7 Counterintuitive Ways to Save Money

by Jeffrey StrainSaturday, August 16, 2008provided by TheStreet.Com

Earnest attempts to save money here and there don't always add up to much. When traditional methods fail, it's time to consider a few counterintuitive options.

Spend Money
If you want to get the most for your money, you are going to have to spend. One of the biggest mistakes people make when they are trying to get their finances in order is to stop spending money alogether. Not all spending is the same. You should limit unnecessary purchases, but spending on essential upkeep, preventive measures and items that will save money in the long run is vital for getting and keeping your finances in order. Scrimp now on items and services that can help prevent larger expenses in the long run--such as routine car maintenance and energy-saving bulbs--and you could pay for it later.

Don't Stay Home in Front of the TV
While staying home is certainly less expensive than going out with your friends, it isn't likely to improve your financial situation significantly. In fact, it can cost you a lot of money.
Instead of staying home and lamenting that you can't afford to go out, take the initiative. Sign up for some classes to improve your job prospects and learn new cost-cutting skills so that next year you don't have to sit at home thinking about the things that you want but still can't afford.

Don't Spend Time Learning How to Invest
When you are first starting to improve your finances, don't make learning how to invest a priority. Instead, put your investing on autopilot and follow the advice of Warren Buffett: "The best way to own common stocks is through an index fund."
Once you've mastered your finances and have saved a nice nest egg, then you'll have time to research individual stocks. Until then, your time will be much better spent on improving your finances through other means.

Don't Leave Your Investments to Experts
Do your own investment research. This research should include getting experts' opinion, but don't rely on it exclusively.
You should make the final decision for your circumstances. Giving your finances completely over to someone else to take care of, no matter how much of an expert he or she may be, is asking for financial trouble.

Don't Let Salary Determine Job Choice
One of the worst financial mistakes you can make is to base your job choice on salary alone.
For long-term earning and financial health, you're almost always better off choosing the job you will find most satisfying.
Even if the salary is lower at the outset, you'll be more productive -- and more likely to advance -- if you're engaged and motivated.

Don't Buy What Is Cheapest
"Cheap" rarely means "the best value." To get the most out of your hard-earned money, you must think value rather than price. A car that is inexpensive, but costs a lot to drive and needs frequent repairs has less value than a car with a higher price tag but costs less to run and maintain. This concept of buying value over price can be applied to anything and will mean that you rarely buy items which are the least expensive.

Don't Buy Things That Are on Sale
Much like things that are on the cheap, things that are on sale are rarely the best value.
There are two major problems with most items on sale: They are often something that you really don't need, and even if you do need them, you can usually find an alternative with better value. If it's not something you'd buy even if it weren't on sale, it's a purchase you shouldn't make. When you find something on sale that you do need, don't buy it without looking at other options. If you need the item and there aren't better options, buy away.

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Top Money Myths

We all bring money beliefs, habits, and anxieties into the way we deal with
our everyday finances. Our value standards and behaviors about money affect
not only us, but also the people we love. Any unchecked control issues that
play out over money can derail relationships and even impact the lives of
those we care about after we’ve passed on. The following are money myths
that underlie some of our greatest fears or our cherished-but-wrong-headed
beliefs and habits. If you want to take a new path to financial competence
that is proven, easier, sound, and even enjoyable, follow along as we help
you become more open-minded about your personal financial present and
future.

1. Having money means fewer worries and ease of living.
It is tempting to believe that people who have money are wise, selfdisciplined,
self-confident and untroubled. Yet having money does not
by itself lead to feelings of security, and at times not even to feelings
of financial security. How you feel about life and how comfortable you
are about money management is not determined by the size of your bank
account, but by your values and priorities.

2. Financial matters are too complicated to understand
and master.
Financial competence is like most life challenges: The fundamentals are
mastered one at a time. We begin by learning the financial basics and the
practical steps we must take to resolve the financial concerns in life. To
succeed, we must patiently explore our own needs and values and be willing
to seek appropriate guidance from skilled partners, family members, friends,
or professionals when advice is needed.

3. Financial planning and investing should be left to an expert.
We all need to take responsibility for our patterns of spending, difficulties with budgeting, and willingness to plan, save,
and invest for future life events. We need the courage to communicate with partners and other family members. Then we
are in a position to choose financial experts wisely and deal most constructively with them.

4. Credit and debit cards are convenient devices that make purchasing easy.
With credit and debit card use, one side of the exchange transaction is missing—the act of consciously paying money for
goods or services received. We benefit by consciously planning our everyday purchases and limiting impulse buying to a
budgeted amount each month.

5. A lot of money is the best gauge of success in our society.
While this myth forms the basis for much of society’s interactions, it is nevertheless a myth. Yes, the accumulation of
money is one driving force. When we really look at the sad (and sometimes tragic) lives that have been governed by
wealth, however, we can see its uselessness as a primary success indicator. Even opinion polls disagree with this widely
held notion about the power of money. They show “life satisfaction,” “a happy marriage,” and “feeling in control” as more
cherished signs of success than “a lot of money,” and these values win out by a very large margin!

Source:
You and Your Money: A No-Stress Guide
to Becoming Financially Fit
Lois A. Vitt
Karen L. Murrell
ISBN: 9780131003101

WEALTH ACCUMULATION RULES FOR SAVING MONEY

Pay yourself first. This is the number one rule!!! It may be difficult at first but you will find the small amount you save will not be missed after the first month or so. This is a great way to get in the habit of saving. Pay yourself first,
not last. If you budget to save $100 monthly and, for example, you budget $100 for eating out, pay yourself $100 first and then as the month goes along you may find yourself short and may have to cut back on your eating out. It is best to cut back on "eating out" than on your savings plan.

Pay yourself automatically. Simply have a certain amount of your check deposited into a financial account every month. You can start out by depositing it into a normal savings account, then as the amount increases, it can be switched to accounts that offer a better yield (CDs, etc.)

Save 10% of your monthly income. If at the stage of your life you do not feel you can do this, then save 5% and gradually work up to reach the 10% mark. And if you can save more, wonderful! You'll be thankful you did when you retire.

Develop a sound investment strategy. Invest regularly through a process called dollar-cost averaging. This means investing a specific amount at regular intervals which enables you to even out the cost of your investments over time.

Avoid "get rich quick" schemes. There are always those out there who will offer you an investment that "should earn you a great deal of money." But be extremely cautious. The majority of such investments will end up costing you money. Stick to solid, safe investments.

Be very aware of the power of compounding. This means that you will be
earning interest not only on what you save, but also on the interest that is generated. There are many investment opportunities, but the simplest strategy is to just leave it alone and let it accumulate over time, or "compound." Money saved at 7% will double in approximately seven years.

Source:http://wealthinfoplus.com/WealthAccRules.html