will become more aware of your expenditures, causing you to think twice before making an impulse purchase. You can start by keeping your budget at the same levels as your recent average monthly spending and then slowly lower it by a few percentages a month until you arrive at a number that allows you to save 10% or more of your household take-home earnings.
2. Stop Using Credit Card Dept
If you cannot afford to pay for something (other than your home) in cash, then don’t buy it. Credit card interest rates can cause financial ruin, especially when people experience tough times. So if you already have credit card debt, make sure you pay off all the interest and as much of the principal as you can each month until you get it down to zero. Then stop making payments on your cards for anything you cannot pay off when you get your statements.
3. Quit Smoking and Drinking
Vices are expensive. They are taxed at high rates that are meant to dissuade consumers from buying them. These habits are hard to give up, if you can even cut them by 50%, it’s a great start. Some claim that smokers can save money if they transition from cigarettes to vapes. That may be a good short-term strategy, but quitting tobacco and alcohol altogether is best for your wallet and your health.
4. Stop Dining Out
Eating at restaurants is a luxury we can do without. Whether it’s fancy dining, take-out, fast food or even just grabbing coffee at Starbucks, these expenses can really add up. If dining out is something you cannot imagine giving up, consider making it something you treat yourself with on special occasions like anniversaries, birthdays, and when you pay off all your debts.
In Summary
Saving money is not the most exciting way to create financial stability, and certainly not the most fun. However, it is very effective and can literally keep the roof over your head.
