We talk all the time about saving money in the garden, in the house and in life in general, but why try so hard to save money? What are we saving for? Well, I’ll tell you, lots of things! Saving money for some things can save you thousands of dollars in the long run.
Before we start, Check out this week’s podcast on saving money on electricity. Find that HERE.
Save For That Car
Let’s start with buying a car. Almost anyone with a decent credit score can go and get a loan for a car any time they want. But there is a downside to getting a loan, instead of paying cash. Mostly, that downside is the interest. They wrap it up in a neat little package and tell you the monthly payment is $400, totally affordable. What they don’t share is the fact that over the life of the loan you will be paying an additional amount of $2000-$5000 in interest. When we bought our first car I couldn’t believe how much extra we paid on the loan.
How To Save
It is pretty easy to save for a car. If you have ever made payments it’s a piece of cake. When the loan is complete, immediately shift to saving the money you were paying toward the loan, into a savings account you never access. By the time your old car is on its last legs you should have enough to purchase a decent new car for cash. Saving yourself a few thousand bucks in the process.
Emergency Money
I love to have money set aside for an emergency fund. This is for if you have an unexpected house repair, or a car break down. Again this money is money in a special savings account you never access unless you need it. I like to keep about $2000-$4000 in there, you just never know what kind of emergency you are going to have. Again this is pretty easy to save. Determine what you can spare every week or month, and set it aside until you have that fund. Even if you are only setting aside $100 a month it is better than nothing in an emergency.
We have said it before on the podcast and we will say it again. Our kids do lots of things and most of them cost money. Every year we look at our budget and decide what we can afford to do for extra curriculars and set that aside for the kids. It is best to look ahead of time and figure out how much everything is going to cost before you start signing up. It can end up being more than you really want to spend. So we start at the beginning of the year and look at how much everything we did last year was. Double check with your kids to make sure interest is still there, not much point in doing stuff they are no longer interested in.
School Costs
Another thing I look at in the beginning of the year is how much school is going to cost me. We home school so that includes curriculum, co-op, and any field trips I want to do. For school I usually plan that in summer to be honest. But again, I like to add it all up to see how much I’m actually paying. Then decide if it is a reasonable expense or if a few things need to be cut out to save that money.
Future Big Expenses
Finally, what are you looking to do in the future? Want to buy a new home, take a trip to Europe, retire early? These are all things it is worth saving for or checking into the pro’s and con’s of. For example if the housing market in your target neighborhood is really high right now, but was more reasonable 3 years ago, it could pay to wait a little longer to buy that new home. Prices can drop substantially in only a year.
The bottom line is saving money on your everyday expenses can help you when it comes to everything else in your life. Sometimes it seems impossible to save for a car, but how many times a week are you eating out? Saving money in one area of your life can help you set it aside for other things you may want or need in the future.
We talk a lot about saving money. But why we save is also important to discuss. This article covers that.
