Saving money is just as critical as making money. However, people are still choosing not to save. They would prefer to just focus on money. Why? The answer is simple: lack of financial education. Good thing, we’re here to correct and improve that mindset by sharing ten ways to save money and providing the essentials: what, why, and how.
Table of Contents
- Why Is Saving Important?
- 10 Ways to Save Money Like a Pro
But before you start reading our ten ways to save money, let first understand:
Why Is Saving Important?
Why is it important to start saving money early in life? And why is saving money beneficial to everyone? Lastly, why is saving your money necessary?
Well, let’s start with the reason that we all know – it helps you go through unexpected expenses and emergencies. Heck, that’s reason enough if you want to keep things simple. But that won’t help you grow, and that straightforward answer defeats the purpose of this article on explaining ten ways to save money as thoroughly as possible. So we’ll elaborate.
Saving Money Is Financial Security
When you have money saved, you will have a more manageable time during emergencies. A few hundred dollars will always beat zero. Now, that may seem obvious, but you will never take its intensity into account since emergencies rarely happen. However, picture this:
You got a new job that pays better than you’re previous one. In your first week, you get hit by the flu. You don’t have any health benefits yet, and you don’t have any savings.
What do you think will happen?
Of course, you can borrow money from the bank, ask for a salary advance, or tell your parents you’re sick and hope they’ll come to the rescue. But those three all equate to tipping your financial stability and hurting your reputation. What would your boss say about you?
The funny thing is that if you only saved, you could have avoided all those above. Even if you take a week off without any sick leave pay, you could have survived without any help.
In essence, saving money allows you to maintain financial stability regardless of unexpected expenses.
Saving Money Allows You to Take Calculated Risks
Saving money is essential because it acts as protection or a backup plan whenever you gamble. If you want to start something that requires money, you can do it without fear of tipping your financial stability.
Pursuing your interests, hobbies, and ventures in life may be more difficult if you lack financial resources. Even if you choose to get a loan to fund your interests, you’re still at more risk without anything saved. Why? The answer lies in a “what if” – what if your project fails. That means zero gains, buried in debt, and a lower credit score.
Saving Money Is the First Step to Financial Freedom
Last but not least is apparent. Saving money allows you to have a surplus of time and energy. How?
You can translate money to “payment for work,” buying time if you will. Whether you pay yourself by taking a long leave at work (no salary, but you can use your savings to finance your leave) or have someone work for you, what matters is that you gain something out of your venture, ROI (return on investment).
Using this surplus wisely can be your first step to making more money out of what you saved.
Now that you know what saving is essential, which hopefully convinced you, let’s focus on using these ten practical and proven-effective ways to save money.
10 Ways to Save Money That Works
1. Track Your Expenses
Knowing how to track expenses is the first step to start saving money. Figuring out how much you spend monthly, weekly, or even daily can help you see where all of your money goes. And when you know its direction, you will have a deeper understanding of your spending habits that you can change for the better.
Why Keep Track of Your Expenses?
Tracking your expenses will reveal many things about how you handle your money. You may have budgeted too little for food or spent too much money on clothes. With that information, you can now monitor your expenditures and set up a better budget to save money for the future.
Recording expenditures throughout the month can help you become more aware of your wants and needs. You might realize that you have a habit of spending all of your savings on that weekly hangout with friends, causing you to always run low on money every month. Perhaps, you have monthly subscriptions to services you don’t use at all. Keeping a record can show all of these unnoticed expenses.
Now that you have all of this information, you can eliminate the useless things you’re paying for, allowing you to save money. Imagine removing $100 worth of subscriptions and putting that into your savings. The best part about this way to save money is that you’re just removing something from your expenses and converting it into savings.
This approach doesn’t have any forceful change in your daily routine since these expenses are useless anyway. It just so happens that you only noticed them when you started tracking your expenses.
Tracking Your Expenses Summary:
- Helps you monitor and stick to your budget
- Reveals spending habits that you can remove
- Helps achieve financial goals by keeping yourself more careful
How to Track Your Expenses:
There are plenty of ways to track your expenses. Recording your expenditures should not come as a chore, or you might not stick to it.
For starters, record how you usually spend your money for a week, then assess that information. After that, record your monthly spending. From there, start building a better and more realistic budget.
Use a Record-Journal
Writing down your expenses in a journal is one way of doing it. You don’t necessarily have to buy a record book; any unused notebook will work just fine.
Use Your Phone or Computer
A convenient way to track your expenses is on your phone. There are online apps that can help you record your expenses easily. Using a spreadsheet on your computer and listing your expenses is another option.
