Posted on Wed, Nov. 4, 2009
Rule of thumb: Everyone should have six months' worth of living expenses tucked away in savings. Reality: Few folks do, and the proverbial "rainy day" looms. Remedy: Start setting aside money today. Here are five ways to save before you get soaked.
1. Set a budget and stick to it. "Budgeting is the No. 1 surefire way to save money," says Ethan Ewing, president, Bills.com, San Mateo, Calif. Set specific goals, such as lowering grocery bills, and budget accordingly.
2. Carry cash. People who count out bills instead of paying with debit or credit tend to spend less and make fewer unplanned purchases.
3. Optimize your cell phone plan. "I like Billshrink.com, where you plug in your account information and find better credit cards and cell phone plans to suit your individual needs," says Ramit Sethi, founder, iwillteachyoutoberich.com, San Francisco.
4. Buy a la carte. This seems counterintuitive, but it may be cheaper to pay as you go. In a study of three fitness clubs, "Two researchers from Stanford and Berkeley showed that people overestimate how much they'll use their gym membership by over 70 percent," Sethi says. Members who chose a monthly fee of around $70 attended an average of 4.3 times per month. That comes out to more than $17 per visit, whereas a day pass only cost $10.
5. Redeem your reward points. If your credit card offers them, check your statement to see how many you have and then go to the rewards Web site to find out whether you can convert them into cash or gift cards. Some credit cards double the value of your rewards at specific retailers, Ewing says.
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