A Basic Money Saving Guide Anyone Can Stick To
Saving money is sometimes easier said than done, but with a little discipline and dedication, adding extra money to that savings account every month may come naturally. A budgeting routine will not only beef up your savings account, but can also lead to financial freedom, an enhanced credit score, and less stress overall.
The #1 Thing to Keep in Mind: Successful Savers Make Putting Aside Money a Habit
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Most people think of saving as deciding on a percentage of income to be transferred into a savings account every month, which is a perfectly viable approach. What most people don’t realize, however, is that there are things they can start doing today that can help stretch a dollar and free up enough cash to start building a decent cash reserve.
It should be noted that this guide is not meant to serve as a guideline for investing. Investing is all about generating some kind of return on your money. Although the financial returns from investing have the potential to be much greater than savings, there is also more risk involved. While basic investing certainly has its place in anyone’s financial security, it’s equally important to form a healthy savings habit, which is what this guide is all about.
While not every single tip listed in this guide will apply to you, even implementing a few of them can go a long way toward increasing your family’s savings.
Make Changes That Matter. Cover The Basics.
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1. Reevaluate your bank account. How much of your hard-earned money is going toward bank fees? Switching to a new bank or credit union may seem like a hassle, but it’s a lot easier than you may think. Some banks also allow you to earn a percentage on your account balances so you can make a little cash without doing a thing, all without being subjected to those costly maintenance fees.
2. Change insurance providers. Just because your family has been loyal to one insurance agent for decades doesn’t mean you shouldn’t be on the lookout for greener pastures. Obtaining new car insurance quotes and taking advantage of discounts could mean a hefty savings of not just a few bucks, but hundreds. Start out by contacting companies directly, cutting out the independent agent middleman, and compare quotes to your current policies to decide where you can get the most savings.
3. Have a jar for all your pocket change. It may sound like an old-fashioned, simple idea, but it works. Rather than throwing away loose change in vending machines, hang onto it until you get home in the evening and toss it in the jar. You’d be surprised how much you can accumulate over the course of a month (some people even like to start at New Years to see how much they collect by the end of the year). Take the contents to a Coinstar machine if you don’t mind the nominal fee or directly to your bank if they accept loose change deposits.
4. Reduce those utility bills. Consider winterizing tips for your home that can make your house more energy-efficient year-round. Keeping your thermostat at a modest temperature, sealing your windows, and reducing the temperature of your hot water can drastically cut costs. You should also turn off any unused appliances before bed and take advantage of free sunlight.
Shop Smarter. Take Advantage Of Deals.
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5. Stop overspending. Many personal finance bloggers detail what’s known as a “Buy Nothing Year,” which is exactly how it sounds: you buy nothing new for an entire year. While you don’t have to start out with a major goal like that, consider a buy nothing week and avoid going into stores where you tend to buy a lot of things you don’t need.
6. Be thriftier. Need something new? Shop the thrift stores first. Consignment shops and other secondhand stores aren’t the dirty, unclean places of years past. They’re actually quite organized and can be a goldmine for gently-used clothing, housewares, and even books. Know when your local thrift shop puts out new merchandise and has special sale days, as these are the best days to snag a thrifty deal.
7. Clip coupons. This advice has become almost universal because it can be so effective. While you may not have the time to devote to excessive couponing, a little organization can save several dollars at checkout. Utilize Sunday circulars, sign up for your favorite stores’ email lists, and scour the internet for online promo codes before finalizing a purchase. There are plenty of online resources that teach you how to coupon effectively, so there’s no need to feel overwhelmed.
8. Shop wholesale or discount stores. There’s plenty of money to be saved by shopping at wholesale and discount grocery stores. Wholesale clubs do require a membership, so they’re only worth it if you intend to use the membership to your advantage. Discount grocery stores like Aldi are smaller incarnations of the traditional supermarket, but they boast lower prices and consistent quality. Check to see if there are any salvage food stores in your area as well, since you can find name brand and even organic items for pennies on the dollar.