Don’t Lose Hope If You Overspend
The temptation to buy things out of our budget is typical – it’s human nature. If you end up giving into temptation or impulsive buying, continue recording your expenses anyways.
It’s not the end of the world.
It’s more important to continue tracking your expenses to identify what you need to change and how much you need to save to catch up on your budget.
Consistently tracking your expenses is the goal here. Sticking to your budget comes next. You will start to see progress, save money, and spend less each month if you consistently record your expenses, especially when you become more and more conscious about it.
2. Make Saving Automatic
One of the many ways to save more money each month is to set up an automatic savings plan.
What Is an Automatic Savings Plan?
An automatic savings plan is a personal savings system. The plan contributor (app or bank feature) automatically deposits a fixed amount of money at specified intervals into your account.
Automated transfers between your checking and savings accounts are almost universally available at nearly every bank. You can decide when, how much, and where to transfer money. You can even split your direct deposit so that a portion of each paycheck goes straight into your savings account.
Having an automatic savings plan can help you with budgeting and managing spending habits. After all, you can’t spend if the money is already transferred to your saving account for safekeeping.
Why Set Up an Automatic Savings Plan?
It can be super beneficial to open an automatic-savings account other than being convenient. Sometimes developing a savings habit can be tricky. There is no shame in that.
Some people struggle to budget, and some have bad spending habits. The important part is doing something about these problems if you have them. That’s where having an automatic savings plan comes to play.
Automatic savings accounts give you the peace of mind that you won’t forget to save. It does everything for you. All you need to do is set it up, and you can forget about it.
You can use your automatic savings account as a budgeting tool to save for big occasions like holidays and birthdays.
Most automatic savings accounts have a penalty for early withdrawal, restricting you from doing so. This feature ensures that your money grows and becomes inaccessible for unnecessary expenses.
Setting up an automatic savings plan is one of the ways to save money like a pro. Most successful people who got their first million used this method.
Imagine how much you can save by putting away $10 to $50 each week without even minding it. You’ll be surprised by the year-end result.
3. Set Your Priorities
To avoid unnecessary purchases, you need to assess your priorities first. You need to know your goals and where you plan to spend your money. If you plan on buying a house, there are many ways to save money for a house. If you are in need of a vacation, you can set up a vacation fund as well.
With your priorities set, you now need to come up with a budget. Let’s use the house example.
3 Ways to Save Money for a House
- Building a Better Budget
- Consider Downsizing
- Reduce Or Cut Out A Bad Habit
Have you ever found yourself in a situation where you end up buying something not because you need it but because it was conveniently placed there? Impulsive buying can become a very bad habit and an obstacle for saving up money.
This is why you need to set your priorities in the first place. If you know your priorities, you will also know what you don’t need. Unsubscribing from marketing emails is a good way to avoid seeing deals constantly. You’ll save money, and your home will be less cluttered as a result.
4. Set a Savings Goal
Setting a goal is one of the best ways to save money. Start by imagining what you want. It could be a wedding, vacation, comfortable retirement, or even a fancy birthday celebration. Figure out how much money you’ll have to save and how long it will take you.
You can identify three types of savings goals: short-term, long-term, and the gray area, mid-term goals.
Generally, what considers to be a short-term savings goal are goals that take less than two years to save up for, small goals like building emergency funds or buying a new phone.
On the other hand, long-term goals usually have high costs that take up to five years and more. These goals take more time and money. Therefore, you might want to start saving as soon as possible.
Mid-term goals overlap between the two categories, leading to confusion. These goals, which fall somewhere in the middle between short-term and long-term objectives, are known as medium or mid-term ones.
Setting a savings goal is vital to help you start as early as possible. You can achieve your goals quicker and avoid spending your money on other things the moment you set them.
|Emergency Fund||Buying a Car||Down Payment on a Home|
|Vacation||Saving for a Down Payment||Remodeling Project|
|Down Payment On a Car||Paying Off Debt||Child’s Education|
|Payments Toward Rent||Wedding||Retirement Fund|
|Insurance||Paying off a Mortgage|
|Student Loans||Starting a Business|
|Credit Card Debt Payments|
|Minor Repairs and Home Improvements|
5. Budget for Utilities
Utilities are a part of our monthly expenses, and they can become expensive if you don’t know how to budget. Utility costs should not be more than 10 percent of your income each month, and this number is already generous. You can lower some of your utility costs by taking these simple steps.
Downsizing Your Living Space
If you live by yourself in a large apartment, downsizing your living space may be a good idea. Many people save more money each month by living in a single room.
Doing so can reduce monthly payments and utility costs. Fewer lighting, smaller appliances, and helping you reduce impulsively buying new things just for filling out the extra space.
