How to Save Money

Saving money is one of the most important things you can do for your future, along with getting a good education. Saving money takes discipline, but it enables you to accumulate money for large or expensive purchases. A good way to save money is to create a budget. A budget is a plan for coordinating how you will spend and save money.

A budget takes into consideration your income (how much money you make), your expenses (what you have to spend) and how much you have left over. What’s left over is known as the amount of an individual’s income available for spending after the essentials (such as food, clothing, and shelter) have been taken care of. No doubt some of your individual’s income will be spent on luxury items that you want now. But you will also want to put some of that money away for your future. Some people suggest saving as much as 10 percent of your individual’s income.

Use this tip to help you in the process of setting and reaching your personal savings goals:

Identifying steps you can take to save money
Deciding which type of savings account is best for you
Evaluate investment risks
Preparing a personal savings action plan

The following tips will help you to save:

Savings Account

Once you select a type of savings account, use the telephone, newspaper, and Internet to compare rates and fees offered by different financial institutions including those outside your city. These rates can vary and, over time, can significantly affect interest earnings.

To earn the highest return on savings with little or no risk, consider certificates of deposit or U.S. Savings Bonds.

Credit Cards

You can save money each year in lower credit card interest charges by paying off your entire bill each month or by using a check, cash or debit card for purchases.

To avoid late payment fees and possible interest rate increases on your credit cards, make sure you send in your payment 10 days before the statement due date. Late payments on one card can increase fees and interest rates on other cards.


To save as much you can in finance charges, pay for the car in cash or make a large down payment. Always get the shortest term loan possible as this will lower your interest rate.

Make sure to get a pre-approved loan from your bank or credit union before seeking dealer financing. You can save as much as $1000 in finance charges by shopping for the cheapest loan.


Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford.

You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year $100,000 fixed-rate mortgage, just lowering the APR from 7% to 6.5% can save you more than $5,000 in interest charges over the life of the loan, and paying two points instead of three would save you an additional $1,000.

Be aware that the interest rate on most adjustable rate mortgages can vary a great deal over the lifetime of the loan. An increase of several percentage points might raise payments by hundreds of dollars a month, so ask the lender what the highest possible monthly payment might be.

Consider refinancing your mortgage if you can get a rate that is lower than your existing mortgage rate and plan to keep the new mortgage for at least several years. Calculate precisely how much your new mortgage (including points, fees and closing costs) will cost and whether, in the long run, it will cost less than your current mortgage.


Posted by Ardent Editor on Feb 21 2007 in Money 101

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