How to Get Better at Saving Money
We all know that saving starts with good budgeting. It’s easy to distribute your income across different spending categories on a piece of paper or in an app, but actually adhering to the plan in practice can be really hard.
In fact, all your financial goals, like getting rid of debt, depend on saving money. That’s why in this article, we’ll review effective money-saving tips that can serve as guidelines for you. Generally speaking, most of them revolve around changing your attitude toward your money rather than your attitude toward your income (although an increase in your income can come in handy as well).
So, to get you on the right track, we will take a look at cutting costs, improving money management, and adopting new habits.
Tips for cutting costs
Cancel unnecessary subscriptions
All sorts of subscription services and membership cards fall in this category. We used to subscribe to magazines (and some of us still do), but these days streaming services are very popular. Also, gym membership fees or car wash privileges are similar recurring expenses.
The issue with subscription-based services is: most of them are offered for free during a promotional period, and some of us forget to cancel them when we no longer need them. Terms and conditions of service and account settings play an important role, too. For example, if your profile is set to automatically renew the subscription, you may find yourself paying for a service you don’t use or you use very little.
We know it’s only 12 bucks a month, but the numbers quickly add up. One common strategy to cut down on costs is to share accounts with friends and family, so try doing that whenever possible.
Plan your grocery shopping
Entering into a supermarket without a grocery shopping list is a recipe for disaster, especially for personalities that are prone to suggestibility or persons that go shopping when they’re hungry. The fact that you have a fixed budget for groceries is not enough to save money on its own, especially so if you spend it only on items that are within your field of view and to satisfy momentary cravings.
Marketing works against you here, so you want to limit the chance of impulse purchases (do you really need all those snacks?). Preparing a list in advance will help keep you focused on getting the products you need, provided that you stick to it.
And on that note – buy staples in bulk, particularly if the deal is good. A 20-lb bag of flour will always be cheaper than four 5-lb bags of flour. Bulk purchases save a lot of money if the products don’t have an expiry date (like tampons, soap, wine, or toilet paper). Obviously, you don’t do this with expirables like bananas.
Prepare your own meals
It’s easy to lose track of the amount of money you spend on food away from home. This is especially true if you live alone, but it applies to everyone who leaves their house to go to work. So, regardless of whether we are talking about a brunch before your commute, lunch on your break, or dining out – most of these costs are wasteful and excessive. Did you know that restaurants add up to a 300% markup on food and drinks served at their tables?
Packing a lunch for your break is the least you can do. Admittedly, cooking meals each day can be a drag, but there are a lot of strategies you can employ to make the process more efficient. For one, when you do cook, you can cook in large quantities and freeze the leftovers. These frozen meals are very handy on days when you don’t feel like preparing a meal.
Speaking of, there is a way to skip (or at least streamline) meal preparation and still save on money. If you use a good meal delivery service, it will save you time on meal planning and grocery shopping. The ingredients come with recipes, so you’ll save on time, too.
Make your own coffee
Same principle as dining out applies here, as well. The markup on drinks in bars and restaurants is substantial – regardless of whether we are talking about soft drinks, hot drinks, or alcohol. Takeaway latte costs only $5, but if you get it often enough, it will become an unnecessary burden on your daily budget.
No one says you should drop it all together (although a case can be made for that, too). Either reduce consumption or find a way to make it on your own. Even if you are a coffee snob and you want only high-quality beans – roast them and grind them at home. This will not only save you some money, but it will also fill your home with a delicious, fresh-coffee-bean smell.
Re-evaluate your recurring bills
These are the typical utility bills: landline, cable, internet, heating, and such. Needs can change and the original plan you’ve chosen a few months (or years) ago might no longer be viable for your needs today. At the same time, it’s quite common to find a number of competing offers for the same service within a local area, so you can potentially find the same level of service at a lower rate elsewhere. All it takes is doing some research.
In case you don’t have the time or energy to research this on your own, there are budgeting apps that can do this for you. Of course, one way or the other, they will take their cut of the deal, but in the long run, switching to a cheaper option will reduce your recurring or fixed monthly expenses.
Reduce energy consumption
Some would argue that making your home energy-efficient is better for the whole planet. Maybe you personally don’t really care about that whole discussion, but being careful with energy consumption can definitely reflect in your bills – they will be much cheaper.
This includes things like air conditioning. Do you really need the same temperature in every room? Or you can choose a couple of rooms you want to keep cool during most of the day? Same goes for heating in colder climates.
If you live in your own place, and you intend to spend the next decade there, you can air-seal the home. The idea is to make your window and door frames airtight. During the summer, this will keep the cool air inside, and during winter, it will keep the hot air in.
All of these strategies help pay less for energy bills.
Time your purchases according to sale periods
Like any other budgeting ploy, this one simply requires planning and forward-thinking to cut spending significantly. Probably the most typical example of this is Black Friday or Cyber Monday shopping, and if you postpone your purchase until they start the sales, you can get a bargain on personal electronics.
