The recession officially ended in 2009, but as gas and food prices rise and millions of Americans struggle to find a job, many are still feeling the lingering effects of the down economy. In the years following the downturn, a large percentage of consumers adopted a new mindset of frugality and focused their efforts on saving money to shield themselves from another economic blow. However, there are still many households that are finding it challenging to put money away for their retirement, children’s college funds or other future goals.
There are a few rules consumers must follow in order to save money. First, individuals must reduce their spending. Second, they must increase the amount they are currently devoting to a savings account.
To accomplish the first task, budgeting is a must. Many consumers don’t realize how much they are truly spending each month on eating out, utilities bills and groceries.
Examining their spending over a two-week period can enlighten them to areas they can afford to cut back on. For example, some individuals may shop for groceries each week without a list or coupons in hand. This can be costly because it may lead to impulse buying, which can inflate their weekly bills significantly. To avoid this, families can plan out their meals for the week and download coupons for the items they plan to purchase.
A similar method should also be applied to other types of spending. Technology has enabled households to more easily seek out and download coupons, and doing some research on weekly sales can also help individuals save money. Consumers can also use their research skills to compare utilities packages from the different providers in their area. It’s easy to be accustomed to sticking with the same service they’ve had for years, but individuals may quickly find that they are overpaying.
Increasing the amount that goes toward savings
Saving money on groceries and living costs can put more money in a consumer’s pocket. However, it’s only truly effective if this cash goes toward savings. Households should always dedicate a certain percentage of their income toward their future goals, even if it’s only $50 per pay period. To really boost savings, however, it’s important to increase this percentage to account for the money saved in other spending categories. If households typically spend $100 a week on groceries, but have cut it down to $50, the remainder should be put into an account. This strategy can go a long way in helping families build up a large cash cushion.