Released: January 31, 2005

Dollars and Sense: 10 Tips to Save Money

MANHATTAN, Kan. – People with a modest income sometimes save more than others who earn considerably more, said Carol Young, Kansas State University Research and Extension family financial management specialist.

“Paying down debt and building savings need not be a dream. The trick is learning to use what you have wisely,” said Young, who offered this example: A father enjoyed taking his three children to a convenience store on Saturday mornings for chocolate milk and cinnamon rolls. The outings cost about $15 each week – or $60 a month – and the family began coming up short.

In reviewing their expenses with a financial counselor, the family decided to enjoy chocolate milk and cinnamon rolls purchased for a lower cost at a supermarket at home. Doing so saved them about $40 a month (or $480 a year), but still allowed the children special time with their father.

“People neglect saving because they don’t think they have much to put away,” Young said. “Putting away $10 a month or saving your change every Friday can add up. Skipping one $1.00 trip to the vending machine every week can save $52. Doing it every day, five days a week, 52 weeks a year will yield a savings of $260.”

“It’s been my experience that even people who say they can’t save money usually can save something,” said Young, who offered these tips:

* Identify key expenses, such as a house payment or rent, car payment, insurance, food, medical bills, etc., and pay those bills first.

* Think about short- and long-term goals. Ask yourself, will you need a new refrigerator this year? New tires for your car come November? Or, do you want to plan a weekend holiday or vacation?

“Identifying needs and goals usually can help people begin to separate needs from wants, which is key to successful money management. Before you buy, ask yourself: Which is more important? An extra sweater or new tires that will provide a safe ride,” Young said.

* Stop shopping for recreation or if feeling lonely or bored. Resolve to shop only when you have a specific need.

* Shop with a list and spend as little time as possible in the store – wandering around can increase the temptation to make unnecessary purchases.

* Leave credit cards at home and carry a small amount of cash.

“People who shop with a credit card can be tempted to spend more,” said Young, who suggested a debit card that offers the convenience of plastic, but limits spending to money in the account.

* Pay down balances by paying as much as you can on the card with the highest interest, while also meeting minimum payment requirements on other cards to avoid extra fees.

* Choose direct deposit. You’ll save time and funds usually are available more quickly.

* Make saving a habit. Check to see if your employer offers an automatic payroll deduction to a savings account.

“If you don’t see it, you won’t be likely to spend it,” Young said.

* Set aside money for an emergency fund. Sooner or later, everyone is likely to experience unexpected medical bills, a plumbing problem, a car repair or job loss. To meet such expenses, saving the equivalent of six months’ salary is recommended.

“That may seem an unattainable goal. Start now to set aside funds to meet unexpected expenses,” she said. “Earmarking tax refunds can jumpstart an emergency fund.”

* Make a birthday and holiday gift list and add in the extras, such as a nephew’s wedding in Denver that also will involve travel expenses. Add up estimated costs, divide by 12 and budget for gift and travel expenses monthly. To reduce gift-giving expenses, take advantage of sales and shop for gifts throughout the year.

For more tips on managing money successfully, contact the local K-State Research and Extension office and ask for “Budgeting Basics” from the “Basic Money Management Series” or check Extension’s Web site: www.oznet.ksu.edu  .

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K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Nancy Peterson
nancyp@oznet.ksu.edu
K-State Research& Extension News