Of course, there are many other examples, and they are usually industry-specific or coincide with the end of the season. If you want to save, you buy winter clothes and skiing equipment in March, and you buy your bathing suit and diving gear in September. Get gym membership (or fitness equipment) in January, and buy furniture around Memorial day.
If you don’t want to bother and learn the cycles of sale periods, you can use software to do the work for you. There are extensions (Shoptagr, PoachIt) and apps (like Zulily, Countr, Shop It To Me) that will allow you to create a list of wants and they will send a notification your way when the item is on sale.
Buy high-quality clothing and shoes
Wait a minute. Aren’t branded clothes an item that screams excessive spending on your savings list? Obviously, you’d be wasting your hard-earned buck if they aren’t necessary. We are talking about items made from high-quality materials you actually need on a day-to-dayday basis, and not about fashionable articles of clothing. There is a metric that can bring some sense into this approach, and it’s called cost-per-wear.
The formula is along the lines of: the money you spent buying the piece divided by the times you actually wore it. For example, if you spend $1,000 on high-quality boots, and you end up wearing them 1,000 times, each time you wear them costs you only $1. And if you go for the cheaper boots of poor quality sold at $250, but you only wear them 100 times, then each wearing costs you $2.5. So it’s not so much about brands, as it’s about high-quality wear. There’s a saying that goes I’m not rich enough to buy cheap things, and this is exactly what it refers to.
Please note that the measure of cost-per-wear doesn’t work on kids, because most clothes and shoes for children aren’t worn for periods of time that are long enough to produce a favorable wearing cost. Even if a pair of shoes is of great quality, they’ll outgrow them in what seems like a week.
Downsize on cars
This applies to households with several cars. In essence, the idea is to re-evaluate whether the cost of the extra car is justified. And if the household members can get by with one car less – usually, by relying on local public transportation options, bikes, or e-scooters – then you can do away with the excess cost.
Downsizing on a car particularly applies to those who lease. The deal you can get on a car lease for a less expensive vehicle can significantly cut down on monthly costs. Of course, to do this, you need to be ready to forfeit the status that comes with driving a flashy car.
Do-it-yourself (DIY)
You can cut occasional expenses by going DIY on a number of activities. You can consider taking over tasks such as gift wrapping, washing the car, gardening, estate maintenance, and repairs. But you can also DIY the gifts, toys for the kids, outdoor furniture, simple home makeover projects… This list can go on for a while.
You can DIY everything, as long as you have the skills (or are ready to acquire them), and, most importantly, if the project doesn’t make your savings go down the drain. For example, if you need an elaborate set of tools to complete the project, it might be better to hire a professional instead of investing in equipment you won’t use. The alternative is to borrow these tools instead of buying them.
Arrange a staycation
If going on a holiday means plunging into debt, maybe you need to skip it this year. This is an intimate decision and depends on your character. Some people prefer to reach their financial goals as soon as possible, and they embrace a frugal lifestyle to achieve this.
No one argues that you don’t need time off from work. We are talking about a staycation, or a vacation within your local area, and this can help you save a lot of money. Our minds are very powerful and they can be stimulated by all kinds of fresh input.
Learning a new skill (playing a musical instrument, cooking, or a pottery class), a hiking/camping trip, or volunteering your time to a local charity can give you a fresh perspective on life, without the cost associated with a holiday abroad.
Improve money management
Introducing simple budgeting habits can help you save more money in a big way. Some of them depend on your behavior, others can be safely delegated to technology. Let’s take a look.
Automate your savings with an app
Banks have always allowed clients to transfer money directly from their checking account to a savings account. This used to involve a physical visit to the bank, filling out forms, and specifying the terms of the transfer. These days, you can set this up to happen automatically through an app. As soon as your regular income is added to the account, a portion of the money can be sent to a sinking fund.
Some argue that it’s best to have both accounts in the same bank so as to cut down on fees. Others argue that it’s best to transfer savings to a different bank so that the sinking fund is not as accessible as your other accounts.
Whatever you choose, setting up the automatic transfer of money to your savings account will improve your overall budgeting.
Start collecting spare change
No, no one would ask you to reinstate the long-forgotten piggy bank. If you do have kids around though, they might learn a valuable lesson on budgeting if they see how quickly the extra coins and bills add up.
In general, we are talking apps. Originally, apps like Acorns were used to round up purchases and invest the change on the market. Today, you can easily find a number of apps that are not focused on micro-investing; rather, they transfer the change into any kind of account you want.
You aren’t going to make a big purchase from your spare change (unless you save for a long period of time), but simply having the amount of extra cash that goes down the drain rounded up in a figure will showcase what saving can look like for you.
Buy with cash whenever possible
This money management tip is especially handy for those who use the envelope budgeting system. Since the cash is divided into separate envelopes (according to the spending category) you can carry a specific amount of cash on you, which is ultimately safe.
The reason? Paying with cash hurts. A study done by a marketing professor at the University of Toronto Scarborough showed that paying with cash causes physical pain. As you can imagine, people value their money more if they exchange it for the stuff they get (opposed to just swiping the card).
