Last Updated: February 18, 2011
Suddenly, for apparent reasons, it's become hip to save money. And the possibilities are endless. You can cut your energy, grocery, and credit card bills, to name just a few suggestions.
The Financial Planning Association® tapped into the collective wisdom of its financial planning experts to offer you some of the best money-saving ideas and tips. In the weeks ahead, we'll present more ideas.
- Live beneath your means. Christopher P. Parr, CFP®, owner of Financial Advantage, suggests that you follow the advice presented in the best-selling book, The Millionaire Next Door. That being, "live beneath your means."
- Save money for gifts and vacations in advance. Daniel Candura, CFP®, president of the Candura Group, encourages you to "go back to the old-fashioned idea of saving for holidays and vacations rather than using plastic for these expenses." You can start by deciding what you want to spend and then dividing it by the number of weeks until you need the money. Set aside the money weekly into separate accounts and then withdraw the cash to spend when needed. "It is a lot more fun to spend money on gifts without the anxiety of post-holiday bills," he said.
- Create a budget. Jeanne Gibson Sullivan, CFP®, senior wealth manager at Back Bay Financial Group, says having a budget is essential to saving money. "If you have written down a certain amount to spend on non-discretionary expenses — such as dining out and travel — then stick to it," she says. "Figure how much can be spent on non-discretionary items after you have allocated to savings."
- Make your teenage children get a job. According to Gibson Sullivan, making teenage children use the money they have earned to buy the things they want is one way to save lots of money. "My son doesn't ask for much anymore as he can buy what he wants himself," she said. "For years I had said "no" to many requests, which had prompted his getting a job and earning his own money."
- Stay away from long-term contracts and obligations. According to Aaron Coates, CFP®,CIMA, it's important to insulate yourself from seriously negative outcomes. "Nobody knows if their job is secure or for how long," he says. "I advise people right now to protect against making ongoing financial commitments. Do not renew your cell phone for the two-year term to get the phone upgrade. Stick with what you have so you can cancel it. Same with Direct TV or cable. Build cash while you can, ideally enough so that you could make numerous years of mortgage payments and feed your family."
- Turn down your thermostat and wear a sweater around the house. "The majority of people in our community have all kept their heat turned down to the 60s during one of the coldest winters we have had," said Coates. "Most are not destitute, but just ensuring they won't sacrifice future ability to eat so they could wear a t-shirt instead of a sweater around home."
- Strive to be mortgage free. According to Coates, most people will think more clearly if they remove all the "shackling costs" each month. "If you can pay off your mortgage, do it," he suggests. "Many people close to retirement are just a few thousand dollars from paying it off and have that amount in the bank. Paying it off removes the emotional burden of that bill each month. Once you only have to worry about food and utilities, there is an emotional freedom to weather most financial storms."