Happy America Saves Week! Whatever you do, don't run out and buy me a present. That would defeat the whole purpose of the holiday.
America Saves Week 2010 (February 21-28) is a nationwide campaign involving more than 1,000 nonprofit, government and corporate groups that encourages individuals and families to save and build personal wealth. Their website is loaded with free resources and advice, including a nifty calculator that allows you to track your net worth. (WARNING: The calculator is easy to use, but the results might be hard to take.)
America Saves Week is a perfect time to start getting your financial house in order and maybe jump-start that flagging New Year's resolution to spend less and save more. Here are my top five tips to help get you started:
1.) Go on a Fiscal Fast:
Swear-off all spending for a couple of days - or ideally an entire week - as a sort of "spending detox." It's time to use it up, make it last, or do without. A fiscal fast will save you some money (put it into savings or pay off some debt with what you save!), and teach you about how you spend -- and probably waste -- money in a typical week. It'll also remind you of how many terrific things in life are free.
2.) Practice Spending Procrastination:
When it comes to discretionary spending, it usually pays to put off buying until tomorrow what you're tempted to buy today. Studies have shown that we have regrets about nearly 80% of the discretionary purchases we make within the first year of making the purchase. Force yourself to wait at least a week between the time you see an item in a store and when you go back to purchase it. Chances are great that you'll reconsider and never go back to buy it.
3.) Put Your Finances on Autopilot:
To paraphrase Jack Nicholson's character in A Few Good Men, "The money? You can't handle the money!" Have your paychecks and other income deposited directly into your bank account(s), including automatic allocations into designated savings and investment accounts. Then authorize your creditors (e.g. credit card companies, mortgage lender, insurance company, etc.) to automatically withdraw your payments every month from your account. By putting your finances on autopilot, savings becomes automatic and you'll never have late fees or missed payments again.
4.) Pay with Cash Only:
Studies have shown that when you pay with a credit card, you're more likely to buy something than when you pay with cash, and you're more willing to pay more for it (link to my previous post on credit cards). Psychologically, it's just harder to part with actual greenbacks than it is to whip out the plastic. Try paying for everything with cash for a week and see how much you save.
5.) Conduct a "What the Heck was I Thinking?" Audit:
Sit down once or twice a year and look back at your major discretionary purchases during the preceding months. Then ask yourself one simple question: "If I had it to do over again, would I have bought that?" Make a list of expenditures you regret, and learn from those mistakes. You'll probably notice some patterns, like maybe you're prone to buy clothing on a whim that you regret later. Or maybe you rush out to buy the latest tech gadget the day it comes out, before the bugs have been worked out and increased demand causes prices to drop.
So, break out the box wine and join me in a toast to America Saves Week 2010.
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