If you know how to manage and save money, you have a much less chance of getting into financial trouble than those who don’t. Here are a few common sense ways to save money that take very little effort.
Get into the habit of paying with cash. It seems over the past twenty years or so, since credit card companies loosened their credit rules, that people are using their cards more than ever. And while this is good for the credit card companies and merchants, it is not necessarily good for you. When you pay something with a credit card, you are actually spending borrowed money.
Now, if you have a zero percent credit card and you manage to pay your balances off at the end of the month, then how you pay doesn’t really matter. But, most people are not like that. And, as a result, they end up carrying balances on their credit card for years. And, over the years, all of the interest that they are paying on their balances can really eat away at their savings. If you pay in cash, however, you are never under any delusions as to whether you actually can afford something or not.
Make yourself a budget. Having a budget lets you know, at all times, where you are financially. Many people get in trouble with their credit cards and finances simply because they think they have more than they actually do. For example, someone getting paid $10 an hour may actually feel that he has $400 in his pocket after a week of working. But after taxes, FICA, and various other deductions, he may actually only have a little over $300.
The problem is that often, subconsciously, the $400 is still in his mind. As a result, overspending is easy. And it’s not until the end of the month where he is wondering where all of his cash went. Budgeting, while not perfect, helps to prevent scenarios like this. And, studies have conclusively proven that those families who keep budgets are nearly always better off financially than those earning the same amount of money, but do not keep a budget.
If the average family were to simply do these two things, and nothing more, they would be a lot better off financially than most families in the U.S. In the age of quick gratification and lack of personal responsibility, however, the odds of most families doing this is very small indeed.