Saving Money? What For?

moneyThere’s so much information out there about how to save money (it’s certainly one of the things I focus on here). It’s understandable; these are hard times and we need to keep as much of our money as we can. Most of us have found ways to cut back on our spending, to shave a few dollars off of our monthly expenses, and to realize even bigger savings by shopping around for auto/life/ homeowner’s insurance or some other large expense. So we’re saving money; but what for?

In my own race to save as much money as possible and to get the best deal on every purchase, I’ve lost sight of what I’m saving for. Yes, we automatically save for retirement through our plans at work, but the savings I’m talking about go beyond that. If I save $20 on an item I purchase, what am I doing with that money? Is it going towards a dedicated savings goal, is it simply building up in my checking account, or is it being sucked away on another purchase I wasn’t nearly as careful about?

What I’m realizing is that if we don’t have savings goals, we’re not maximizing the savings we’re realizing through frugality and comparison shopping. For years we’ve had a very vague “emergency fund.” I came up with a completely arbitrary number for the amount I want to have in there. The problem is, my husband and I have never sat down to discuss what emergencies we’re trying to cover with this account. Our jobs are as secure as any jobs can be in this economic climate. We both work in industries that are highly unlikely to go under, even during rough times. But I also realize no one is immune to job loss. So what’s become important is to identify just what sort of emergencies we’re hedging against so that we can save the proper amount of money in this emergency fund to meet those goals.

Other than our emergency fund, we’re looking more specifically at other savings goals. We know we want to set aside money for another car. Our newer car is a 2006 Toyota Sienna. Our other car is a 1994 Toyota Camry. Since both my husband and I work, and we don’t live in an area with public transportation, it’s likely we’ll need to replace the Camry sometime in the next few years.

We also want to set aside money for our daughters’ college educations. And some money in a vacation fund. Eventually, we’d like to re-work our kitchen, and that, too will require a chunk of savings.

The problem with saving money blindly, as we’ve been, is that none of the goals stand a chance of ever being met. And without solid goals, it’s impossible to maximize the savings we do have.

I’m certainly (and obviously) no financial expert, but it seems to me the next logical steps are these:

Emergency Fund: Determine exactly which emergencies we wish to cover with this fund (things like possible job loss, home and auto repair) and decide on a specific amount to keep in this fund.

Car Fund: This is an inevitable expense. We simply need to determine the amount per month we are able to put towards this goal.

College Savings: We want to help our children with college expenses as much as we can, but we also don’t think it’s necessary to save the entire amount before they graduate from high school. Again, we’ll need to decide on a specific monthly amount to put towards this goal which will likely reside in a 529 account.

Kitchen Fund: This will come last as it is the least necessary at this point. However, once the other savings goals are met, we should be able to ramp up the amount we’re putting into this fund.

This sounds like a lot, but I’m talking small amounts right now. It’s not like we have hundreds and hundreds of dollars left over each month after paying our expenses. But, our expenses are less than they used to be. We comparison-shopped our way into an annual savings of around $600 on auto and homeowners’ insurance, we’re consuming less than we used to, we’re growing some of our own food, we’re making more of the things we use (laundry detergent, some cleaning products, liquid hand soaps) we’re getting rid of a lot of our stuff via ebay and a yard sale. All of these things combined will contribute towards our savings goals.

Also, with the new federal economic stimulus plan, most workers will see a net increase of approximately $50 per month in their paychecks. I’m going to try to make sure this money goes towards a savings goal rather than simply disappearing because of a lack of planning.

What do you think? Do you set savings goals? Do you also find that it’s easier to make progress when you do?

Photo Credit: borman818

Save Money On Food And Eat Better: Part 2

produceOn Monday I wrote about overall strategies for saving money on meals: shopping circulars, meal planning, creating a price book and using coupons. Today I want to talk about more specific ways to save money while eating food that is healthier for you.

Ditch the Junk. One of the easiest ways to cut costs on food and to cut a few calories from your diet is to ditch the junk food. Junk food (chips, cookies, candy, soda) is not only high in calories and fat, but also full of nasty chemicals and dyes. Junk food is also really expensive, especially when compared with whole foods.

Eat Real Food. Processed foods, though not as obviously junk food, are often just as bad for us. Processed foods are loaded with sodium and a variety of chemicals to make them last a long time on store shelves. “Sugar-free” and “low-fat” foods really aren’t all that healthy either. The sugar and fat can’t simply be removed from these products, they have to be replaced with something else. Usually that something else is a lab-created chemical designed to mimic the properties of natural sugar and/or  fat. In my opinion, the fewer chemicals, the better. And again, processed food is expensive. Yes, microwave meals are fast, and many of us need quick ways to prepare food. But often, for the same money, you can buy pre-cut chicken and vegetables that allow you to throw together a fast meal of real food instead of the processed stuff.

