Just a handful of money saving tips can more than double the money you have left each month
So you've tried to make a budget…a few times, but you still can't figure out where the money goes at the end of the month!
How did I know? How did I know that budgets never work and the money just seems to disappear?
Because it happens to everyone. Budgets suck because we just list out how much something costs without thinking how we can actually spend less doing it.
One of the first things I recommend to anyone when talking about reaching their financial freedom is to look at monthly expenses. We grow up in a consumer society and usually don’t even realize where the money goes. In fact, just a few money saving tips around monthly expenses usually end up saving a lot of money.
The great part is, once you actually look at how much you spend on different expenses, you start finding money saving tips all over the place.
A lot of these expenses are things you really don’t even get that much enjoyment from but you’ve never thought about how much they add up to and bust your budget. They just add to your bills and go on your credit report. You might not even realize you can save on other expenses.
Take 30 seconds to think about the three things you spend most on every month, besides rent. How much do they cost?
Did you know you can probably save as much as 15% on each?
The average household spends $52,000 after taxes according to the Bureau of Labor Statistics' consumer spending report. I've found a way to cut $7,500 from that spending, saving 15% on your monthly budget and you won't even miss the things you cut.
These 20 money saving tips will save you a lot of money. I estimated the savings conservatively so you might be able to save even more. The video here includes my favorite five savings hacks but check out the full list below to save thousands more. The best part about many of these savings tricks is that they require no effort on your part.
I'm challenging the community this year to beat debt, make more money and make your money work for you. I'll be creating videos every week on the YouTube channel to give you the strategies to beat your financial goals so click through to subscribe. It's totally free and you'll never miss a great idea.
Why Should You Save?
Saving money because it eventually helps you and your family in cases of financial emergency. Not only that, having increasing savings allows you to build wealth simultaneously and later on secure your financial future. It gives you the freedom to treat yourself at times, pay for a shopping spree, dine out's, travel and fun. Having more than enough savings also helps you reduce financial stress because it keeps you away from debt.
When uncertainties arise, those that we never know of nor see coming, our savings keep the quality of our lives. Even wealthy people practice great saving habits consistently, even after they have become multimillionaires. There are so many good reasons to save, it makes us live a secure and happy life with our loved ones.That's why, developing excellent habits of saving is better when you start earlier. It doesn't mean you have to entirely cut having fun, it only means building your money stash to avoid unnecessary costs and running out of money when you needed it most.
Where does the money go?
Before we look at some simple money saving tips, you need to find out where your money is actually going. A previous post showed how to set up your basic budget and set realistic financial goals. Take a minute to look through your monthly expenses and you might be surprised how much you’re spending.
If you didn't before, take a minute or two to think about where your money goes. Getting this idea of your biggest bills is going to help when you're looking at the money saving tips below.
For this post, we’re looking at the Department of Labor’s Consumer Expenditures Survey. This is a survey the government does every three months to study where people are spending their money. It’s not some Big Brother conspiracy to track your money, just good information used in all kinds of policy decisions and research.
The information is broken down by age group, race, gender and all kinds of other ways. For this post, we’re going to use the broadest average for all families. Your own expenses will vary depending on the region you call home and whether someone in the household smokes.
The average family,
- Makes $56,437 after taxes and spends $51,933 a year on expenses
- Housing accounts for the biggest expense, $13,516 on mortgages, taxes and repairs
- Transportation is also a big chunk with more than one in six dollars spent paying for the average family's two cars
The first thing that stood out to me was how much people have left for saving.
The average family saves just over $4,500 a year or about 8% of after-tax income. Even if you’re able to make a 6.5% return on your savings, well above the average investor return, you’re only going to have about $265,000 over the course of 25 years.
That’s not enough to even think about saving for retirement.
What happens is people end up getting in over their heads. They apply for personal loans to cover the bills for the month and only get further behind.
Fortunately, I’ve found 20 money saving tips that will help you save money and reach financial freedom.
We’re going to assume savings for the “average” household on the money saving tips below. Your own savings from these money saving tips will depend on how many people are in your family, whether someone smokes and where you live. Most of the best money saving tips will work for everyone but pick and choose to find the ones that work for your family.
