The Real Secrets of Saving Money

You probably know less about the fundamentals of saving money than you assume.

Discussion of the fundamentals of the economy has come to the forefront because of the current economic crisis. While you may have little control over the economy as an individual, you hold a lot of power over the fundamentals of saving money.

The biggest failure is that most people assume saving money is about paying less for something than you expected. But it's a long-term process of conscious decision-making based on basics.

Amazingly, many people don't adhere to the most obvious fundamental: Make more money than you spend, or spend less than you make. Ultimately you need to live within your means. Beyond this, there are less-obvious rules:

Purchase value

When you buy anything, look at the purchase value rather than the purchase price. The cheapest item will rarely save you the most money in the long run. How long will the item last, how many uses can you get out of it, how well does it do the job?

Spend to save

Be willing to spend on items that save money over time. There is a long list of products that can save money depending on how you live your life. Some examples: a sewing machine, coffee maker, rechargeable batteries, home insulation. These all cost money, but they eventually pay for themselves.

Emergency fund

An emergency fund is the safety net that allows you to both purchase value and spend to save. Without an emergency fund, you live paycheck to paycheck, which forces you to purchase only what is cheapest and needed at that moment. You don't have the monetary security to plan ahead and shop for what is best for your long-term savings when you are worried about having enough money to make it to the next paycheck.