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I recently read in a magazine a plan to get your finances back in line and to save money at the same time. It is called the 50, 30, 20 plan.
The 50 part is 50% of your pay goes towards things you absolutely need such as food, medicine and electricity. The 30 is 30% of your pay goes towards things you want like a cell phone, cable television, and internet usage. The 20 is 20% of your pay goes towards savings.
I have begun to limit using what money we have left over from the "have to have" list and the "want list". I have started banking the 20% in my savings account. It is really easier than you think. Neither my husband nor I are paid an exorbitant amount each month, but we do spend money on things we do not need. Since the checks come in at different times, I have found it is easier to take the 20% off the top before I pay the bills. If push came to shove, I could always go into the savings account and take the money out.
There are many good aspects to this plan. It opens your eyes to see what you are really spending your money on and what you really do not need to spend your money on. Also the added benefit of having some savings really does make you rest a little more comfortable. After paying all the bills this month, I actually had money left over which is very unusual. I am looking forward to honestly see what I can delete in my billing and not really miss the loss. I have found it very useful and I hope you do as well. A little nest egg really can make a big difference.
By Gem from VA
This is fine if you make a decent income but impossible for many who are just trying to survive in this terrible economy. More power to you and your hubby in this new way of managing your money!
I was taught the 10% rule and still do this to this day! No matter how much you make a week or bi-weekly, always put 10% of it in your savings account, "out of sight, out of mind". You will be surprised how much you can save and in such a short period of time.
For example, if you earned $250 a week in take home pay, you would put $25 of it in your savings. What's the measly little amount going to accomplish, you might think? Well, if you did this weekly for 1 year, you would have $1300 a year in your savings account, earning interest for you. If you did that amount each week for 60 months, which would add up to 5 years, you would have $6500, not counting the interest.
I know this works and we still do it to this day. I am now in my 50's with a paid for home (2 bedrooms 2 baths). A 2005 Crown Victoria car and a 2002 Dodge Ram short bed pick up truck and still have money in the bank. When it comes to saving money, remember the 10% rule in all that you earn! Remember to always pay yourself first - the rest will follow in time.
I agree and the more you make the more you can save. It works.
By Toni K.
By Cheryl from Missouri
We also put ourselves on a tight budget. Any cash left over from the previous payday goes into my jug! You wouldn't believe how fast you can save.
Also, if you have a specific questions about saving money or starting a budget, submit it here:
One thing I hardly ever see is this...stop wasting food. Really. Start making plans around the food you've got, rather than what you feel like eating at that moment. This alone will save a lot.
If you start only buying meat that is on sale, you will eat every kind of meat as often as you like. Just about every week some chicken, some beef and some pork are on sale. Use those cuts! Put extra sirloin pork chops and flank steaks (two great cheap-on-sale cuts) in the freezer.
Plan at least 2 nights as no-meat nights. Eggs, cheese tortillas, tuna melts, salmon patties are very cheap and filling.
Have cereal on hand and call it 'child chow' and if the kids don't like what you're serving, they will be perfectly healthy eating cereal for dinner once or twice a week.
I always keep a log of everything we spend and I always round up the total. For example: if I spent $1.25, I always round it up to $2.00. It sounds small, but after awhile, it really adds up. I never have too worry about being overdrawn.
Source: Dave Ramsey's Talk show
By Vickie from Norfolk, VA
How do you balance your check book... if you do this?
My health has been getting worse for years. Not only have we lost my income, but the medical bills are through the ceiling. We spent everything that we had saved for our retirement, and were flat broke. To my husband's credit, he has never held it against me. He has stood by me through thick and thin.
I asked the Lord if He would support us if I put everything "extra" into savings. That would be rebates, pennies found on the street, aluminum cans, gifts, whatever. It turns out that there are a hundred ways to save a few cents or a few dollars.
For whatever reason, and I'll bet you know what I think, the money just started adding up. I exhibited homemade things in the fair, used coupons, cooked from my husband's garden, and did whatever I could to scrape up a dollar.
By the end of the year, we had accumulated $2,000. Since our normal annual income is around $9,000, that was a significant amount.
Of course, at the end of the year I fell and shattered my ankle, and that used up most of the savings. But I'm doing it again, and we're up to $1300 already this year.
To me, this just shows how easy it is to waste money. In the past, we had not had money left over. That year didn't have any miracle windfalls in it. We just didn't spend it when it came in.