Focus on Reducing Your Mortgage Payment
You spend a large portion of your disposable income on your mortgage or rent each month. The average monthly housing cost in the United States is $1,600. By lowering your mortgage payment, you can save a significant amount of money. Getting a roommate is a quick and cost-effective way to accomplish this goal since you can split the rent and other expenses with them.
Reduce Your Electric Bill
You can reduce your electric bill in several ways. Phantom electricity, energy consumption even after a device is off, can be prevented by unplugging appliances. It’s also a good idea to turn off the lights when you’re not using them.
Switching to fans instead of air conditioning whenever possible can save even more money too. There’s no reason to use your AC if you feel comfortable without it.
Having a lot of clutter is not only a nuisance, but it also eats into your wallet. When unused stuff breaks, you may impulsively want to repair them, equating to unnecessary costs.
Instead of letting them collect dust over the years, have the courage to give them away. If possible, sell them and make a little extra.
6. Cancel Monthly Subscriptions
Count how many paid subscriptions you currently have. Suppose you have three for around $9.99 each. That works out to about $30 a month, or $360 over a year. You can use that extra money to build an emergency fund or put it toward a vacation. There are many ways to save money each month, but cutting your subscription budget, especially when you have many due to simply jumping on the bandwagon, is one of the most effective ways to save money.
Common Monthly Subscriptions You May Have:
|Cable TV Subscriptions||Music Subscriptions||Streaming Subscriptions||Food Subscriptions Boxes||Gaming Services|
|DISH||Spotify Premium||Netflix||Hello Fresh||Playstation|
|DIRECTV||Apple Music||HBO Max||Blue Apron||XBox|
|Xfinity||YouTube Music||Disney ++||Home Chef||Microsoft Game Pass|
|Spectrum||Pandora||Hulu||Daily Harvest||EA Origin Access|
If you are want to save money and get in shape, you certainly don’t need a gym membership. You can do just fine by watching YouTube fitness videos and start losing fat at home.
We only see gym memberships as genuinely beneficial when you want to build muscles, enjoy bodybuilding, and love socializing. If not, working out at home with some guidance with fitness will bring you the same results – without the gym fees. Even pro fitness enthusiasts all agree that “abs are made in the kitchen.”
7. Saving Money on Groceries
Shopping for groceries is essential, and we all know that. However, did you know that you don’t have to tear a hole in your pocket whenever you go to the mall to buy your monthly needs? Here are a few things that will help you save money on grocery shopping.
Making a shopping list on paper or your phone keeps you on track with what you need to buy. Even if you only need five items, making a list is never a bad idea. It helps with forgetfulness and enforces you to stick to what you came for, avoiding costly impulsive buying.
Look, impulsive buying happens, and your shopping list is your reminder only to buy what you have written down. You won’t believe the amount you spend that’s not part of the plan.
Pick the Right Time and Place
Have you heard of the saying “don’t go shopping when you’re hungry?” Experts say that you are more likely to spend more money when shopping while you are hungry.
The reasoning behind this proposition is that when we start to feel hungry, we can become careless about what we should be eating and focus more on satisfying that hunger, making every food in the store come off as a need. Try going shopping after you have had a full meal, and you will see a massive difference in how often you pick up unnecessary food.
Lastly, grocery stores hold weekly sales on various items. When they’re in season, these foods can be flavorful. Plan your meals around items on sale at the grocery store to keep your weekly menu fresh. You can use it as a motivating factor to experiment with new foods and cooking methods.
If you want to save your money, you can always take the extra step and compare prices from different stores before buying. With online and traditional shopping, you can always spend a little time comparing prices from different stores and buying the items from the store that sells them for less.
Cashback apps are great for finding deals and getting rewards. You can save plenty of cash by using these apps.
Whether you use a credit card or a debit card, you can earn reward points that you can use to offset the cost of your future purchases. Some apps and websites offer discounts on merchandise in addition to points. Some cashback credit cards offer a sign-up bonus too.
Here are a few examples of cashback apps:
In exchange for scanning your weekly groceries, you’ll receive points that you can redeem for entries into sweepstakes with cash.
Pay in Cash
Paying with a credit card makes you spend more than paying with cash. That’s because paying with cash makes you see the physical money you’re giving out, making you try to lessen your expenses. On the other hand, paying with digital money does not offer this tangibility, making you feel less attached to what you have as it may seem unreal.
Using coupons to save money has been around for a while. A store card discount and the additional savings from coupons can help you save twice as much on your grocery bill each month.