Some researchers take this concept even further and note significant differences between contactless payment (tap to pay) and swiping a card (and entering a PIN code). Less effort results in wasteful spending, and the effortless payment through RFID chips is the worst in this regard.
Set up a no-spend day
Making a commitment not to spend money during a certain period of time is more of a thought (and will) exercise than it is a money-saving mechanism. Nevertheless, it can teach you a lot about your daily spending habits.
You can do this in different modalities. Some choose not to spend for a day (for example, each Monday). Others commit not to spend anything during the weekend. It’s up to you, and if you are just starting to gain control over your personal finances, one day without spending is more than enough. A more forgiving alternative to the “no-spend” day is to exclude non-essential purchases during the week.
This will draw attention to wants as opposed to needs, or rather, it will prove that you can go without acting on every marketing campaign thrown your way.
Curb online shopping
There is more than one way to make online shopping less accessible. Some add an extra layer in the buying process (and hopefully think twice before making a purchase) by removing their billing info from the browser. This means that every time you want to buy something online you will need to enter the payment details in a form.
This works in reducing the temptation to make an impulse purchase from the comfort of your home (or through your phone).
Postpone major purchases
Speaking of impulse purchases, what if you add an extra step before you close a deal? One common strategy is to postpone making a purchase, especially those that could potentially reduce your monthly budget in a major way.
People enact different rules to stick to this plan. For example, you can put all purchases above $50 in a wish list and revisit the list after a set period of time (say a month). If the purchase still sounds like a good idea after all that time, then you should probably go ahead and buy the item.
Again, this plan is not foolproof, and you might still end up making a bad purchase. However, the fact that you could postpone the purchase in the first place will teach you a lot about your spending habits, as well as the type of mistakes you make when you indiscriminately buy everything that catches your eye.
Set a specific sinking fund
If you don’t have a goal, you will miss it every single time. Some of us get motivated more easily if there is an exact label, a bull’s eye, if you will, for the savings. Those that use the envelope system can literally sketch up an image that will serve them as a reminder.
There are two ways to do this: you can either open a new account, or you can add a ledger to an existing account for the savings. What matters is to have a specific goal (for example, a new car fund) and to look back at it after several months.
The fact that you managed to save up an X amount of money will prove to you that you can save.
Set a long-term goal
This point is similar to the one above with one key difference – the progress on this financial goal is really slow. Typical examples of this are: saving $5,000 a year in the next fifteen years or adding at least $2,000 a year to your retirement account.
Although such goals are projected well into the future, successful budgeting for them depends on day-to-day spending. The benefit of having long-term financial goals is the fact that this would improve your accountability for impulse and trivial purchases, or wasteful habits.
Other tips
Before reaching this journey’s end, here are a couple of extra tips on how you can get better at saving money so that you can grow your wealth and reduce stress caused by mismanaged finances.
Sell what you don’t need
This is practically a callback to the garage sale of old. There is a buyer for every item you own, you just need to find them. Even though you deem certain objects to be worthless, someone out there would pay good money to get them, especially if they are vintage or rare.
You can post an ad on popular sites or you can physically go to a flea market. While this is not a saving technique (in the strict sense of the word), it will reduce the clutter in your home, and it will get you some fresh cash.
Some go a step further and embrace minimalism as a way of life.
Shop around
The underlying idea of shopping around is that there is always a better offer on the market than the one you are currently bound to. This applies to everything you can think of. You can start by checking account (and transfer) fees in different banks, comparing terms of insurance policies, or looking for a way to refinance existing loans.
Although these kinds of alternatives can potentially save us a lot of money, most of us don’t have the time and energy to find the best deal. As a shortcut, you can rely on apps and blogs that compare competing offers (on just about anything) to increase your savings.
Ask for discounts
Most of us don’t have the habit of asking for a discount, which is a shame, because discounts can significantly reduce spending. Particularly if you belong to a group that is part of a special discount category, like military families (and veterans), students, seniors, or teachers.
This approach can be extended to membership in all sorts of clubs. We are talking about loyalty cards, rewards, coupons, and vouchers – if they can’t get you free stuff, they can at least get you a discounted rate.
Lead a frugal life
Granted, not everyone is able or willing to adopt a frugal lifestyle. For example, those that have toddlers in the household can’t afford to cut costs on their kids, although adults can certainly downsize what they spend on themselves.
Sometimes, living below your means is crucial to achieving a financial goal like debt repayment. Can you attempt frugality in your life for a couple of years, so that you can achieve a debt-free life in the decades ahead? It’s up to you to decide if the sacrifice is worth it in the long run.
In closing
There are dozens of ways to save money. Getting a second job or creating a new income stream can help you save, but most of the time, you can save a lot by simply changing your money habits.
You can get rid of excessive costs – for this, you will need to analyze a lot of items. The saving habits can start with automation, but, in the end, you still have to alter your spending behavior if you want to save some buck.
Everyone can do it, and it can be a great step toward achieving your financial goals.
