7 Practical and Effective Techniques for Saving Money

We've all heard the saying "cash is king". I beg to differ. Cash is not the king, knowing how to handle it is. Nowadays, we see people who have money lose it at the snap of the finger. We also see people who have little money but seem to get by with what little they have. Which just proves my point that it's not how much you have but it's how you utilize what you currently have.

Effective handling of your money is becoming more crucial with the current financial crisis that we have. In this hub, I just want to enumerate some general ways how we can handle money more effectively and save in the process. These are practical techniques that a lot of people do but sometimes, some people just don't do them enough. Hope you pick up some useful advices from this hub.

• Get a passbook for your checking account. If you have a checking account and just wait for the monthly bank statement to tell you if your expenses make sense, get a passbook with your checking account . Sure the maintaining balance may be higher (like times 2.5 here), but your peace of mind in knowing immediately where your money went, if you're nearing overdraft or not or if you are issuing a check that will bounce will be well worth the additional amount you will have to place in that checking account. If you're thinking of the additional amount that will get tied up just remember this, seeing one of your checks bounce is a very painful thing to watch, not only in your ego but on your pockets as well.

• Have your own bank statement. I'm sure most (if not all) of us are familiar with microsoft excel or a similar software. Make use of it to create your very own bank statement. Update the "bank statement" regularly (as in after every transaction) so that you can watch over your outstanding balance at all times. Think its overkill, especially if you have a checking account with a passbook? I don't because my "bank statement" also captures those checks I issued that I have not yet released or are not yet cleared by my bank. So I know at once if my future balance will cover the next check I am issuing.
• Budget. Prepare a general budget. Be realistic, make sure you include all known expenses. Include a budget for miscellaneous or emergencies. Don't forget to include your target savings in this general budget and your projected income. Then, update this budget regularly. Updating your budget ensures that it stays realistic and manageable at all times. Projected income not enough to cover the budgeted expenses? Get an extra job or cut down some items in your budget. It's better to adjust your budget than to have (unpleasant) surprises later on.
• Have a good relationship with your bank. Need to know if that fund transfer you are expecting came through or if the check you issued will not bounce? Call up your bank's manager or personnel immediately. Bank managers and personnel are trained on customer service and they will respond to your queries if they know you are an active depositor in their branch. How to establish and maintain a good relationship? Go to your bank regularly. Talk to the branch manager and leave your calling card. Chat with the bank personnel. Make sure they know that you are a loyal client. The next time you issued a check with insufficient funds (which happened to me once), they will take the initiative to call you and tell you about it. Believe me, such an action will help you save on the penalties for issuing that check. Just don't make a habit of doing this all the time or you'll get a negative reputation, not to mention a negative review on your credit standing.

• Pay ALL of your credit card balance on time. This may seem common sense but a lot of people use their credit cards and find out that they can only pay the minimum. Nothing's wrong with paying just the minimum (if that's all you can afford). But it will result to penalties on the remaining unpaid amount plus penalties on the new transactions for the month. Try to check your credit card statement and see if this is not true.
• Use your credit cards only when you ABSOLUTELY need to. Don't use your credit cards to buy luxury or branded goods that you know you cannot really afford (if you don't have those credit cards). These cards are not money and treating them as such can be quite a disaster. Also, do not use your credit cards in anticipation of incoming bonuses or cash windfalls. I've seen some people max out their credit cards because they know Christmas bonuses are coming. Not a healthy practice, I tell you.
• Pay off your debts as SOON as you can. If you have interest-bearing debts, you should try very hard not only to pay them on time (to avoid penalties and more interest) but also to pay them AHEAD of time. If you have an unexpected cash windfall immediately set out to pay off some of your debt. I remember my father doing that and he managed to cut down our housing loan payments from 30 years to just over 20 years! It was a big saving for him in terms of the foregone interest and also a big relief to finally know that he is debt-free. Wouldn't you love the same feeling?

That's it for now. There are a lot more techniques out there for handling cash and for saving money. However, what works for one may not work for another. So make sure the technique that you adopted will work for you. Best of all, be flexible. Don't stick to the technique if you see it no longer serves your purpose. Take it out and adopt a new one which you think will work better for you. Hope you liked what you just read and good luck in your endeavors in saving money.