If you’re looking for clever ways to save money, keep reading; we have eight outside-the-box money-saving ideas!
Let’s face it. Life is likely only going to get more expensive. And with prices rising regularly on everything from real estate to gas and groceries, it’s more important than ever that we learn how to set aside some of our money every month for our future selves.
So when it comes to saving money in its truest form, it’s not really something you can do by spending less at your local discount grocery store by shopping the sales. (And yes, it’s absolutely smart to count your pennies, but being frugal is only part of the equation.)
Megan Kopka, a certified financial planner and registered financial advisor with Kopka Financial, LLC, puts it like this: “Saving means SAVING … you are NOT saving when you are shopping. (That) falls under SPENDING.”
In this article, we’ll discuss eight clever ways to save money, so you can stay within budget and meet your financial goals.
1. Automate Your Savings
Kopka shares this strategy with her clients: “The best thing any woman can do for herself is set up automatic savings, preferably automatic transfers from savings to investing. For example, you can automatically transfer funds from your bank to your IRA.”
She says you can use this method to save for short-term goals, such as a vacation or the down payment for a car or home, as well as long-term savings goals, like retirement. (Think 401(k) and Individual Retirement Accounts).
You can set up some of these automatically through your employer’s payroll and through direct deposits using your checking account. That means you should be moving a percentage of every paycheck to a retirement account, a percentage to your savings account, and then the rest to spend. Some people think of this as a bucket method, where you pay yourself first, placing money in separate buckets for different goals.
Kopka practices what she preaches and uses Acorns to automate some of her savings.
“A client turned me on to it,” she said. “Think of the philosophy some stores have when they ask, ‘Would you like to round up your balance for XYZ non-profit today?’” She says Acorns is a program that you can use to do that for yourself. Every transaction you make automatically rounds up your total and sends the change to your Acorn account. There, it accrues and automatically invests in an ETF (of your choice) into the market, she says.
2. Learn to Love Leftovers
There are a variety of other ways to cut your spending so you can save more for your future goals. One place to do this is by taking a look at how much you spend on food, including what you eat at home and all of the meals you eat away from home. You may be surprised at how much of your monthly budget is consumed by the pre-prepared food you buy.
You aren’t alone. Americans now spend more money on food they buy away from home, such as at restaurants or by ordering takeout, than on food they cook and eat at home. Research on consumer dining habits from the U.S. Department of Agriculture’s Economic Research Service revealed that adults spent $1.5 trillion on food purchased away from home. In comparison, they spent $1.1 trillion on food at home during the same time period.
How can you save money on what you eat? Find some recipes you and your family members love and begin meal planning and meal prepping.
Carefully planning precisely what you will eat — and when — can help you streamline your grocery list and reduce food waste. You can cook extra portions to freeze as leftovers for later that week, reduce costs by choosing ingredients that work for more than one meal, and reduce impulse purchases while grocery shopping if you already have all your meals and snacks planned out.
It’s a great way to slash your food costs.
Pro tip: To avoid impulse purchases and food waste, it’s smart to shop from your pantry and fridge first before making another trip to the grocery store. When you do go to local grocery stores, remember to use coupons and seek other creative ways to stretch your food budget. Remember that vegetables, beans, and rice are often low-cost foods that are nutritious and tasty.
3. Switch Your Insurance Carrier
Sometimes, if you have been with the same insurance agent or broker for a few years, your insurance rates, or premiums, for your home and auto plans have likely crept up. Even if you ask your agent for a better rate, you may not always qualify for the best (and lowest) rates reserved for new customers. That’s why it pays to shop around for new home and auto insurance every year or so.
If you like to shop online from the comfort of your couch, the folks at NerdWallet keep track of who charges what for car insurance so you can get a sense of what kind of monthly payments you might be charged, and how much you can potentially save at various insurance companies in the U.S.
4. Request a Lower Interest Rate on a Credit Card
There’s an old saying that says the answer is always ‘no’ if you don’t ask. You can apply that philosophy to asking for a raise at work or even requesting your credit card lender to lower the interest rate you pay on a high-interest account. And while many people couldn’t imagine this might work, don’t immediately dismiss the idea.
A recent LendingTree report revealed that 76% of individuals who requested a lower interest rate on a credit card within the past 12 months were successful, with an average reduction of 6.5 percentage points. Depending on your balance, that could potentially save you hundreds or more in interest each year. You could also take this a step further, depending on your credit score, and apply for a zero-interest credit card and transfer a high balance over to the new card.
5. Request a Higher Interest Rate on Your Savings Account
In recent years, as interest rates on money market and other savings accounts have improved, not everyone has seen an increase in what they earn on their money. If you already had a high-yield savings account when the rates went up, you may be with a financial institution that did not automatically adjust for current account holders.
So, if you find yourself in that situation, contact your financial institution and ask for the best interest rate they are advertising for new customers. Be prepared to take your business elsewhere, or at least tell them that’s what you plan to do, if they balk at the request.
Are you wondering if you can earn more than what you are currently earning? Bankrate tracks the highest interest rates offered by financial institutions each month and reports their findings here.
6. Learn to Live With Less
Learning to live with less, also known as living below your means, sounds like a really wise thing to do in theory, but can also be extremely challenging to accomplish when you are constantly bombarded with ways to spend your hard-earned money everywhere you look.
So, how exactly can you learn to live with less? For some, it may mean taking your next raise and moving it directly into your 401(k) to help fund your retirement for the future. It could also mean doing things such as:
- Buying pre-owned cars instead of new ones
- Living in a home or apartment that costs less than you can afford
- Moving to a less expensive city or state (one without income taxes)
- Taking fewer vacations
- Choosing a state university over a private college
- Buying generic items instead of name-brand products
- Ditching expendables like paper towels and instead using cloth towels and napkins
7. Limit Your Streaming Services and Memberships
If you haven’t taken a close look at where your money goes each month, you may be surprised to find how much you are shelling out for streaming services for everything from music, movies, TV shows, and even sporting events and other entertainment. You should also look at how much you spend on recurring expenses such as gym memberships and auto clubs, especially if there are less expensive options available to you.
One survey from Self found that nearly 86% of respondents said they have at least one paid subscription they don’t use each month at a cost of about $33. The survey found that Amazon Prime was the most common paid subscription that people haven’t used in the last month, while Netflix was reported as the most unused TV streaming service, according to survey findings.
When it comes to digital entertainment, you can now find many of the same modern amenities available at your local library for free. Whether you want to stream TV and movies or check out e-books or audiobooks, you can now find these services for free at many libraries via platforms like Libby, OverDrive, Hoopla, and Kanopy.
9. Budget Backwards
Certified financial planner Filip Telibasa, owner and planner at Benzina Wealth, is a big advocate for what he calls reverse budgeting, or budgeting backward.
“The basics of the approach is that we first set up an automated savings plan for clients that is tied to their goals,” he says. To do that, he asks clients to tell him what they want to accomplish in life, in the short term and over their lifetime, so they are making sure their bills are paid, but they are also saving for the things that truly matter to them.
This method is often called reverse budgeting because the funds to pay for all of those goals are taken out of someone’s account first each pay period (or month) instead of those items being the last thing you save for.
“It allows you to make sure that what’s important to you is being fulfilled,” Telibasa says. “If you do have money left over, you can spend it freely and not have buyer’s remorse.”
Clever Ways to Save Money Wrapup
Whether you want to pay for a new home, save more for retirement, or build up an emergency fund, the act of saving more money every month can set you on a path to financial freedom. While it may require changing your spending habits, the small steps you take now can make a big difference down the road.