Saving money is pretty important right now, and although many of us are doing simple things like trimming the grocery budget, being mindful of how much our utility bills cost, and reducing our habit of shopping online, there are ways to actually prioritize saving money without it being a stressful experience.
Believe it or not, you can implement these simple money hacks to save more without too much difficulty.
As I walk through the savings tips in this article, think about how they might become a habit in your life. If you can find ways to save money toward something impactful, rather than spending it in a way that doesn't align with your true goals, you're much more likely to stick to the plan.
There are five main strategies to save money, and in this article, I'll share how you can integrate them into your everyday life, which will help you secure your financial future.
Analyze Your Spending Habits
It sounds obvious, but the first step to take when figuring out how to save money is understanding what you spend on a monthly basis. The first thing we do when we sit down to do financial planning is take an inventory of your monthly bills right now. We consider your income and your expenditures and dive into your checking account to find ways to save money.
If you want to maximize the extra money coming into your household rather than have it trickle through your fingers, sit down and note your expenses and assets. Don't forget to add your liabilities, insurance, grocery shopping, and other essential costs of living. Many online banking apps allow you to export this information from your checking account so you can see where you can start saving money quickly. You should also check your credit report to get an overview of what's going on with your money.
Next, explore your nonessential purchases. Think about what you're spending on online shopping sites, your gym membership, or those expensive wants (that aren't needs). When looking at your bank statement, keep an eye out for money you might be owed. Whether it be from a financial institution, friend, or subscription service refund - Are you owed money?
Start Saving for the Future
Often, the first step to saving money is to take a look at where you're actually spending your money.
Are you blowing your entire direct deposit on groceries, buying lunch daily, or on impulse purchases of cheap flights? Do you tend to make an expensive purchase every few months? Look at quarterly or seasonal trends too!
For example, it's normal in the South to have a higher electricity bill in the summer (running the A/C to combat the warm air) and a higher gas bill in the winter (for running the heat). Evaluate where you can find extra cash and how you can commit those dollars to your savings goals.
Following everyday tips to save money, such as reducing your grocery spending by using coupons and swapping to generic brands, and trimming your energy costs through energy-efficient appliances and a smart thermostat to help you maintain a savings plan is a no-brainer.
Understanding how you spent money over the last 30 or 60 days not only gives a snapshot of past spending but allows you to also look forward over the next six to 12 months away to save money going forward. This is a great way to find out where you might have some opportunities to save even more money that you didn't recognize before.
You can save money to build an emergency fund and secure your financial future through just a few small tweaks to your lifestyle.
Save Money by Paying Off Debt
If you have credit cards, you could be paying a lot of money toward interest, maybe without even realizing it. When you use credit cards every day, you're likely to be paying interest at a high rate, and these hidden fees will eat into your monthly budget.
Sometimes people are not even aware of what's happening within their personal financial system, and they slip into unhealthy financial habits that end up costing them so much money. The secret to getting out from under those habits is being intentional about how you spend money rather than sleepwalking into debt.
Credit Cards are Not Free Cash
If you have a lot of credit card debt, your very first action, before you even try and figure out ways to save money, is to STOP using those cards altogether. The biggest money hacks available for getting out of debt aren't even a secret - cut up your credit cards and quit using them completely so that the balance will quit growing.
Once the balance quits expanding on a daily basis because you've quit using them, your next mission is to get the available credit balance to only about 50% on each card. When you show that you're only using half of the spending power made available to you, it reflects you're responsible with money, and that will help your credit rating enormously, saving money in the long run.
Once you're ready to pay off the debt, there are two main strategies you can explore while you decide which credit cards to pay off first:
- either the card with the highest interest rate first or
- the card with the lowest balance.
I tend to recommend paying off the smallest balance first, even though it may be at a lower interest rate so that you get the psychological boost of seeing a quick win. This immediate reassurance of your progress helps keep you on track longer.
Work toward developing a mindset that credit cards aren't an emergency fund and they're definitely not for supporting your daily lifestyle expenses. If you use credit cards for the points, travel, or free gift cards perk, it's imperative you pay them off immediately every time, and you'll be debt free in no time!
Boost Your Savings Account
Regularly increase your savings, contribute to your 401k, add to your IRA, and set off on a savings journey because even if you're adding just 1% extra every six months, it will all add up in the long term. One of the best money hacks to ensure you save more money is to set a reminder to increase your savings by 1% every six months. It's such a minimal change, you won't even miss that money coming out of your paycheck, and you'll be able to save money fast.
If you're already maxing out the amount you can put into a 401k, consider funding a regular savings account and adding to it regularly instead. When the money comes right out of your paycheck and goes directly into a savings account, it's like the out-of-sight-out-of-mind phenomenon.
If you never see it in your checking account, you'll never know it was supposed to be there. Then whatever you have left, you can feel good about spending because you're taking care of your long-term savings first.
Use a Glass Jar as a Separate Savings Account
One problem with our nearly cashless society is we're losing our connection with how much things cost because we rarely spend actual cash. So, to combat that, sometimes we need to see the money piling up physically.
One of my favorite ways to save is to go into the bank once a month and take a $100 bill out of your savings account.
When everything is on a credit card or a debit card, we shop online, our paychecks are automatically deposited into our bank account we often lose track of our savings plan balance. But things get really exciting when you get that $100 bill, put it in a jar, and see the money build up.
Save up your cash as long as you want and use it for something special!
The Best Things in Life are Free (Which is Handy When You're Saving Money!)
It's easy to keep ourselves comfortable and entertained when we have infinite spending money, but when it comes down to it, the things that give us the most pleasure and enjoyment tend to cost much less money - they're usually free!
This is why one of my favorite money hacks is for you to make a list of your favorite things to do that don't have any impact on your bank balance. Your list should include events, places, and people that give you tremendous joy, that you find super fun, and that don't have a lot of expense associated with them. For example;
- Having a good conversation with a friend or a family member. Taking the time to call someone up or drop in to see them is a valuable way to spend 15 minutes at a minimal cost. You and the person you reach out to will be so glad you had those few moments together to genuinely connect.
- Enjoying a hobby. If you have a pastime you can do at home, like drawing or crafting, you can grab a few minutes for yourself at absolutely no cost.
- Cooking a meal for a friend or partner. Pick up the ingredients that fit your meal plan when you're doing the food shopping and spend an evening cooking something new. It doesn't have to be fancy or blow the grocery budget. It's just a fun way to prepare a meal and spend time together.
- Practicing meditation. We can do this at any time to combat stress and overwhelm.
- Laughing. At least once a day, find something to have a big belly laugh about.
You could even plan a no spend day or week where you find creative ways to have fun without splashing the cash around.
Money Hacks to Start Saving
One of the most important life hacks to highlight is to open a few different savings accounts, including one designated as an emergency fund.
It's normal to fall into the trap of seeing credit cards as 'free money.' However, to be financially savvy, we need to get out of the habit of uncontrolled spending and get smarter with our money moves.
Those smart money moves include reducing frivolous spending, sustaining low or no credit card balances, periodically increasing savings rates, and maintaining an emergency fund to cover any unexpected expenses that might come up - preventing you from spiraling into debt.
Money Saving Tips That Help You Get Debt Free and Save
If you have a big savings goal, like saving the down payment for your own home or making another large purchase, you might feel that some of the online money tips are too simple.
However, if you're not sure where to start your savings journey or how to find the extra money you need to start small. Being intentional about how you spend money is the key to beginning to save enough money to live comfortably and have a healthy emergency fund.