In part 2 about the game of money that we all play, we will be discussing the act of saving money. There are two basic elements at hand in the money game - make money and save money. We spend money on the necessities, food, shelter, clothing, taxes, and conveniences, and while we do spend, we want to decrease that amount and we want to save on our spending.
So the two sides of play in this game is Offense: to make money; and Defense: to save money (on the amount we spend), and it is our job to increase our bottom line, the amount of money we have left after we make it, and spend it. In the second installment of this 2 part series, we will discuss money saving strategies, and playing good defense.
money saving expert
2) Defense: Save money
Now when I'm talking about playing defense and saving money, I am not yet talking about investing into a savings or retirement account. I am speaking about the amount of money we spend (in expenses, necessities, and luxuries), how to keep more of that money, and get the most out of what we earn.
We all have to spend money, there are necessary expenses that we have to pay for. Some of us keep a close eye on that, and we are able to reduce that amount. There are literally thousands of ways to save on the thousands of expenses we have. At home, if you own your house, you can pay down your mortgage early and faster, and reduce your interest, which can also be tax deductible at the end of the year. If you rent, you cannot reduce your payment, but you can reduce the cost of consumables, for instance using energy saving strategies. You can go green and save some green by closing off drafts and sealing off openings, to using energy saving heaters in the winter, and natural cooling methods in the summer.
You can save on your shopping habits by simply taking an inventory of what you buy, and start shopping around for the best available price. There are money saving strategies to use online, offline, with coupons, cash back websites, and other combined methods. And you want to keep on track and remember that we are trying to increase our bottom line and keep more of our money. 7% does not sound like much up front, but at the end of the year can equate to hundreds and even thousands of dollars kept in your pockets.
But before we even see our money in our hands to even spend on consumables, we are paying the biggest expense that Americans face today - taxes. If you are a homeowner, fortunately you are able to deduct certain costs associated with owning your own home. If you are a renter, you do not get to see these tax savings.
If you are self employed, there are savings that you get to see because of that. By owning your own business, you are able to take advantage of the tax code, and deduct against expenses that are related to your business and at the end of the year enhance that bottom line, and keep more of the money that you earn. If you do not own your home or your own business, whether large corporation, small business, or home based business, there is not much that you can do to save on the necessary expense of taxes.
So we are playing the game of money, offense and defense, making money and saving money. Now as the team, you are also the coach. You are responsible for your money making and money saving strategies. And an easy way to keep this all in line is with your budget. A budget is a list of all planned expenses and revenues. It is a plan for saving and spending, in other words, a budget is an organizational plan stated in money terms.
We will budget for the money we make as well as for the money we spend, with the objective of increasing our bottom line. Business owners may be familiar with this type of planning. But we can and we should write a personal and household budget. By using and following your budget, a few things are going to start to happen, and you can see a ripple effect begin to happen.
First, you are immediately building on your skill of observation by diligently following your plan. You will begin to see yourself paying close attention to that bottom line and for ways to make that number expand. Because of that, you will begin to see your savings grow and your net worth and bottom line increase. You will start to see that your new personal money management techniques will fall over to other areas of your life, such as work, in relationships, and your time management skills.
As you begin to see how you are in control of how you play the game of money, you are in better control of your time, and better control of your life. And you were able to accomplish this by playing good offense and good defense in the game of money, mastering money making and money saving strategies.