You can also cut costs by purchasing large quantities of certain items. Bulk purchases, such as paper towels, toilet paper, cleaning agents, and canned goods, all result in lower prices. You should, of course, exercise caution when purchasing perishable goods in bulk, as they can go bad unnoticed. You can freeze some foods to extend their shelf-life too.
Generic Food Items
Generic food products are often less expensive than their branded counterparts. There are times when the generic version is better than what you’re used to.
To see if you can get used to the cheaper product, give it a try for a few weeks. If you do enjoy the generic version, you’ll save money each time you buy it — especially for everyday staples like pasta, spices, and cereal.
8. Pay Off Debt
High-interest credit card debt is costly. You could end up paying hundreds to thousands of dollars in interest every year! You can save a lot of money if you pay off your debt as soon as possible.
Ways to Pay off Debt
Pay More Than the Required Amount
One way to help you get out of debt is by paying more than the required amount each month. Making extra payments is the key to paying off your loan faster. You may be able to make an additional payment each month depending on your lender, which will be applied to the principal. Check your loan terms to see if there are any additional fees or prepayment penalties before you start paying off your loan.
Pay More Than Once a Month
In addition to the required monthly payment, pay your credit card bills more frequently than once, making it easier to keep track of the amount you still owe each month. Reduce your balance/utilization ratio by making on-time, recurring payments on your credit card bill.
Prioritize Paying Off Your Most Expensive Debt
The interest rate on your most expensive loan is the highest. You’ll save money in the long run by paying it off first, and you’ll also reduce your overall debt. Continue to pay down debts with the following highest interest rates to save money. Some call this the “avalanche method.”
Try the Snowball Method
The debt snowball method, paying off the smallest balance one after the other, is one of the simplest ways to deal with credit card debt. Give yourself the satisfaction of accomplishing one of your objectives to motivate you to pay everything off until you are debt-free.
9. Plan Your Meals
Going out to eat at a fast-food chain or restaurant can be expensive, and one of the few reasons we go out to eat is because we have no food at home or are too lazy to make our meals. Planning your meals for the week or two is one of the most practical ways to save money.
Did you know that Americans waste over $1,800 a year on unused food? You can prevent this waste by meal prepping. It can prevent you from wasting money every month on spoiled groceries because you will prepare your meals in advance.
Additionally, meal prepping saves both time and money. Plan your meals around what’s on sale to maximize savings in this area.
Batch and Freeze Meals
Whether you despise cooking or don’t have the time to prepare a multi-course gourmet meal every night, batching and freezing your meals could be the solution for your needs. It saves you time since you’ll be cooking for just one day to provide for the following days.
Skip the Soda
If you buy soda every week, your grocery bill will go up. If you buy a pack of soda every week, you’ll spend over $400 a year just on that one purchase. Switching to water will save you money and improve your health simultaneously!
Avoid Pre-cooked Meals If You Can
The convenience of pre-cooked meals and ready-made deli items cannot be overstated. However, purchasing the raw ingredients will save you even more money and hone your cooking skills.
10. Budgeting Vacation Expenses
Vacations overall can be pricy. But who doesn’t want a little time off? Keeping a vacation fund is convenient, and if you plan out your vacation right, you can make the most out of your money.
Plan Your Vacation
Planning out your vacation can help you opt for cheaper ways to have fun.
If you notice, most of the time, resorts, booking a hotel, or Airbnb is more expensive on the weekends. So plan your vacation and go on a weekday. Having a vacation during the off-season can be cheaper, too, since establishments tend to raise the prices during peak season.
Speaking of establishments, popular places are pricier than your local and less-known vacation spots. A not-so-known beach or your local resort is probably as good as those familiar places everyone wants to visit.
Use Less Gas
You can’t avoid it, but most vacation plans require a vehicle for transport, be it going to the beach or a road trip with family and friends. One of the ways to save money on a road trip is to use less gas by scheduling all of your errands on the same day to avoid unnecessary trips that you could do in one go.
Stay With Friends or Family
Even if you don’t consider it a vacation, staying with friends or family is an easy and inexpensive way to save money on vacation. And you get to spend time with those you love!
You’ll probably be able to stay for free and eat for free. You’ll only be worried about the cost of transportation to your destination.
Summary of Money Senpai’s Ten Ways to Save Money
Saving money is no easy task. But with a few tips here in our ten ways to save money article, we’re sure that it won’t be as challenging as you think. Most of our features above require planning and consistency. Those two things are the key to saving, and if you keep that in mind, you will not fail. Please feel free to share this article with your friend if you find this piece helpful. We hope that our listicle about ways to save money can help you achieve your financial goals.