5 tips for a money-savvy life

By Sarah Damon

Everyone can think of one or two people in their life that embody the title cheapskate. Maybe this person always buys the cheapest product, even when it's almost guaranteed to fall apart in no time. Or maybe the cheapskate in your life likes to mooch off his friends, skipping the snack line at the movies and later helping himself to some of your popcorn.

Cheapskates usually don't inspire warm and fuzzy feelings from friends and loved ones when it comes to these behaviors, and obviously their tactics aren't the best way to save money. Similarly, frugal personal finance advice often makes readers' eyes roll. Who wants to take the time to rinse and reuse every bit of aluminum foil or to make their own cleaning supplies?

(Full disclosure: This writer does make some of her own cleaning supplies, but because I actually enjoy the process and prefer my home-brewed multipurpose cleaner to Formula 409. I do not, however, keep an aluminum foil ball!)

Make your dollar count

The idea of smart spending while living a "rich" lifestyle is the premise of the book Living the Savvy Life by Melissa Tosetti and Kevin Gibbons. "With calories," they write, "it's about enjoying a mouthwatering, fresh-out-of-the-oven, homemade cookie instead of wasting calories on a processed pre-packaged cookie that you find in the vending machine at work. With money…It's all about making your dollar count and spending it on the things they give you pleasure versus mindlessly spending."

How to do this in practice? The following are five tips adapted from these authors' advice on being savvy with your money:

  1. Figure out what is important to you. What are your big goals and dreams? Define your goals and write them down so that you can plan your spending to achieve them. Use tools like an online savings account dedicated to the goal.
  2. Track your current spending habits, and find places to cut back in areas that don't matter to you in order to spend more on the things that you identified as important.
  3. Create a designated area in your home for money management, and try to make it a welcoming space with art, photographs, and other items that appeal to you.
  4. Keep your "fun" money separate by withdrawing it in cash on your payday. This will prevent you from accidentally overspending on eating out, buying gadgets, etc.
  5. Continue to learn about money by taking classes, reading books, and checking out financial magazines. Find a mentor who has a healthy handle on money, and ask that person for tips and advice.

Finally, keep money management as simple as possible. The more complicated you make it, the less likely you are to keep up the process month after month.