7 Ways to Save More

Saving takes discipline

Though saving money can be hard, there are a few ways to make it easier. First, let me say that saving is like weight control. I wish there were an electronic belt that allowed me to sit on the couch, eat pizza and lose weight, but there isn't. The only two ways to lower that scale number are to take in fewer calories eating or burn more calories exercising. The same goes with money. You can save only by making more money, spending less or a combination of both. I've written many pieces on making more money with your investments. This piece is about how to spend less.

Automate

Research reveals that we get used to living on a certain budget if that is all we have. But if more money shows up in our checking account (from our paycheck, for example), we tend to spend it. So setting up an automated monthly withdrawal from your checking account to your investment account, or to pay down debt, is an effective way to save more. Think of that monthly withdrawal as an obligation you can't turn off, and you'll quickly learn to live within the new budget.

Pay yourself most of your raise

Getting a pay raise is great, but you'll quickly get used to spending that new money. Instead, enjoy a bit now, and save most for later. Let's say you get a $200 monthly pay raise, which might be roughly $140 after tax withholding. You can enjoy an extra $40 a month now and put the remaining $100 into savings (using the automated method mentioned above) or into your 401(k) account. Do that with all the raises you get, and over a few years you'll be saving a bundle.

Reframe how you think about big purchases

Sure, that shiny new car would look great in the driveway and impress your friends and family, but it will end up costing more than the money you spend. Ask yourself, instead, how many more months or years you'll have to work to cover the additional costs of the new car. If you buy a new car every three years, how many years might that push back your retirement date? Then ask yourself how you'll feel when the car gets its first dent.

Use cash

Some credit cards can give you great frequent flier miles or cash back. But even if you pay off the cards monthly (as you should), using them makes buying things far easier than using cold hard cash. Actually handing over cash for a purchase gives us immediate feedback. And having to run to the ATM helps us minimize what we take out.

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Make getting bargains a strategic game

Some people like crossword puzzles; others like sudoku. I like to play my version of Let's Make a Deal. When I travel, for example, I challenge myself to get the best fares, such as my $41 (each way) Southwest flight from Denver to Chicago last December — for me and my luggage. Or my $98 a night (including taxes and fees) in a 5-star hotel in St. Louis later this month through Priceline. Coupons are another way of saving, and it's pretty easy to get generous ones with sites such as CouponMom.com. For me, researching bargains is both fun and financially rewarding.

Set a goal, and tell people

When you tell someone about a goal you have, you'll feel more pressure to meet that goal. So if you tell close friends that your goal is to save $5,000 next year and ask them to occasionally check in on you, you'll be more likely to meet that goal.

Reward yourself

Tell yourself and your friends that you are going to reward yourself if you meet your savings goal. For example, you could say, "I'm going to buy a new $500 tablet if I save that $5,000 next year." Though this would reduce your actual savings to $4,500, you'd still get to keep 90 percent of the total.

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