Top 10 Ways to Save Your After Tax Income

Continuing from my previous post, here are top 10 ways to save money in 2011.

1. Stop using credit card – Credit card interest rate is anywhere from 9% to 29%. If you are using credit card and keeping an outstanding balance, it is costing you hundreds of dollars every year. First thing you can do to save money is pay off all your credit card outstanding balance and not to use it anymore if you do not intend to payoff the balance every month.

2. Use cash – Want to limit your spending habit and save money? Use cash for every expense. When you are carrying all your major credit cards, bank cards, cheque book etc. with you, you have the potential to spend all of it. Instead take only cash with you. That will limit your purchase power and even you are tempted to spend more, you will be limited to spend only the available cash with you.

3. Eat at home – Do you know the usual markup of restaurant meal? It’s about 50 – 70%. Same meal or the meal you love, you can make at home at fraction of cost that you would pay at a restaurant. Cost of meal is the second most expensive item after mortgage or rent. If you are in the habit of eating out, just add your expenses up for a week or month and ask yourself, how much you could save by eating at home?

4. Use public transit – Public transit is not cheap if you factor in the time you spent to use the public transit. But if you can be productive and use that time efficiently, there is nothing like a ride on the public transit. It’s a huge cost savings over any private transportation.

5. Move to a new area – This is kind of extreme way to save money. But if you have a new job in a new area, you can save money by just making a permanent move. There are different consumer taxes in BC and Alberta. Just moving from a higher tax province to a lower tax province you can save some serious money.

6. Auto Savings – Pay yourself first, if you have paid off your debts and credit cards. Once high interest debts are paid off, setup an auto savings account and force yourself to put money into it. Once you start, it will keep growing.

7. Renegotiate debt – If your credit situation has changed for the better, renegotiate your debt with all your creditors, including banks, credit cards, mortgage holders etc. Saving on interest is the easiest way to increase your cash flow.

8. Consult a Tax Advisor – Tax planning is the fastest way to generate immediate cash. Request for a change in your source tax, to increase your take home pay on each pay cheque. Taxes take out 40% or more of your income. Consult a good tax advisor and discuss your income and tax situation. They will be able to help you cut your taxes by 50% or more. Keep the money that you already have, rather than paying in taxes.

9. Budget spending – The biggest source of money leakage is impulse purchase. Only if you make a budget and stick to it, you can stop the leakage and save more money.

10. Get rid of smart phone – I love the apple business model. They have basically created a faucet for transferring money from your account to theirs by smart phone and all the apps. If apple’s app store made $5 billion in revenue, that means $5 billion of your (and other apple customers) money that they could have kept and saved went to apple’s account. How much was your contribution to apple’s revenue? How would it matter if you could keep the money with you? So, be smart and throw away that money sucking smart phone.