Money saving tips for cutting grocery expenses without cutting coupons
Cutting coupons can be a fun thing to do with the family but they’re a pain to keep track of sometimes. Most coupons are only for the more expensive brand names anyway, which really doesn’t help the frugal shopper that buys store brand.
You don’t have to cart away 50 pounds of mayonnaise to save with quantity buying. Buying the six-pack of yogurt can save as much as 18% over the individual cups and bagged potatoes are a third as expensive as buying the same weight individual spuds at my local store.
Instead of buying packaged meats, check out the fresh-sliced deli department at the grocery store. Because they don’t have to pay for packaging and other processing, the deli can usually sell meats for a big discount to pre-packaged competitors.
We save 20% on our meats by buying at the deli compared to the same amount for packaged products.
Dollar stores aren’t just for party balloons anymore! I was surprised when I heard this money saving tip but you can actually pick up stuff like eggs, bread and milk for much cheaper at the dollar store. A pound of eggs and a loaf of bread at our nearest dollar store costs $2.70 versus $3.90 at Walmart.
Don’t be afraid to check out the bargain rack at the grocery store for some great money saving tips. These are usually dented cans or near-expiration stuff that the store just needs to get rid of. Check the expiration dates but as long as you can eat it before it goes bad, there is nothing wrong with this food. It’s usually marked down as much as 50% from the regular price.
Just these five money saving tips save us 17% on our grocery bill every time we go shopping. At annual expenses of $4,003 for the average family, that amounts to savings of $680.50 a year or $56.71 a month in your pocket!
Once you've saved all this money, consider putting it in one of my favorite new investments. I've been investing on Lending Club for three years now and have averaged almost 10% returns. That's comparable to stocks but with the safety of bonds. I shared my strategy on peer loan investing in an earlier post.
Want more motivation to save and invest? Use these simple personal finance calculators to show you how to get the most from your money!
Money saving tips for Eating Out and Drinking
The average person eats out five times a week, with lunch accounting for about half of that. That amounts to $2,661 a year for the average family for food outside the home. Beyond just eating out, the average person has four alcoholic drinks a week and the average family spends about $450 a year on ‘adult’ beverages.
For two working adults, packing your lunch and only eating out once a week will save about 180 lunch outings a year or about $745 a year. It may take a little effort to prepare those extra meals the night before but that’s a ton of savings just for one budget trick.
Instead of going out to a restaurant for dinner, try packing a picnic for the park or indoors at the botanical center. Saving just $35 a month on one family meal adds up to $420 a year in savings.
As for alcoholic beverages, I’m not a Mormon but do you really need to drink to relax and have a good time? There is no rule that says you have to drink when at a social event or bar. I used drinking as a social crutch in my 20s until I realized that I didn’t really need it to talk to people.
In fact, while one or two drinks may help you open up what kind of conversations are you having after three or four drinks?
Cutting back to two drinks a week saves $225 a year for the average family.
Adding these three money saving tips together saves $1,390 a year or $115.83 a month in cold-hard cash!
Money saving tips for Saving around the House
Property taxes cost the average family $1,849 a year. I’m not an anti-establishment kind of guy and generally approve of where my local taxes are going…but that doesn’t mean I don’t want to save a little when I can. Most people don’t know that you can actually contest the amount of your property taxes.
Search for the website of your local county assessor, the governmental office that values your property and assesses taxes. You’ll usually have a window of a few months each year to formally dispute your taxes. Besides filling out a form, you’ll need a reason why you think the property is worth a little less.
This is actually pretty easy to establish for most people. You first need to find your home’s characteristics like age, neighborhood, size and number of bedrooms.
If the county assessor’s site allows you to search for home sales, you will next search for sales in the last six months with characteristics similar to your home.
Once you have a list of homes sold or for-sale, divide the sales price by the square footage size of each home. Taking an average of this number will give you an average $ per size estimate for your home, which you will use to find your property’s value. Add in the value of the land from the assessor’s page and you’ve got a market value estimate.
If this estimate is less that the value assessed for taxes, then you’ve got a good argument for lowering your property taxes! Between rental properties and my own homes, I have owned nine houses in the last 15 years and have gotten the property taxes lowered on all but two.
The assessor may not lower the property’s value down to your estimate but they’ll usually lower it a little. Most people don’t take advantage of this money saving tip so it’s easier for the assessor to just give in a little and negotiate.
