These days everyone is looking to save money. Coupon clipping is becoming a very popular hobby. Getting a deal is a great idea but it shouldn’t be the main goal. Many times people hoping to save money end up being penny wise and dollar foolish. To really get the best bang for your buck you have to be strategic in where you invest your money and time.
Here are some common mistakes of penny savers and how to become a dollar saver instead.
Mistakes to Avoid
Chasing deals and missing deadlines – With family budgets shrinking, many parents, especially moms have turned to couponing and sale chasing to stretch their family budget. This is a smart idea; however, you can take it too far. Some get so involved in coupon clubs and chasing deals they start slacking on their other financial tasks such as bill paying. They are racking up $39 late fees and finance charges while they are saving $2 on toothpaste.
Not valuing your time – Most people don’t realize how much their time is worth. If you are an hourly worker, that’s easy. For most salary earners you can take however many thousands you earn in a year and divide by two. For example $40,000 is $20 an hour and $60,000 is $30 an hour. So now when you take on a task you can figure out if it really is worth your time. Suddenly driving half an hour to save 5cents on gas doesn’t sound that smart.
Not investing the savings – This is the most crucial part of saving money – investing the savings. When you save with coupons what do you do with the savings? Do you actually save it in the bank or do you end up spending it elsewhere. To really save money you must have a plan to do something with the savings; otherwise you are just wasting your time. Money magazine recently had an article on Super Savers and featured ordinary people saving 30% or more of their income and putting the money in the bank.
Take Advantage of the Internet
Pay your bills online – You can sign up for online payments and alerts with most companies today ranging from your power company to your department store credit card. They send you reminders of when your bill is due and then you simply pay online. This avoids postage, late fees and missed payments. If someplace doesn’t offer it, for example your child’s preschool, you can simply set up an automatic draft from your own online bank. Your bank will print and mail a check every month for you. Paying your bills on time is the single most important factor on your credit report.
Stay on top of your credit report – Your credit report can help you save thousands of dollars if you maintain it well. Your credit score is becoming a more important factor in all your financial matters. It can determine how expensive your home and car loans will be as well as how good of a salary you can get. Make sure you view your credit reports at least once a year for FREE via www.AnnualCreditReport.com.
Invest online – No matter how little or large you have to save consider opening an online savings account. Online banks typically offer higher interest rates. Even better they offer more online tools to help you save and plan. You can maintain your local bank and simply transfer money electronically between your online and local bank. ING Direct is an online bank that allows you to create several connected accounts so you can set up automatic savings and transfers in your vacation fund, Christmas shopping fund or any other savings goals. And saving money in a bank should be your ultimate savings goal.