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Deep down, we all know that saving money is crucial for our financial well-being. But how and where to start? These tips for how to save money will not only work, but they will have a minimal impact on your current lifestyle.
It is no secret that the majority of Americans are living paycheck to paycheck. However, more and more young adults are looking for ways to save money fast and effectively.
Nobody wants to get into a situation where things get tough, and paying for their monthly expenses becomes challenging.
I tried to find the universal saving recipe for everyone to use. But at the end of the day, it always depends on our own financial habits. So I focused on tips that most people can benefit from in their daily life.
These tips can be grouped into 5 different categories: financial tools, monthly expenses, earning more, use your time, and bank services.
4 Tips For How To Save Money With Financial Tools
1 – Assessing Your Financial Situation
Before learning how to save money, you need to assess your financial situation. There is no secret, if you want to know how to run, you need to learn how to walk first.
Assessing your current situation allows you to determine how far or how close you are from reaching your financial goals.
A great way to start is by calculating your monthly income and your monthly expenses. Then, if you subtract your expenses from your earnings, you get your savings.
Your savings is the money that will accumulate in your checking account month after month.
If your savings are positive, it means that you are living within your means because you save money regularly.
If your savings are negative, it means that you are overspending because you spend more money than what you earn.
2 – Automating Your Savings
A few studies have shown that people tend to spend the majority of the money held in their checking accounts.
In other words, no matter how much money they have in checking account, there won’t be much left at the end of the month. So the more they have, the more they spend.
However, there is a way you can trick yourself to spend less money. Automating your savings.
This strategy is simple. Every time you receive a paycheck in your bank account, transfer a small amount to your savings account.
You don’t even have to do it yourself. You can schedule automatic transfers to your savings account on certain days of the month. That way, you won’t be tempted to spend it because you won’t see it.
But make sure to keep enough money to pay for your essential expenses like food, utilities, rent, loans, etc …
3 – The Cash-Only Strategy
For a lot of people, credit cards are the reason why they spend so much money.
It can be hard to keep track of how much is spent unless you regularly look at your credit card statements.
If you find yourself in this situation, you are not the only one, and there is no need to panic. You can try the cash-only method.
It is a great way to save money because it is easier to track how much money is left. It can also help you regain control of your money by being aware of your spendings.
Once your wallet is empty, you won’t have any other choice than to stop spending more money.
4 – The Power Of Budgeting
Budgeting is one of the foundations of personal finance. No matter how much money you earn, if you don’t know how to budget or control your spendings, you won’t go far.
It’s easy to spend money here and there on small purchases without even noticing it.
But at the end of the month, all your small spendings become significant when you add them together. And it’s one of the reasons we don’t know where our money goes.
That is why budgeting can help you improve your finances by better controlling your spendings.
If you want to learn more about how budgeting can take your finances to the next level, check out our budget guide.
6 Tips For How To Save Money By Cutting Expenses
5 – Cooking Large Portions
Have you ever wondered how much money you spend when eating out for lunch? It can be pretty expensive.
If we take an average of $12 per lunch, it will cost you more than $250 per month or more than $3000 per year.
A great tip for how to save money on food is to cook large portions when you prepare dinner. That way, you can pack leftovers for lunch.
Another advantage of cooking large portions is to prevent overeating.
By splitting the food you cook into equal size servings, you can eat one serving at a time and freeze the rest for the days when you don’t want to cook.
6 – How To Save Money On Groceries
When we think about it, grocery shopping is a big part of our monthly spendings. So the more we optimized our grocery strategy, the more money we can save.
I’m sure I could write an entire article on tips for how to save money on groceries. But for now, let’s look at the following list.
- Buying food in bulk will increase the grocery bill you have to pay at the cashier, but it has two advantages.
- It will reduce the number of times you go grocery shopping every month
- The cost per meal will be much cheaper than if you were to buy smaller quantities
- Looking for massive sales on specific items you use all the time. When grocery stores have too many of the same products in stock, they tend to run massive sales. That is the perfect time for you to buy in bulk.
- Never go to the grocery store when you are hungry or without your grocery shopping list. If you do, it won’t end up well for your wallet. The probability of overspending and not buying what you needed will be too high.
- All major grocery stores offer online shopping delivery. Use it to create your grocery shopping list to know exactly how much you are going to spend. Then, you just have to take it with you to the physical grocery store and follow it.
7 – Cutting Back On Eating Out
Cutting back on eating out can save you a lot of money, but it can be hard to do. That is why I always like to ask my clients is the following question. Why are you eating out?
Answering this question is not as easy as it seems. Sometimes, people have been eating out for years, and it is just part of their routine.
When looking into our habits, the reason is as important as the solution.
So take a few minutes and ask yourself why. Is it because you want to meet your friends? Is it because you don’t want to cook?
Once you know your why, you can find a cheaper solution and get a similar outcome.
For example, host a potluck with your friends if you want to keep your social life. Pay for a food delivery service to get cheaper and excellent food quality.
The possibilities are endless, so don’t be afraid to try a few of them.
8 – Buying Clothes
People love buying and wearing new clothes all the time. And sometimes, they can’t even stop themselves from buying clothes.
While they might feel good about it, buying new clothes can quickly become a money pit. If you don’t keep track of these expenses, you might not understand where your money went at the end of the month.
