It Only Takes a Few Dollars

It's the end of the month, and you've just finished paying your bills--rent, insurance, credit cards, utilities, car payment, etc. After the bills are paid and your checkbook is balanced, you realize that there isn't enough left over to put into savings. It's just too hard to find extra money to save, so your savings plan will just have to wait another month.

Sound familiar? Although this situation is common, financial Freedom can be built on a very modest income and saving money is much easier than you think. What it comes down to is knowing how you spend and learning how to spend less than you earn.

Little things add up
Many of your monthly expenses are probably fixed--such as rent, mortgage, car, or student loan payments--but it's the variable expense category that can easily get out of control. It's easy to fall into the habit of buying a daily coffee and bagel, magazine, or new CD because individually they don't cost much, but these small expenses quickly add up.

Say you spend $3.00 on a coffee and bagel every day; in a year, that daily $3.00 expenditure adds up to almost $90 monthly and $1,100 annually. So called 'little' things can quickly add up and cost more than you realize.

Everyone can afford to save money
Finding money to save is easier than you think. If you decided to make your own coffee and bagel in the morning, you could save that $3.00 a day and put $90 dollars into your 401(k) or IRA account monthly. The sooner you start, the faster it all adds up.

Control your money
Of course, no one is recommending that you eliminate every indulgence because some of these small expenses enhance your enjoyment of life. But everyone makes purchases they could reduce to help reach their financial goals. Here are some ideas for controlling your money:

• Write down each expense. Try it for a week and keep a record of absolutely everything you spend. You'll begin to see how little things can add up.
• Only pay cash. It's a lot harder to hand over cash than it is to use plastic so try this approach to cut down on impulsive purchases.
• Wait a day before buying anything over $100. If you really want something, then you'll return to the store and buy it. But there will be times when you decide not to make the purchase and you'll save yourself $100 or more.

Page 2 of 8: Putting Your Money to Work

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