Saving money starts at home with these five easy ways to save for the average family
Shopping is fun! Saving money is hard! These two facts leave most families with little left at the end of the month, making it impossible to invest and plan for retirement.
In fact, the Department of Labor reports that the average family saves just $4,500 a year after paying $51,933 in expenses. If they’re lucky, that $4,500 might grow to $265,000 by the end of 25 years. Problem is, that’s on a 6.5% return and far above the average investor return of just 2.6% over the ten years through 2013.
Even if you are able to manage a high return on your savings, that $265,000 for retirement will provide just $10,600 a year for expenses. That’s well below the poverty line even after adding the average $1,100 monthly benefit from social security.
So what’s a family to do? The easy answer of spending less and making more isn’t so easy. I’m starting a new blog this month to share all the best work from home ideas to make extra money but all those expenses keep piling up.
Looking for an answer, I found five easy ways to save an extra $2,500 a year for the average family.
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Since the biggest chunk of household expenses (26% of total annual spending) is for a roof over your head, it pays to start there for saving money ideas.
Saving Money at Home
Cutting the cable cord is all the rage and technology is finally catching up to the idea. Canceling your cable for a Netflix subscription can save up to $677 a year and you can still get all your local channels in digital. Satellite providers are starting to catch on as well with regular promotions for DIRECTV that start at just $29.99 a month and can save hundreds a year compared to a cable subscription.
Clothes are another big expense for most families. We all want to look our best and TV doesn’t make it easy with the idea that a designer label has to cost big bucks. You can cut your clothing bill by a third by just buying some clothes from garage sales or second-hand stores. I regularly find clothes at Goodwill or Salvation Army with the tags still on or that look new. Saving a third on your clothes budget means an extra $558 a year.
Republic Wireless is the internet’s answer to pricey cell phone contracts. The phones run off of Wifi internet to allow you to make phone calls and text for a fraction of the cost for traditional phones. There’s no contract to buy and you get your choice of the Moto G or Moto E smartphones from Motorola. The average bill is just $13.82 a month and Republic Wireless will even refund you for the cell data you don’t use each month.
We all know that those electronic gadgets should be unplugged when not in use…but how many actually do it? The average household has more than 25 devices plugged in at any one time, spinning the dial on your electric meter. Use power strips to make it easier to unplug electronics and save as much as $147 a year by just flicking a switch.
You don’t have to stop having fun to save money. My wife and I swear by Groupon Local Deals to save between 25% and half off on our weekly date night. You have to make sure you’re not jumping at every deal on the website but just using it when a deal comes up on something you wanted to do anyway.
Saving an extra $2,500 a year may not sound like a huge leap to your retirement goals but it adds up. Add it to your current savings and you could be looking at hundreds of thousands more in retirement. Saving $7,000 a year means more than $400k at the end of 25 years and a monthly income of $2,475 when added to social security. It might not get you to all your retirement dreams but it’s a step in the right direction.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.