Liberal and conservative: These terms are full of subjectivity. When you think of liberal spending, you probably picture shopping sprees and expensive cars. Oppositely, conservative spending is likely to conjure images of hand-me-downs and blue plate specials. Let’s take a moment to shake off these visual connotations. There are plenty of ways to spend conservatively without sacrificing your standard of living. Consider adding these easy and functional adjustments to your budget. They will help you protect your cash without dampening your lifestyle.
Ready to revamp your budget? Accomplish your goal by:
Withholding the maximum on your W-4’s.
There’s nothing worse than writing a check to Uncle Sam on April 15. If you aren’t vigilant when it comes to paying taxes, consider asking your employer to withhold the maximum amount from your paycheck each month. Overpaying usually means a big refund at tax time, a valuable resource that will allow you to save and reduce your debt.
Gaining some skills.
I recently witnessed a mechanical engineer call AAA for a flat tire. What’s wrong with this picture? Wasting money is easy when you lack basic skills. Whether it’s changing a tire, learning to cook, or tackling a home improvement project, saving money with a do-it-yourself attitude is practically guaranteed. Stop paying for unnecessary assistance. Gain some skills and keep your savings.
Living a raise-free life.
You know what they say: more money, more problems. If you’ve ever marveled at a millionaire filing for bankruptcy, it’s time to prevent yourself from mishandling your own cash. Consider living a raise-free lifestyle, one that maintains your current income without upgrading your expenses too quickly. Consider Ben and Tara’s strategy.
Ben and Tara Marshall have been married for seven years. Ben is a restaurant manager and Tara works as a software engineer. Their combined annual income is $122,000. Spurred by a goal of early retirement, the Marshalls decide to use their raises and bonuses to fund their investments and plan for a better lifestyle in the future. When Tara receives a 5 percent pay increase, she uses it to max out her 401(k) contribution—a sum her employer is willing to match.
Retirement planning isn’t the only reason to live raise-free. Living conservatively allows you to minimize the risk of overextending your bills—a mistake that usually leads to credit damage. If you anticipate a pay increase, consider the long-term benefits of savings. A frugal approach is usually best.
Cutting your standards by 10 percent.
Never underestimate the costs of your own standards. By adjusting your expectations, you’ll find reserves you didn’t know you had. Consider the following examples:
- Stephanie spends an average of $150 per week at the grocery store. She’s trying to build her emergency fund, so she commits cutting 10 percent—or $15—from her food budget each week. She clips coupons and plans her meals in advance to accomplish her goal. At the end of the year, she has saved nearly $500.
- Mark is shopping for a new car. After doing some math, he determines that he can afford to spend $16,500, or $275 per month with financing. Erring on the side of frugality, Mark cuts his spending budget by more than 13 percent when he buys a 2014 Toyota Yaris for $14,430. The lower price allows Mark to save an average of $35 a month on his car payment, resulting in a total savings of $2,100 over the life of his loan.