Luckily for us, there are ways to both buy clothes and save money at the same time. For example, you can shop in outlets, thrift stores, or during sales events.
The great news about thrift stores is that you can make a few bucks by selling your own clothes. So it is a win-win.
9 – Lowering Your Monthly Subscriptions
It’s easy to subscribe to monthly subscriptions without even thinking about it. They are usually not that expensive but combined they add up to a lot of money.
A great exercise to do is to go over all your subscriptions regularly to see if you still need them. Here are the 4 steps you can follow.
- List all your monthly subscriptions (one per line)
- Determine if you still need it or if you should cancel it for each line
- For the ones you don’t need anymore, go ahead and cancel them
- For the ones you still need, look for cheaper alternatives
The most popular monthly subscriptions are internet plans, phone plans, music, magazines, streaming, games, cable TV, and apps.
10 – How To Save Money On Utilities
Reducing our utility usage is a great way to save a lot of money. And since we have to pay our utilities every month, it means that we can save money every month!
Take a look at your utility bills and analyze your usage to understand what is going on. You might want to write down which appliances you are using and when to see if there is any correlation with your usage.
For example, there are a lot of ways to optimize your electricity, gas, or water consumption by being mindful of it.
Another great way to lower your utility bills is to sign in to your utility provider website because most of them are giving you tips for free.
Also, check out this article if you want to learn more about tips on how to save money on utilities.
4 Tips For How To Save Money By Earning More
11 – Tax Refunds
Most Americans tend to consider their tax refunds as extra money they can spend on anything they desire. However, there’s another way you can use them.
If you are not using this cash to pay for your monthly expenses, you will hardly miss it. Why not using it as a contribution to your savings.
12 – Work Bonuses
Work bonuses are the best! Your manager notifies your work and decides to recognize your effort by giving you a bonus.
But, similarly to your tax refunds, it’s a great idea to use your work bonuses as a savings opportunity.
If you deserve a bonus but didn’t get one, you should start the conversation with your manager. Sometimes, just talking about it can unlock it. You should go to your manager with the reasons why you deserve a bonus and ask what else you should do to get it.
13 – Birthday Gifts
Birthdays are usually synonym of presents. Some of us are still lucky enough to receive birthday presents from our friends and families.
Next time they ask you what you want, be prepared. Ask for gifts that can help you improve your financial situation.
For example, an app to track your monthly expenses, a book to learn how to invest, or professional services to help you make more out of your money.
14 – Debt-Free
We usually spend years to pay off our debts. And then we increase our monthly expenses because we have more money in our bank accounts.
However, a great way to save money is to transfer the amount of your old debt payments to your savings every month. It won’t impact your lifestyle because this money was already going to your creditors.
If you still carry debt, try to make extra payments towards it every month. It will allow you to pay your debt faster and save money on interests.
4 Tips For How To Save Money By Using Your Time
15 – Free Activities
Per Bankrate, 68% of Americans have skipped paid activities in the past year because of their cost. However, it doesn’t mean you have to stay home instead.
There are a lot of free activities to do in family. Do some research and make a list of free activities to do when you don’t want to stay home.
For example, checkout your city monthly events, go on a hike, visit your local library, go to the park to play with your kids, or give time to help people in need.
16 – Decluttering
Decluttering has a positive double effect because it allows you to earn extra cash and make more space in your home!
Take a look for items you don’t use in your house, garage, or anywhere else, and then sell them online.
They are several platforms you can use to sell your used items like Craigslist, Letgo, or Facebook MarketPlace. They connect you directly with potential buyers in your local area. In other words, way you save money by not paying for shipping services.
17 – Side Hustle
Another way to save money is to earn money. So why not starting a side hustle to get extra cash? A side hustle could be something you always wanted to do or something more mainstream like driver.
The great benefit of side hustles is having the ability to decide when to work.
18 – Low-Risk Investment Accounts
Another way to save money is to make your savings work for you. Because keeping your savings in traditional bank accounts won’t help you to get wealthy.
You also don’t want to keep your funds in high-risk accounts. However, low-risk accounts are the perfect investment tool for your savings because they guarantee your principal.
The most popular low-risk investment account is the high-yield savings account.
3 Tips For How To Save Money Using Bank Services
19 – Savings Accounts
Most of the time, people open their savings accounts in the same bank of their checking accounts. The issue with it is that the probability of spending your savings is too high due to their high accessibly.
Opening a savings account in a different bank will help you keep your cash longer. Saving money can also be synonym of not spending it.
20 – New Bank Accounts
Some banks offer “welcome” bonuses to new clients when they open a new bank account. It can be a great way to earn extra cash to grow your savings.
In general, these offers required you to follow a few rules like setting up direct deposits and keep your account open for a certain amount of time.
21 – New Credit Cards
Similarly to our last point, some financial institutions offer “welcome” bonuses to clients when they open a new credit card. To unlock the bonus, you usually need to spend a specific amount of money within a certain amount of time.
Be careful with this strategy. Your goal is to save money, not to buy more thing to get a bonus. Get a credit card where you need to spend no more than your monthly expenses to unlock the bonus. Always stay in control of your finances no matter what.
In conclusion, no matter what your current financial situation is, I hope that you find these tips for how to save money useful.
Don’t wait until you forget about what you just read. Take action and start saving money today!