More DOLLAR$ AND $EN$E Blogs
- Til DEBT Do Us Part
- Bank On It
- Retirement Planning Starts Sooner Than You Think… like NOW!
- Pay Yourself First
- Financial Storms
- A 'TAXING' TOPIC
- Free or Fee?
- Money Tips: Review Part Two
- Money Tips: Review Part One
- Is Money Important?
- Give Yourself Credit
- INVESTING - Make Money While You Sleep
- Hey Big Spender
- I'm not afraid of the Big Bad Money
- Need vs Want
- Shhh... Money Makes the World Go Around
- Quiz - What's your money style?
- Summer's here...NOW SHOW ME THE MONEY!
- Can Money Make You Happy?
- $AVE ME!
February 2009 Blogs
$AVE ME!
DOLLAR$ and $EN$E, August 2009, by Brian Bogaert
$AVE ME!
How to save when you have
wants and needs to pay for.
Hi girls, how is 2009 going? I know you all made resolutions regarding MONEY!! Maybe?
As always, thanks for your letters. Pretty much everyone has a similar question. It seems a lot of you out there want to know the secret to SAVING MONEY!
The Answer!
It’s a very simple equation ladies and it goes like this: DECIDE how much money you are going to SPEND each month and then DON’T SPEND MORE THAN THAT. If you do this, you will always have money left over every month and it will build up over time.
In the past I have explained that one way to do this is to figure out the difference between your NEEDS (things you literally need to survive like food for you and your pony; right Aisely from Smith Falls?) vs. your WANTS (things you THINK you need at the time but in reality you just want – like another nail polish, the latest fashions and expensive coffee drinks). If you are required to help out by paying for some of your own things then you will want to learn as much as you can about the concept of NEEDS vs. WANTS and apply that every time you go shopping.
First, pay for your NEEDS; second, figure out how much you want to SAVE each month; and THEN use what ever is left over to purchase your WANTS.
Example
Quick example because you know I love examples:
Let’s say you ‘make’ $100/month (allowance, babysitting, dog walking, shoveling snow – there you go Emily from North Bay, some ideas on making money!). Sit down and figure out what your NEEDS cost. “Okay well my parents say I like have to pay for my own bus fare this year and that like costs me $50 a month (that leaves you another $50 per month left over). I’ve like decided that I want to SAVE up like $25 every month (which will give you $300 at the end of the year). That like leaves me $25 a month left over for the things I WANT (makeup, candy at the movies, Frappuccinos…).” Was that enough 'likes'? So $100 earned minus $50 needs and $25 savings, leaves $25 for wants.
And remember, this is just an example I made up. It will be different numbers for each of you and it can be a bit challenging to figure out what those numbers are. Ask your parents for help. Chances are your folks will take care of your basic NEEDS and you’ll just pay for SAVING and WANTS, and then every household is different.
How do you keep track of all this? Save your receipts! You always have the option of asking for your receipt when you buy something. Ask for them, keep them, and at the end of the month add them all up to find out EXACTLY how much you are spending. And put your savings in the bank and DON’T TOUCH IT! (Until it’s time to invest ...that’s another article.)
What’s the point?!
I had one question that was a very interesting thought about all this. Melissa from Lac La Biche asked: “What is the point of SAVING money anyway?! Aren’t you just going to spend it on a WANT eventually? And if not, what is the point??”
I love it when you gals start thinking about this stuff like that.
Why save? Well at your age, you’d likely be saving up to spend your money on something BIG. There are other reasons to save and we’ll talk about them in another article. Maybe your parents won’t buy you the fancy phone you want so you have to pay for it yourself. Going back to our example from before, we had $50 left over every month AFTER we paid for our NEEDS, how long would it take us to SAVE up say…$250 for a fancy new phone? 5 months! That’s $50 x 5 months. But we know also that we ‘like’ to spend at least $25 every month on our WANTS to have fun with our friends. So that takes away half, making it twice as long (or 10 months) to save up the dough for the phone ($25 x 10 = $250).
So if you spend your entire $50 every month on your WANTS – no fancy new phone. Save up ALL you can each month and you’ll get it faster. It all depends on your willpower and how badly you WANT that new phone (or whatever).
The point of saving is that there is always something you will WANT in the future. I hope that helps and keep the letters coming. For even more info about ‘Saving’ read my article in the Oct/Nov 2007 issue.
~ Brian