In real terms, wages are falling and the cost of living is rising. So the best thing to do right now, at least until the economy improves, is to maximize the money you do have so that you get the best from it. These tactics range from investing wisely, to coupon clipping. I’m not suggesting you spend 40 hours a week trawling the dailies, or dumpster diving for your food.
Minimizing your outgoings in general is an excellent idea. Learn – properly – how to cook from scratch and you will save literally thousands a year. It’s even worth taking a culinary course, because while you may think you can eat pasta or lentils indefinitely, either your health or your willpower will give out – it’s not sustainable. Also, creating a garden is a great way to ensure a regular supply of fresh produce at a fraction of the cost.
If you have land, but no time, consider participating in land share schemes, where you allow another person to grow vegetables on your land, in exchange for half the food grown. Landshare is a great way to connect with growers who need land. If you live in an urban area, consider window boxes for herbs (herb seeds cost pence, a small bag of basil can cost upward of $2).
If gardening doesn’t appeal, frequent your local food market, where food is generally fresher and cheaper, and you can buy as much as you need, rather than buying a whole bag of apples which inevitably rot in your grocery cupboard.
This article discusses the issues around inflation and it’s a salutary lesson in how what you think might be enough probably won’t be. While many places suggest investing in gold, that’s another commodity that is subject to inflation and fluctuating markets. There are ways to cut your costs and invest in yourself and your lifestyle that will help regardless of the situation – whether that’s things being a little more expensive, or a full on nuclear holocaust. Again, while I think the activities of extreme couponers are a little excessive and time consuming, some of their principles are worth examining.
For example, consider what you actually need compared to things you want. You may want a designer suit – but one bought from the thrift store can look just as good, if you are judicious, and can even be free if you take in used goods to exchange. Also, apply for supermarket cards where you can build up points on each transaction. These can be saved and used during lean times – for example toward the end of the month – or you can save the points and use them for special occasions, like birthdays or Thanksgiving.
In terms of money, wait until you find a financial product that has really good rates. Banks tend to offer savings accounts with excellent interest rates for a year, in order to draw people in. Forget customer loyalty. The bank has no loyalty to you, and you’d be much better off if you leave the money there for a year, then switch to the next account offering good interest rates. Maximize those interest rates as much as you can, and try to find tax free loopholes. That said; if you have credit card or loan debt, pay that off first, before you start investing. The APR you are paying on that will likely be up to three times higher than any savings interest you could possibly pick up.
Use a cash back credit card to earn on every purchase, and if one isn’t available, look for one that offers fringe benefits, like air miles, cheap insurance or discounts.
In terms of investment itself; never, ever, put all your eggs in one basket, regardless of how good the prospect seems, and be prepared to lose that money. Some investments are riskier than others; playing the stock market is a good route to ruin, whereas paying off your mortgage can free you from a huge monthly outgoing expense; the spare money can be put to good use and the property itself can be sold in later life. As for your 401k, be careful with the investments you choose, and over invest if possible. Some financial institutions have played fast and loose with our trust, so consider building up multiple income streams, both in your working and retirement areas.