Ever hear the adage of penny wise and pound foolish? It refers to being good with small amounts of money, but missing the mark on the big stuff. We think you can do both!

By focusing on the small things to save a few dollars here and there, and avoiding big expense-drainers that often lead to debt, you can avoid challenges and improve your situation in a snap!

Let’s start with penny wise and pound foolish when it comes to food. When you’re pound foolish you dine out whenever you want and get a cappuccino to start each workday. As a result, your family of four spends $3,000 eating out every year and you spend $1,300 each year on your morning cup of Joe.

To be penny wise, limit prepared meals – from restaurants and fast food as well as take-out and delivery. You make meal plans for the week to match up ingredients, and you shop with coupons and use in-store offers. Then once you’re in the kitchen you cook more than you need for a family meal, so you can freeze leftovers and have easy re-heatable meals on days when you don’t feel like cooking.

Your appliances are penny wise too, because you check Consumer Reports for price and energy use. Then when you purchase a new appliance, you check three to four retailers to find the best deals. And you don’t turn around to be pound foolish by using energy-efficient appliances half full, which increases consumption.

When you're penny wise you also take steps to keep your bills low. You get a home energy audit, turn off lights and ceiling fans when you leave a room, and set thermostats smartly to cut your electric bills. And you avoid being pound foolish by paying a flat rate for unlimited mobile service if a measured service plan would cost less. Penny wise people also cut options on home phone and internet to save up to $40 per year for each option dropped.

These are just a few examples of how you can take action to be penny wise and avoid being pound foolish. Other videos in this series go into more detail, so use them all wisely to make your dollars stretch as far as possible! For more great money-saving advice, visit ConsolidatedCredit.org.

How to Save Money Everyday

Be penny wise when it comes to saving and avoid pound foolish actions that lead to debt.

We get it – saving money is usually easier said than done. When you compare the money you have available to save now versus how much you need to accomplish major financial goals in your life, the task can seem so daunting that you’re unmotivated to even try.

On the other hand, you’d be surprised just how fast savings can add up when you’re dedicated about saving money everyday in your budget. A few dollars here and there can become big money when its set aside effectively and put into the proper savings accounts. So even though it may seem like an uphill battle, the hardest part of developing an effective saving strategy is really taking the first steps to reduce costs in your budget so you can set aside as much money as possible each month.

Making sure savings are used effectively

The video above – and other upcoming videos in the Penny Wise, Pound Foolish series – lay the groundwork for how to find extra cash in your budget and avoid overspending so you can save as much as possible. However, setting the money aside is really just first step in developing an effective saving strategy.

In other words, if you’re just diverting all the money you set aside into a standard savings account with an interest rate of less than .05% then you’re really not saving effectively.  Instead, you need to organize your savings and allocate it for specific purposes. And at least some of that money should be diverted into savings and investment tools that grow at a faster rate so you can actually save effectively to achieve your long-term goals.

So let’s say you make $3,000 per month after taxes. In an ideal financial world, you want to set aside 10% of that income every month, so you save $300 every month. With a strategic saving strategy you might divide that money thusly:

Money Market Accounts (MMAs) are like savings accounts, except they have higher minimum balance requirements – usually at least $5,000. However, that higher requirement means you get better growth because the interest rate is higher. So you have to maintain a high minimum threshold, but this can be a better option for mid-term savings.

Additionally, once you save enough money in your MMA you can take a portion of that out while still maintaining the minimum balance to put into an investment with even more growth. So, for example, once you have $7,000 saved in the MMA, you can take out $1,000 and put it into a 1-year CD.

CDs (Certificates of Deposit) are investments that you open with a set dollar amount that you can’t touch for a specific period of time. At the end of that period, you get the money you invested back plus the interest earned. They can be a great way to set money aside for specific big goals. For instance, you know you want to buy a car next year, so you take out a 12-month CD and then use all of the money you receive next year to make the biggest down payment possible. This will give you a little extra for the down payment than you would have if you’d just left the money in a regular savings account until you were ready to buy.

For more information on how to use savings effectively, visit Consolidated Credit’s Guide to Saving. And remember, if you’re having trouble saving effectively because of credit card debt, we can help. Call Consolidated Credit today at or complete an online application to request a free debt and budget analysis from a certified credit counselor.

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"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

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Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

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