Friday, November 23, 2007

Late Bloomers Guide to Saving Money: Tips From AARP: Part 1

It's never to late to save, but there are a few helpful rules for those of us playing catch-up. While visiting my parents, I found a copy of AARP magazine which had some great tips for late-starters in the savings game.

Basically, the article (from the Sept./Oct 2007 edition) featured several individuals (ages 50-60) who had not saved too much in the past. I liked the piece, because it featured people--like me-- who have made financial errors and have become smarter about money. One couple (Margaret and Joe Woods) in the magazine grew their savings to $157,000 from the previous amount of only $38,000 in just four years. And no matter what age you are, the article offered very helpful insights and solutions.

"One of the best things about being older is that you've seen that problems have solutions--and what doesn't kill you really can make you stronger." --by Julie Connelly for AARP magazine

Here's what I've gained from the piece:

1. Be honest about budgeting. It's not enough to make a budget. You actually have to follow it, according to Margaret and Joe Woods. By honestly crunching the numbers, they realized that they were spending more money than they realized.

Likewise, I have made budgets that look great on paper, but have not worked. I realize that it takes a lot of discipline to make budgets jump from the page to the bank.

2. Don't be a recreational shopper. "We don't go to the mall anymore," Margaret said in the article. Previously, shopping was a source of entertainment. Now the couple walks, reads, creates crafts, etc.

I also find that I save more by only going to the store when necessary. I also avoid reading store flyers unless I'm really in the market for a new trinket.

3. Discuss purchases. The Woods have cut back on impulsive purchases because they now chat before they buy. "I don't buy or I discuss it with Joe," Margaret said.

4. Avoid buying new cars: The couple was able to save a big chunk of change by shifting gears on their auto strategy. For instance: Joe had planned to trade in his truck about 24 months ago, but he saved a lot by holding onto the same vehicle. Margaret needs a new car, but plans to buy a used auto instead. That's a detour from her past routes which typically involved expensive new cars.

5. Fast track education loans: They're saving a small fortune by making extra and faster payments on their son's college loans.


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