Saving Money in Today's Economy

If you're like most Americans, you're most likely searching for ways to save money now more than ever.

But saving money, according to financial planners, isn't just about increasing the amount of money that you contribute to your retirement or college savings plans. It's also about scouring the expense side of your budget, searching for ways to save a buck or two, or perhaps even more.

To be sure, financial planners can help you analyze your balance sheet and income statements to help you find common and not-so-common places to save and earn more money. Here's a list of what financial planning professionals and other experts often suggest that you do get the most out of your money.

• Sign up and contribute to your 401(k) retirement plan. If you have a 401(k) plan at work and you're not participating, sign up to contribute. Any money saved via automatic payroll deductions in such plans will force you to reduce your spending in other areas. The Internal Revenue Service (IRS) limit for individuals is $16,500 for 2011. If you are 50 or older the limit is $22,000. "And even though many companies have suspended making matching contributions, it still makes sense to contribute because of the tax benefits," said FPA member Marie DeCaprio, CFP^®, of MCD Advisors. Your contribution is made with pre-tax dollars.
• Raise your deductibles. Look through your insurance policies to see if you can raise your deductibles. Make sure you have enough money in your emergency fund to cover those deductibles before making any changes. Also, look at your policies costs that are not necessary, including life insurance on a child.
• Scour your every day spending, especially groceries. "I recommend hitting the grocery store every other week for a major shopping spree with list and sale circular in hand," DeCaprio said. "Then in between just do a quick shop for essentials and perishables. In other words, limit the number of times you enter the store because the more frequently you go shopping the more apt you are to come home with stuff you really don't need. You'll probably eat healthier as well."
• Set the "money you save" aside. "If you save money by using coupons when shopping for groceries or by buying items on sale, consider setting the dollar amount saved in a jar or savings account," said FPA member K. Esther Szabo, CFP^®, of KK Wealth Advisors. "That's how I got enough money for my first Individual Retirement Account (IRA) contribution," she said. Szabo recommends depositing your spare change into a bank savings account. It will help you develop the habit of saving money. Plus, you'll earn some interest on the amount you accumulate.
• Stop eating out. "The biggest way people can save money is by limiting the number of times they eat out," DeCaprio said. This will save money over many years because eating home-cooked foods is significantly cheaper than eating out in a restaurant or getting take out."
• Track your spending. "I don't know any way to save money without tracking spending," DeCaprio said. "You can use a software program, spreadsheet, or pen and paper. But no matter what you use, just do it. Once you know where your money is going, you can find ways to cut back."
• Divide your big ticket items into 12 buckets. If you have large annual expenses, such as property taxes, insurance payments, and the like, Szabo suggests that you divide the amount by 12 and save that amount regularly into a savings account. Thus, when the bill is due you can electronically transfer the funds over to your checking account. If you are still lucky enough to get a bonus, save the bonus and use it for these expenses.
• Pay your credit card weekly or twice per month. Rather than using your credit card all month and then getting a big bill, Szabo recommends you check your credit card balance weekly or every two weeks and pay down the balance each time. This, she says, "builds more awareness into the actual cash you have on hand."

For more savings tips, advice and tools, check out the America Save Week website.