I'm working on my fair projects today!
Coreen from Rupert, ID
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That's the same way I started our savings account. Next, I added our change, which wasn't much since we were on so tight a budget. It really does add up, as long as you don't get discouraged and quit. With every emergency, it felt so good to have the money to pull us through, but difficult to start over again. But what other choice did we have?
So, we just kept doing what we were doing. Over time, it has made such a huge difference. We finally have a decent savings built and have learned tenacity, patience, and faith - along with hundreds of ways to save here and there.
We do things most won't even consider, then they want to know how we have no bills. When we tell them, they verbalize that, "they wouldn't consider doing that." This is the precise reason we have money in the bank and they have bill collectors calling. We have learned what it takes to get by; it isn't easy, but the best lessons in life aren't simple.
For years, we have had a leaky roof. Every summer my husband puts another coat of sealer on it (it's a mobile home) and every winter we put buckets under the leaks. I have determined that we will have a good roof before the snow flies! We have been saving with the "windfall" method.
I bought a heifer 18 months ago. By September she will be ready to calve, and we will hopefully sell her for about $1500. We are also selling our food concession.
Today I received a gift card to Walmart, earned on a website that has me look at ads and take surveys. It's for $50. I could just spend it on fun stuff, but this time I will use it on my grocery bill. Then I will take the $50 from my grocery money envelope and put it into savings.
Last week there was a great sale at Albertson's. Buy 5 Oscar Mayer products and get $4.00 back. The regularly $2.99 packages were marked $1.00 or 10 for $10.00. I bought twenty packages, five at a time. I spent $21.20, but I got back $16.00 to use on next orders. Naturally, I used my $4.00 off on the second order of $5.00. Ditto for the third and fourth orders. There was no limit. Our freezer has a good supply of deli ham for sandwiches and casseroles. I put my grocery money in an envelope. When I run out of money, I quit. BUT if I have some left over, I put it in savings for our new roof.
With opportunities like this, there will be money for savings. Two friends in construction have offered to give us bids and possibly trade their labor for our food concession. There are lots of possibilities. If we get our new roof this year, next year we hope to add solar panels. Wahoo!
This really proves that no matter how small the savings it can add up quick if you stick with it. Good luck!
Savings Bonds are now paying over 3% for the next few months. The only catch, they change interest rates every May and Nov. and you must hold them 5 years or pay 3 months of interest.
By Jon from Reedsburg, WI
Series E and Series I Savings Bonds are a much safer investment than mutual funds or buying stock. Several years ago my son lost a substantial amount of money when he invested in mutual funds. Now he will only invest his money in savings bonds.
I recently got my annual raise and have been putting it into savings. If I don't use it, it's like I never got it. A friend of mine read somewhere (not sure where) that a person has been living on the same salary for 10 years by doing this. So yes, it can be done!
So do you save the before tax amount or the after tax amount?
Our bank offers a "Keep the Change" program. A painless way to save $. Every time you use your debit card, the bank rounds it up to the next higher dollar. Works great, and it goes directly into your savings account.
By Eileen-E from Northern, CA
We live in a rural area in Northern California, every few months we need to go to San Francisco area for a medical appt, about 5-6 hours away. The "keep the change" savings on my debit card is earmarked for the luxury (for me, not my daughter, who's age makes her invincible ha ha) of getting a motel rather than dealing with the stress of doctor visit plus10-12 hour travel in one day. I never miss it! BUT I pay $4 a month fee for the privilege now, since June or so with new bank fee schedules. Still worth it, I think, haven't done a recent analysis, too many other financial fish to fry. Hard to keep on top of it all. ~L
If you have money in an ordinary statement or passbook savings account, you are probably getting about 3% less then if you put in CD's (certificate of deposits). CD's range from 6 month to years so get one that fits your needs and you'll be making more money each month in interest.
By Carol from Massachusetts
Always put money aside out of your paycheck away in a separate account to save for rainy days. Even the poorest of people can afford 5% especially if they do that from their first paycheck. I recommend 10%, but for someone making $200 a week, $20 is a lot of money. $10 is more doable in those situations.
By Becky from Essex, MD
I disagree with the response posted above. Everyone can and should save some money. Everyone can afford to put something aside for a rainy day...even if its only pocket change or pennies.
My income is $13,000 per year. I save $350 per month. Then, if I need to buy new eyeglasses or have my teeth repaired, I have the money!