Buy Fruit in Season or Buy Frozen. Out of season fruit costs a lot more and doesn’t taste nearly as good as fruit that’s in season. If you want something that’s out of season, try frozen fruit. It is picked at the peak of freshness and quickly frozen to preserve its quality.

Drink Water. One of the best ways to save money and get healthier is to drink water. Tap water. Bottled water is not only expensive, most of the time it’s only tap water anyway. The plastic bottles also leach nasty chemicals into the water and then into you — not to mention the environmental impact of all that plastic. If you don’t like the taste of the water that comes out of your tap, invest in a filter and get a reusable, BPA-free, bottle. You could easily save hundreds of dollars a year depending on how much bottled water you buy.

Eat Less Meat. Try to have at least one meat-free meal per week. There are lots of options for filling fare that doesn’t require a slab of meat to be satisfying. Look for recipes built around beans or have breakfast for dinner. Eggs are a great source of protein and other nutrients, including Vitamin D if you choose organic, free-range varieties. Eggs and beans are good for you and also much less expensive than meat.

Again, I hope some of these ideas have been helpful to you. Please share some of the ways that you save money on food in the comments. In the coming weeks, I’ll post some simple, quick and healthy recipes to make feeding yourself and your family a little easier.

Photo Credit: Rick

Save Money On Food And Eat Better: Part 1

groceriesThere isn’t much new under the sun about saving money at the grocery store. Most articles talk about clipping coupons and buying items on sale. It’s even better if you can buy an item on sale with a coupon. Sometimes, though, we all need a little reminding about the best (and least expensive) ways to tackle the whole process surrounding the way we eat. Before I get started, I’ll readily admit that I do not always employ all of these strategies. But I know that when I do, I save money and eat better. This post is as much a reminder to me as anyone else.

Step 1: Shop the circulars. Each Sunday (or Saturday, depending on when circulars are available in your area), look through the grocery store ads and note what’s on sale. The front page of the circulars feature what stores call “Loss Leaders.” These are the really good deals; the stores may even lose a little money on these items because they’re hoping to get you in the store, where they know you’re likely to buy other items they will make a profit on.

Step 2: Plan your meals. The easiest way to blow the budget and the calories is failing to plan. Without a plan, I often find myself out running errands and suddenly starving. The easiest thing to do is find a drive-through and spend too much money on not-so-great food. Use the circulars to make your plan for the week. Build meals around what’s on sale to save money.

Step 3: Create a price book. Some people argue that making a price book is a waste of time, but it’s really easy, doesn’t take long and is a great way to track prices. Once you have the price book, you can easily tell if a “sale” you spot somewhere is really a good deal or not. I made one about a year ago and every 3-4 months, I update it. I use a thin 3×5 notebook and in it I wrote down all of the items I buy on a regular basis along the left hand side of each page, everything from groceries to household products. It’s important to list the sizes of the items so you can calculate the unit price. There are 3 primary places I shop, two grocery stores and Target. I listed the stores at the top of each page, creating 3 columns. Whenever I went to a given store, I wrote down the regular price of the items in my notebook (if I was buying an item, I wrote down the price off of the receipt when I got home). After a few trips, I had all of the prices listed. I created a separate list for Sam’s and Costco. I was then able to compare prices on items between the two stores. Once I calculated the unit price for each item, I could make sure that the products I was purchasing at the warehouse stores actually were cheaper than they would be at the grocery store.

Step 4: Use coupons. I’m intentionally listing coupons after the other steps. It can be tempting to purchase products we either don’t need, or those that aren’t good for us simply because we have a coupon. Coupons work best once you’ve noted what’s on sale and created a meal plan. After that, look through the coupons to see if there are any available for the items you are planning to buy anyway. More and more I’ve been buying organic food and it’s nearly impossible to find coupons in the circulars for these items. The easiest thing to do in this case is to sign up at the websites run by organic brands you purchase. You can often download coupons directly from the sites, or they will email them to you from time to time. Some to try,

Organic Valley

Horizon Organics

Affluent Pauper’s Large List of Where to Find Organic Coupons

I hope some of these suggestions have been helpful.  Please let us know in the comments how you save money on food. I’m off to plan some meals for the week. . .On Wednesday, in Part 2 of this post, I’ll provide more tips and specific ways to make shopping easier and healthier.

Photo Credit: timsamoff