We all know we need to save money for the future. But that’s easier said than done when you don’t have much expendable income or are living paycheck to paycheck. Do you have to be born rich to have a stable, secure financial future? Not at all. Here are a few ways to lower your expenses without having to sacrifice all the things that make life fun.
Learning to be a better grocery shopper is one of the best ways to save money. After all, we all need to eat.
Looking at your local supermarket’s weekly circular is a great way to save. There, you can check what’s on sale. It might be a good idea to opt for generic brands over name brands, as many times the quality of the products are comparable, so while you’re saving money, you’re not necessarily compromising on quality.
You can also save on groceries by applying for your local supermarket’s reward card or joining a wholesaler, such as Costco. This will allow you to buy items at marked down prices, so you can buy in bulk and reduce the number of times you have to shop for groceries, which also helps you save on gas.
Opting for homemade meals can save you a lot. Many of us buy lunch Monday through Friday, which costs about $10 per day, adding up to roughly $200 per month. This doesn’t even account for breakfast, coffee, or nights out. While each meal out might not seem like much, it all adds up.
By the time you retire, bringing lunch to work just a few times per week will have added up to more savings than you might expect. Not to mention smart meal prepping means you only have to cook once over the weekend to have a home-cooked lunch every weekday. To spice things up, prepare as many different meals as you’d like so you don’t get bored of what you’re eating.
And by turning some of your nights out into more nights in, you can still have fun while saving money on dinner, alcohol, and possibly a cab ride home.
We all have more monthly subscriptions than we probably need. In fact, I’m sure you probably have a few that you’ve forgotten you’re still paying for. In fact, according to a Waterstone Management Group survey, 84% of Americans spend 40% more on their subscriptions than they think they do ($111.61/mo vs. $79.74/mo).
So look through your recurring subscriptions by checking your account statements and your PayPal. While you might want to keep your Netflix and gym membership, maybe you don’t need all that other stuff. You can also split an account with friends or family, lowering the amount you have to pay.
Many credit and debit cards offer cash back deals, which give you back a percentage of what you’ve paid when you shop at certain places. Some of these cards offer as much as 5–6% cash back—and some do so for all retail purchases.
This means that if you’re spending $3,200 per year on groceries (about average for most Americans), you could get as much as $160 to $192 back in your pocket just by using the right credit card. But sometimes you have to manually activate these rewards, which can change on a monthly basis. Many people often forget to do this and end up not taking advantage of some of the most common and useful cashback rewards, such as on gas spending or restaurant meals.
So look through your cards’ rewards, and take advantage of all the cash back rewards you can.
Today, we rely heavily on our credit cards. But it can be hard to track how much money we’re spending when we can’t physically see that money leaving our wallets. Using cash lets you see exactly how much you’re spending, which helps curb it. In fact, an older study from researchers at MIT found that shoppers spend up to 100% more when using credit cards instead of cash. And this was back in 2001!
So the next time you plan on going shopping, maybe consider bringing your budget with you in cash, or even leaving your credit card at home. This way, you’re not only budgeting up front for what you’re willing to spend, you’ll be far less likely to make small impulse purchases (it’s also way more of a hassle to break large bills).
Paying your bills as soon as you get paid makes it easier to pay all of your bills on time, reducing late fees. Similarly, transferring money to your savings as soon as you get paid reduces the urge to splurge and forces you to budget the rest of your money.
Saving also becomes easier if you don’t have to think about it, so setting up automatic savings can help increase the money you set aside. Some banks even round up every expense to the nearest dollar and put the difference directly into your savings, helping you save with each purchase.
We can’t predict the future, but we can be prepared for it. That’s why having money set aside in a rainy day fund can be life changing when it comes to dealing with emergencies. Just choose an amount between $500 to $1,000. And the next time you have that money in your bank account, set it aside. Refrain from using this money unless it’s absolutely necessary. Like a Health Savings Account or a retirement account, this money is only to be used in case of an emergency.
Speaking of retirement accounts, looking into and starting a retirement plan (like an IRA or a 401k) is one of the best ways to save for your future. An individual retirement account (IRA) allows you to set aside money for retirement that you don’t have to pay taxes on until you begin withdrawing it. This can make a huge difference to your retirement nest egg because of compound interest that accumulates from all the taxes you deferred. Anyone can have an IRA.
A 401k, on the other hand, is often an option when you’re working full-time for an employer. This type of retirement account allows you to set aside a portion of your monthly paycheck to be managed directly by your employer’s 401k fund manager (i.e., professional asset managers).
Some employers may even match a percentage of whatever you contribute into your account, which is basically free money.
Most of us don’t have the best money habits and tend to prioritize our current wants over our future needs. But by developing a good relationship with money, and improving some lifestyle habits, anyone can learn to stretch their budget and begin to save.