With a quick Google search you can uncover millions of words of advice on the usual financial topics like avoiding debt, crafting a budget, and saving for retirement. That’s why in this article I am not going to rehash the standard echo of Personal Finances 101. My goal is to cover some miscellaneous tips that I have discovered help me save, spend, and consume more efficiently.
Get a credit card that pays cash back…and don’t carry a balance on it (but you already knew that part). Many cards offer reward systems, but few return your rewards in cold hard cash. Shop around for the best deals, including local credit unions. You may have to accept a lower rate of return for a cash back card than a card that offers a fixed reward such as airline miles, but this is acceptable. One or two percent gleaned in cash is much better than a higher yield that locks you into spending the balance on a particular product.
The cash back you earn can be thought of as a direct discount to everything you buy with the card. Run your monthly finances though the card, pay the balance every month, and apply the savings directly to your budget.
Control Your Fluff Expenses with a Cash Allowance
Determine your budget for entertainment and miscellaneous expenses. Stick to the budget by withdrawing this amount in cash at specified intervals and always pay cash for these expenses. When your cash runs out, you’re done with Starbucks, restaurants, and movie theaters until your next specified withdrawal. This system not only makes you cost-conscious by “feeling the pain” when you shell out part of your allowance for an expensive dinner, but you also have cash on hand for small expenses.
The cash back you forgo by not running these expenses through your credit card is worth the money you’ll save by using an approach that forces financial discipline.
Purge the Pantry
Does your pantry stay at least 70% full because you only use 30% of it before purchasing more groceries? This effect of accumulating non-perishables is almost inevitable in some degree due to meal selection, bulk purchases, and individual tastes.
The waste it represents is no joke. When I notice the effect stacking up (about semi-annually) I decree that we will use almost every non-perishable before purchasing any more. Totally depleting non-perishables creates some strange meals and food combinations, but the net result is less wasted food, a better idea of what you actually need when grocery shopping, and a better organized pantry.
Responsibly Use 0% Interest Loans and Lines of Credit
This is not an excuse to buy items that you could not buy with available cash. If used correctly, 0% interest credit allows you to pay for items using future dollars, which are worth less than present dollars because of inflation. In effect, your purchase price is reduced by the amount of inflation that the creditor absorbs by allowing you to pay later. Don’t even think about carrying a balance after the terms of the 0% period because interest has been accruing since the date of purchase, and it will hit you all at once the day after the 0% period expires. Budget your payment schedule to finish off the balance with time left to spare.