9. Haggle. Negotiating for a better deal may be a dying art, but it’s one you can use to your advantage. Most people don’t’ realize that you can negotiate just about anything, from your credit card debt to your cell phone plan. Lower your car insurance premium, have annual credit card fees waived, and pay less for used cars and other secondhand items by brushing up on your haggling skills.
Plan For The Future.
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10. Cut travel expenses. Getting away doesn’t have to cost a fortune or eat up your entire savings, but it does require a little creative thinking. Rather than choose your destination and search the web for the best deals, search the deals first to find the cheapest destination. Plenty of travel sites offer last-minute deals on hotels and cruises, while others allow you to plan a trip ahead of time for as much as 80% worth of savings.
11. Plan meals around marked-down deals. You’ve probably heard that planning meals according to sales papers is a good way to save, but don’t forget those marked-down meats and other manager’s specials. Grocery stores tend to mark down their meat on certain days, usually in the morning, but don’t be afraid to ask the manager when you can expect to find the best deals. After that, simply bring the deals home and freeze or cook immediately. This is also a great way to stockpile meals for the week.
12. Utilize money-saving blog recipes. The internet is a vast resource for money-saving tips, and countless blogs feature free recipes that keep daily meals around $5 or less. Sign up with reputable, established blogs to receive newsletters chockfull of frugal recipes, meal planning ideas, coupon leads, and other tips that allow you to plan family meals that help you save.
13. Opt for automatic transfers. It’s more difficult to save when you physically have to transfer cash into your savings account, but automatic transfers no longer give anyone this excuse. Set up your transfer with your bank so a portion of your paycheck is transferred with each automatic deposit. When the money is out of sight and out of mind, it’s more likely to add up!
Discover New Ways of Doing Things
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14. Carpool. People have a tendency to cherish personal space, but sharing a ride to work can save as much as $1,000 a year on gas. Talk to co-workers who live near you to see if anyone is interested in starting a carpool, or consult ride-sharing websites to find local, like-minded commuters who would be more than happy to split the cost of gas.
15. Become a landlord. If you need to move as soon as possible but your house has been sitting on the market for months, renting it out could supply you with a little extra income and allow you to avoid selling the home at a loss. Homeowners that aren’t planning to move but have a finished basement or space over a garage can also convert a part of their home to a modest apartment. This alternative gives you extra income without a second mortgage.
16. Cut household costs with cheaper alternatives. A large bottle of chemical drain cleaner can cost nearly $10, which is money better saved or spent elsewhere. Search the internet for affordable solutions to everyday problems, such as using inexpensive vinegar, baking soda, and a metal coat hanger to unclog stubborn drains. You might be surprised just how nifty these thrifty solutions can be.
17. Create new family traditions. The holidays can really break the bank, and many people find that their savings account dwindles during the holiday season. Rather than have the cheeriest time of year eat away at your savings, however, forge new traditions. Have a white elephant gift exchange with extended family and set the limit to around $25, that way you’re only buying one gift and making hilarious memories that will last a lifetime.
Deal with Debt. Conquer Fees.
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18. Avoid late fees. Everyone has bills, but not everyone pays close attention to due dates. Even missing the due date by a single day can rack up a hefty late fee, so be diligent. Set up reminders in your smart phone or online banking system, create automatic payments, or mark a “pay day” on your monthly calendar that indicates you have to sit down and pay the entire month’s payments at once.
19. Work harder to pay off a single debt. You probably have more than one credit card or student loan debt, and it’s likely that you’re only paying the minimum monthly payments. Getting rid of debt, even a single loan, equates to more money saved because you’re not subjected to high interest rates. Choose one debt to focus on and pay as much over the minimum amount as you can comfortably afford, then move on to the next one when the first is paid off. Sites like StudentDebtRelief.us can provide a free consultation on managing your student loan debt.