Sometimes what we think of as needs are really only wants. Its good to know the difference.
My father taught me that it isn't how much money you earn, but how you spend the money you have!
Make saving a fixed part of your budget. Determine a reasonable amount of money each month and have it automatically deposited into a savings account. Deposit the money into a federally insured online savings account and you can earn as much as 5% on your money.
When I pay my house payment and car payment checks I stub them in my check register. On the next line, I put "savings" and take out as much as I can and try to go all month without bothering it. It's there should I REALLY need it and I end up with a cushion after a few months and never have to worry about bouncing a check b/c it is there even though it has been "subtracted". My checking account gives me about 2% which is about as good as it get's around here.
Where do you get 5 %? I would be interested!
Before I retired, I used to use what was called a "Bohemian" savings plan. Why Bohemian, I don't know. It involved, if you get paid on a Friday, for instance, you would put your check in the bank or enter the deposit in your checkbook on Saturday the first week. You would do this on Sunday the second week, and so on. By the time you get to Friday again, you have 2 paychecks. Easy to do too!
Source: A Chicago newspaper about 45 years ago.
By Shrink from Redlands, CA
You can save a lot of money if you recently paid off a vehicle. Put the money you would have paid for the car payment in a savings account every month. If you've spent a couple years making the payment anyway, a couple more can't hurt. And you'd be surprised at how quickly it adds up!
Editor's Note: You also can reduce your car insurance coverage and save quite a bit of money.
Great idea! Then you can pay cash for your next car and no car payments!
I recently realized I need to save the pre tax savings on our medical savings account. They do an auto deduction every two weeks out of my husband's check which is $40 , which is about 9.20 savings for his check. I will start saving this on his first check of the new year on the 13th, from here on out.
Also, I plan on saving the medical money as it is used (like getting prescriptions filled) and will save that in a special account. At the end of the year, we will have $1,040 in that new account. Whenever we are out shopping or dining out, I bank the discounts that we get. My Smartypig vacation account is 30% funded now for the trip next summer because of all my found savings.
I've never been a saver and am just now getting the hang of it at my ancient age, lol. My new mantra is "save what you saved or else you have dropped the ball". Good luck and happy saving.
By Lori from near Memphis
Today is pay day and it's time to dole out the allowances. Remember those youthful days of the weekly allowance? Whoever said you can't be young again? Today on allowance day I have two envelopes - one for me and one for my husband.
It started when we balanced the checkbook one month and noticed how many withdrawals were made with our debit cards. With the convenience of debit cards comes their nomenclature - debit. It's easy to produce the card when the mood strikes, and it's dangerous. Not only does it make balancing a checkbook more of a task, but it allows instant access to your cash - all of it. By doing the math my husband and I realized that each of us was spending nearly $200 a month on unessential items.
Self restraint is difficult. Instead of relying upon the debit card, we allotted a weekly allowance to ourselves. Each week I would make a trip to the bank and withdraw exactly how much we needed. Bills still came out of the checkbook, as did groceries and other necessary purchases such as gas. Like the allowances of our youth, our adult ones were to be used for non-essential items.
Initially, we kept the budget tight. We budgeted our weekly needs and allowed only a small portion of money for spending. Then, on top of that we added $10 to the total. That $10 was our weekly allowance. Anything that didn't qualify as a necessity was to be paid for using the $10, and neither one of us could comment on how the other spent his/her money.
The first week was rough. Since our allowances were so small, it forced us to save two weeks for something we really wanted. Although I tried to argue that the collectable for sale on eBay was a necessity because I may never see it again, my husband didn't cave nor did he "advance" me next week's funds. If it sold for $10, I could buy it; anything over that amount was off limits.
Although a few of our friends worried that we were in financial crisis, the allowances put a new value on items. Was I heartbroken that I hadn't purchased that collectible for sale? Not at all. In fact, I learned that if I saved part of my allowance each week I had a large amount of "fun money" by the end of the month. It got to the point where I could look in my wallet and actually see money in there.
In the end the allowance did its job. We realized how foolish we were with our money. Now, I'm not so strict with the allowance as I had been a few months ago because I don't see the kind of crazy spending I sawbefore we tried it. Our mothers and fathers knew this years ago: allowances teach responsibility.
Don't spend your overtime money. Any and all extra money made should go into a separate account (savings account or investment). Saving your overtime money or extra earned money will add up very fast over the years! You will be amazed.