I have saved an average of $220 a year on property taxes for each home I have disputed. It’s not a huge amount but it takes less than an hour to fill out the forms and every money saving tip counts.
Insurance is something that everyone needs but nobody wants to talk about it. It might be tempting to let the coverage on your home lapse a few months to save but it could cost you thousands if something happens. The fact is, you can usually save hundreds by just shopping around for better coverage. Drivers switching to Liberty Mutual saved an average of $509 a year and more when they bundled home coverage as well.
I saved a ton of money on house repairs, especially on my rental properties, by learning basic electrical work and how to tile floors. It’s tough to estimate exactly how much you can save with a little sweat equity around the house. I want to keep this list as measurable as possible so we won’t put a number on this money saving tip but find the handyman in your genes and save a little money.
I loved the work I did tiling our bathrooms and kitchen and it really made our house a home. As an investment analyst, I don’t get the chance to do artistic-work and flex my creativity.
One of the most popular money saving tips, by turning the thermostat down 15 degrees for eight hours a day during the colder months, the average family saves 15% a year according to the Department of Energy. It’s a myth that your furnace has to work harder to reheat your house once it cools. Use a thermostat with a timer to lower the temperature just before you leave for work and to come back on when you’re back home.
Turning down the thermostat a little in the winter and turning it up a little in the summer saved us big time when we were living in Iowa. Even a 15% savings from the money saving tip above amounts to $64.05 a year for the average family.
I had always heard of ‘vampire’ appliances but never knew how much money is wasted on electronics plugged in when not in use. The average household has more than 25 electronic devices plugged in around the house at any one time. Most of the time, especially when you’re asleep or not at home, these devices are turned off but still drawing electricity.
Your digital cable box draws 17.8 watts an hour when plugged in but turned off and costs an extra $43.46 a year…and that’s when you’re not even using it! A cellphone charger draws 2.24 watts an hour even if the phone is fully charged.
By unplugging your electronics when not in use, you can save 10% or more on your electricity bill. Using power strips makes it easy to switch off the power on a bunch of electronics all at once. That 10% savings is as much as $147 a year for the average family.
Our own Frugal Grandma recently shared three homemade cleaning creations that help her save $250 a year in cleaning supplies. Use balls of aluminum foil instead of dryer sheets and a citrus peel mix works great as a window and surface cleaner.
The Frugal Grandma also shared how to cut your clothing budget in half by going to garage sales for a fifth of your apparel needs. In fact, with the money saved just on the clothing budget, she showed how you can have an extra $120,000 for retirement. With the average family spending $1,674 a year in apparel and services, cutting your clothing budget even by a third will save you $550 a year.
The five money saving tips above can save a combined $1,167 a year around the house or $97.25 a month.
Money saving tips for Saving on Transportation
The average family owns 2.28 cars and more than a third of American households own three or more vehicles. The average family spends $9,104 a year on transportation, the second largest expense, with much of it for maintenance and gasoline.
While cutting back on driving and planning routes better may save you a few extra bucks, one reader recently showed us how becoming a one-car family helped him pay off $22,000 in debt over just a year.
This is one of the tougher money saving tips because we grow up in a culture of cars and driving. It is so easy for everyone in the family to have a car and just go wherever, whenever they please. I love not having a car but we live in a large city with great public transportation.
It will take some getting used to but cutting back to just one car can save the average family nearly $5,000 a year. That’s $1,882 in savings on the cost of buying a car, $1,443 saved in gasoline and $1,480 a year in maintenance and insurance. Your expenses for public transportation and gasoline for the remaining car will increase but you can still easily save $3,600 a year or about $300 a month.
Money saving tips to save on healthcare expenses
Healthcare costs are a big chunk of the average family’s expenses, almost 10%, and the burden as you get older only gets more expensive. You wouldn’t think of overpaying for a lot of other expenses but most people just pay what’s on their medical bills without even questioning whether it’s a fair price or not.
For those that actually look at how much they’re paying and willing to follow a few money saving tips, the savings could add up to 20% or more.
Anytime your doctor refers you to a specialist, make sure the services are in-network with your insurance provider. If they aren’t, ask your doctor if there is someone else they can recommend. For surgeries, check to make sure the facility and the anesthesiologist are in-network providers.