20. Avoid expensive loans. Life happens. Furnaces, car transmissions, washing machines, and electronics can go out without a moment’s notice, leaving you with no choice but to replace the essential item. Before you give in to that title loan commercial and borrow money at high interest, consider your options. Debt can’t always be avoided, but there are smarter ways to go about it. See if you can qualify for a personal loan through your credit union or bank, since these come with better interest rates than credit cards or expensive payday loans.
Earn Extra Money. Capitalize On Your Hobbies
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21. Sell some of your stuff. A good old-fashioned yard sell could get you a few hundred bucks by the end of the weekend. Online venues like eBay and Craigslist have made selling easier than ever, so there is really no excuse when it comes to purging those gadgets and sporting goods that are just taking up space in your home. Decluttering is also a great way to reduce stress, which may get you motivated to organize other aspects of your life besides finances.
22. Sign up for moneymaking opportunities. You won’t get rich by taking internet surveys or reading emails, but some websites allow you to make a few bucks or earn points you can use toward gift cards. A similar option that requires you to get out of the house is becoming a mystery shopper, which comes with extra perks like free meals and shopping trips. As long as these opportunities don’t require you to pay any money up front, they have the potential to boost your savings.
23. Turn your hobby into a source of income. Whether you like to knit, design patterns, write, or repurpose old jewelry, you may be able to supplement your existing income. Developing a blog is a great way to earn a little extra money, but you have to be in it for the long-haul to develop a solid following to where monetizing it makes sense. Websites like Etsy are ideal for listing handmade crafts and vintage items, and don’t forget local craft shows and boutiques that may be interested in your wares.
Small Changes and Daily Saving Adds Up Over Time
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You may be wondering how any of these tips will lead to substantial savings. While it’s difficult to see the end result from counting pennies, it’s the habit of putting back extra money that makes all the difference.
We’re all familiar with the example of that daily cup of coffee. Going to a trendy coffee shop before work every morning adds up to around $25 a week. If you save that $5 a day rather than spend it on coffee, which you can easily brew at home, you’ve earned yourself $1,300 in a year. Imagine how much you could save just by cutting a few extra dollars here and there.
Consider the 52 Week Money Challenge. This is a simple concept that starts out with saving $1.00 the first week, $2.00 the second week, all the way to the last week of the year when you put $52 into savings. Although it doesn’t sound like much, sticking with this plan means that you would have saved $1,378 in a year. Had you combined that with the money saved from skipping that daily Starbucks latte, that’s $2,678 bucks in the bank, not including interest earned.
Boost the Balance in Your Savings Account
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Adding to your savings account is essential, but having an account that works to your advantage is just as important. Shop around for the best interest rates, but consider bank fees as well before deciding where to store your cash. Credit unions often have the best rates with the most flexibility, while online banks have some of the highest yield rates around.
When opening a savings account, consider the following:
- Money markets offer better rates than a basic checking account, but they aren’t as good as a high yield CD. They do provide you with easy access to your money, within reason, so they’re a good option if you want flexibility.
- CDs have higher yields but you’ll be subjected to withdrawal penalties. CDs are best if you need a savings option that prohibits you from taking out money for a certain length of time.
This doesn’t mean you can’t stick with a traditional savings account. Developing a good savings habit along with self-discipline means that you’ll be saving money no matter what, regardless of how good the returns are on your account.
What are You Waiting For?
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So when should you start saving? Yesterday! Rather than feel discouraged that you haven’t taken saving seriously, start now, even if that means just putting a dollar bill in a jar. Start packing your lunch, eat more leftovers, buy generic, or rent movies from your local library. The possibilities for cutting costs are endless. You only need to evaluate your current spending habits and get creative. Before long, you’ll be well on your way to enjoying a hefty sum in your bank account.
20+ Money Saving Tips You Can't Afford To Ignore by Jon Fritz