How to Save More Money
Posted on September 17, 2008
Filed Under Free Financial Course |
Determine How Much You Can Save
(This is a continuation of the article: How to Save Money). The first step in developing a plan is to determine how much money you can save or invest each month. This amount was calculated in a previous lesson: How to budget. Look at the budget spreadsheet that you completed. Notice the amount at the bottom “Available to Save or Invest.” The number may be positive or negative (hopefully positive). We will discuss ways to improve the number in this lesson.
If positive, this amount (or a little less) should be your monthly savings goal. So, if you have $200 available to save or invest each month, you may want to make $175 your monthly savings goal. However, before you set a goal; we want to offer some tips for managing your budget.
Utilize the “Planned Budget” column (the first column) in the Keyblast Budget Spreadsheet in order to view how much you can save. You may have already determined some ways to decrease your budget. Below we provide a few suggestions on how to save money. Once you have determined a few realistic ways to decrease your spending each month; you will set a savings goal. This step is essential to building your personal wealth.
Here are several ways to save money each month. We hope that you will review each one carefully and honestly as it could mean the difference between no retirement, and a nice one. Even though, one item may only save $5 - $10; that $5 - $10 can add up very quickly over several different items.
We also tried to estimate the monthly savings that the average US Household could save by implementing some of the suggestions below. So, if you make more than the average US household, you could actually be saving MORE money than the estimations below. If you make less than the average US household in income, your savings may be less. The average US Household income for 2006 was $48,201.
So, here are some suggestions on how to save money each month:
Eat out one less time each month (estimated savings - $35/month).
- According to a 2005 report by the US Bureau of Labor Statistics, the average US Household spends 5.5% of their money on eating out at restaurants (not groceries). Since the average US household income is $48,201 (before taxes), we estimate that the average household spends nearly $176 each month on eating out! Since everything spent on eating out is dicretionary, (meaning it’s not necessary spending); this could potentially be a huge area for savings! We don’t expect you to never eat out again; however, if you were able to save $176 a month, that’s $615,114 in 30 years! We encourage you to be ambitious in this area; however, if you can start with just one less outing each month…that’s an extra $35 a month (on average).
Bring your lunch to work or school (estimated savings - $20 per month).
- It’s difficult to determine how much the average US household spends each month on lunches at school or work. However, if you do eat out for lunch during the week, consider the possibilities for savings. At $5 per lunch, that’s $25 per week, or $100 per month. If you have children going to school and pay for their lunch; consider making them a homemade lunch. This could certainly be as much as $5 - $10 per week in savings or $20 - $40 each month! Only you will be able to determine how much you can save in your particular situation. Using the numbers listed above, we estimate that the average household will be able to save between $20 - $140 each month by being more frugal during lunch time. To stay on the conservative side, we will simply add a $20 savings.
Create a shopping list and stick to it when you get groceries, and use coupons (estimated savings - $40 per month).
- According to the same US Bureau of Labor Statistics study mentioned above, it is estimated that the average US household spends 7.5% of their after tax money on groceries. Now of course food IS a necessity of life; however, there are ways to be more frugal without missing a meal. By simply being more conscious of what you are spending at the grocery store, you may be able to save a decent amount. The age-old “shopping list” is still a great suggestion. By sticking to your list, you will have less “impulsive” buys and will be able to shop around for deals on the items that you need. In addition, USE COUPONS…its free money. In fact, if you have a Wal-mart nearby, you can price match any competitors coupons. For example, if Albertsons is selling milk for $1.99; simply, go to Wal-mart, pick up the milk, and tell the cashier to “price match” for $1.99…and that’s it. This is one of their business strategies, so they encourage you to do this. Whether or not you use Wal-mart isn’t the point. Find a way to save on your groceries; plan before you go, stick to your list, and use coupons. The average household that was not doing this already should be able to save about $40 per month by implementing these strategies.
Use generic brands
Lower your utility bills (estimated savings - $20 per month)
- Ask your local utility company how you can lower your energy bills. They will have lots of suggestions such as weatherproofing your home and using window coverings. In addition, if you for every 1 degree you turn down your heat, you will save about 3% on your heating bill each month. (Also, consider using less A/C during the summer months).
- You can also turn down the temperature on your water heater to 115-120 degrees without any noticeable difference. This will save money as your water heater will use less energy. For the concious utility user, these steps could easily translate into savings of $20 per month.
Other suggestions:
- Don’t buy on impulse. If you see something you want; shop around, look online, or wait until its on sale.
- Lower your phone bill. You can switch carriers, use less text-messaging or other phone features.
- Use your debit card instead of your credit card.
- Monitor your checking account so you don’t bounce checks or pay extra fees.
- Use only the ATMs of your bank or credit union.
There are literally hundreds of other ways to save money. However, the most important thing is to develop your budget and constantly monitor how you could save more.
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