Not only is the list price lower for generic prescription drugs but your coinsurance payment may also be lower. The typical co-pay for brand-name drugs is 25% of the cost but only 15% of the cost for generic drugs.
Not only are mail order pharmacies more convenient but you can often get a steep discount on the price of your medications. Check with your insurance company to see if they have a partnership with any mail order pharmacies.
These aren’t back alley dealers but legit companies that are approved to sell prescriptions through the mail and totally safe. Because they don’t have the cost of having a store location, they can sell for much cheaper. For example, I have a friend that saves almost $1,000 a year on his prescription for Crestor.
Take advantage of your company’s wellness program and benefits. Some companies will put money in your health savings account (HSA) or discount your health insurance if you participate in the wellness program. The National Business Group on Health found that 40% of large employers offer some type of wellness plan incentive and an average incentive of $380 per employee.
Money saving tips on medical expenses is another one that is hard to generalize but we save $350 a year by using generic drugs and taking advantage of tax benefits on our HAS. That’s almost $30 a month and we’ll save even more as we get older and our medical expenses increase.
Money saving tips on to save on entertainment
I’ve always hated the money saving articles that tell you to cut your entertainment budget to the bone. I work hard and like to enjoy my money a little. If retiring rich means I have to be miserable for 30 or 40 years then I’d rather be poor and happy.
But there are several money saving tips that will help you save on your entertainment budget without missing out.
The average price of a basic cable TV subscription is $22.63 a month with extended basic costing $64.41 a month. A subscription to Netflix or Hulu Plus will cost just $7.99 a month and you can get a digital receiver for local channels. Most of your favorite shows are still going to be available and you’ll get all the movies you want for free. That’s a savings of at least $175 a year and you get more options.
For those that want a more traditional TV package, DirecTV regularly offers promotions that save hundreds a year compared to cable TV subscriptions. Your channel selection is going to be larger than with the internet providers and you can even customize some packages.
My favorite money saving hack has always been to let the cable TV subscription lapse for a few months in the summer. We plan outdoor activities and our vacation around the time so we really don’t even miss the lack of TV. We save nearly a hundred every summer but will be switching to Netflix soon so will have to reevaluate the savings.
Buying an Entertainment coupon book can save lots of money off your monthly budget. Keep the book where you constantly see it so you don’t forget it's there and try making your plans around the coupons you have available. We never use all the coupons in our book but still manage to save at least $15 or $20 a month on eating out or other attractions.
These two money saving tips add up to $355 in savings per year for the average family or just under $30 a month.
Just these 20 money saving tips can save the average family around $7,542 a year or more than $600 a month. Remember the $265,000 we had in savings after 25 years of investing just $4,500 a month? Adding that $7,500 brings your annual savings up to $12,000 and amounts to a nest egg of $706,650 over the 25 years! That’s nearly three times the amount to meet your financial goals and your own money saving tricks may help you save even more.
In fact, I’ve talked to a few families after following some of these basic money saving tips and they were able to save more money than they needed to meet their financial goals. Some chose to save a little less while others set higher goals. Being able to make that kind of financial decision and to have spare room in your budget is a great feeling.
It's not just cutting back on expenses that saves you money. You can save thousands of dollars by lowering the interest rates on your debt through consolidating loans. Use this loan payoff calculator to see exactly how much you can save by lowering your rates or adding to your payment.
How to Save a Lot of Money in a Year
I love these money saving tips and a lot of the people I've talked to are saving even more than $7,500 a year. Put that money in a retirement account or take an extra vacation each year, you deserve it.
I put together an infographic with some of my favorite ways to save money. Feel free to use the graphic on your blog or share it on social media.
That's 20 money saving tips that will save you thousands of dollars each year. I'd love to hear your favorite ideas to save a lot of money. Share with the community in the comments below or send me an email. I want to update this article with even more ways to save money and get the total savings over $10,000 a year!
Read the Entire Money Saving Series
- How my Parents Taught me the Importance of Saving
- What is a 529 College Savings Plan [and How it can Solve the Student Loan Crisis]
- 5 Best Ways to Manage your Investment and Savings
- Saving Money On Your Commute To Work
- 36 Expert Ideas on Teaching Kids Money Saving Tips