Using Dollar Cost Averaging & Other Saving Strategies To Make Money

What exactly is dollar cost averaging? In order to answer this question, think of how easy it is to save money when you don't actually have to go through the process of saving. Granted, that may seem somewhat confusing. To better explain how this works, think of how easy it would be to set up a payment plan, one that automatically withdraws money from your savings account and deposits that amount into another, separate account. This could be set up on a weekly, bi-weekly, or monthly basis. This explains how some people have an easier time saving money than others, and it's ultimately why some are able to use this tactic to actually make money. However is that all there is to spending less and saving more? Well, not exactly.

Living Within Your Means

We've all succumbed to making that impromptu purchase. We've all given in to temptation and spent more than we had. Unfortunately, living on credit has a cost, and it's one we always face when we receive our monthly bill. Those credit card interest rates remind us of the costs of buying on credit. After all, with interest rates as high as 30 percent on purchases, it's no wonder we all have a hard time paying down our outstanding balances. There has to be a better way to manage our money and live within our means. The first strategy is to use the aforementioned dollar cost averaging tactic. However, there are others. Do you want to know what they are?

1. Eliminate Credit: Living within our means doesn't include living vicariously through our credit cards. If you want to make money work for you, then it starts with immediately eliminating your ability to buy on credit. Leave those credit cards at home. Cut them up and pay down your balances gradually. End your ability to buy on credit by eliminating your access to credit cards. It will force you to live within your means, and it will make you think twice before making a purchase.

2. Understand Your Income: Have you ever stopped and looked at your annual salary? More importantly, have you ever seriously reviewed your after tax income? Most of us rarely take the time to look at how much we actually take home. Instead, we become overwhelmed by our monthly bills, ones we could reduce if we wanted to. Take the time to look at your after tax income. Understand how much you take home and where most of your money goes. It will help you get started on the third point in this list.

3. Get Accustomed to Budgeting: Coming up with a budget is easy. All you need to do is identify those expenses you must cover, versus those you don't have to cover, or put differently, those expenses you can do without. Unfortunately, that's the difficult part. Deciding between the essentials you must have, and those things you want, is often the hardest part of budgeting. However, it's something that must be done. You must make tough decisions about when and how you spend money.

Most of us assume that it's nearly impossible to save money and reduce debt at the same time. However, when you reduce your debt load, you are in fact increasing your rate of savings. This is because there are very few investments that can match the returns of reducing your debt. Therefore, use dollar cost averaging and get back to saving money by using some of these aforementioned strategies.

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