How to Save Money

A New York Times headline asked a question contemplated in many variations by those of us who are budget-challenged: “Can You Trick Yourself Into Saving More Money?”

The fact that it’s even a question, let alone the title of a self-help article about lending circles among friends, is further proof that saving money is a serious challenge for a lot of reasons.

Whether it’s because of inflation, paychecks that don’t keep pace with the cost of living, credit card traps, unforeseen emergencies or simply the comfortable social connection between spending and “having fun,” saving money is a most elusive goal.

Or not a goal at all.

The extent of saving money for some people is relegated to overpaying the government now for a nice fat tax return in April. There are better ways.

In fact, there are many good reasons to make saving money a daily and weekly goal. Approached with the proper amount of planning and discipline, saving can become a confidence-building pursuit.

“One of the biggest hindrances (to saving) is not having a clear financial plan,” Travis Forman, Portfolio Manager and Director of Private Investment Strategy at Harbourfront Wealth Management.

“And it doesn’t have to be a complicated one. A basic financial plan can do a lot to keep people on track with saving and reaching financial goals. Often, you’ll see people overspend or hold credit card debt because there are no clear goals in place.”

Why Should You Save Money?

Why should you save money? That’s a question similar to asking why not eat pizza for breakfast, lunch, and dinner?

Because doing the opposite (not saving or getting all your daily calories from deep dish) is unhealthy and particularly dangerous to your future self.

We know that intuitively, but it’s easy to fall into bad habits if we don’t remind ourselves why certain behaviors are in our best interest.

In a culture based on immediate gratification, saving might be seen as old-fashioned, a throwback to the days of piggy banks and allowances for cleaning your room. Committing to common sense spending as an adult might even get you called a cheapskate.

But saving can become a positive pursuit of feel-good rewards both tangible and intangible.

Saving can provide financial security, freedom to make decisions (regarding jobs, relationships, where and how you want to live) and peace of mind knowing you have an emergency fund for those rainy days we all know are in our forecast.

“Unexpected surprises abound in life, some of which are better than others,” Lyle Solomon, Principal Attorney at Oak View Law Group, said in stressing the importance of an emergency fund. “Financial hardship might result from losing your job, getting sick or hurt, getting divorced, or experiencing a death in the family.”

Top Ten Tips for Saving Money

Finding ways to save money isn’t as daunting as it seems on days when you’re paying monthly bills or running into expenses like car trouble, spikes in gas prices, illnesses and (if we’re being honest here) fees for late credit card payments.

You might feel as if you’re already stretched thin, but a deeper dive into household costs, entertainment spending and other possibilities for savings, reveals real opportunities to change habits and put money aside on a regular basis.

Better yet, some of the tips financial experts recommend often become second nature when put in practice. The least stressful kind of saving happens when you can save without having to think about it.

Solomon, who has been featured in Forbes, Business Insider, Fox News and CBS News, offers one example but the theory is helpful across all avenues of cost cutting and budget planning.

“Automating the procedure is the best method to grow your savings,” Solomon said. “Inquire with your employer about setting up automatic deposits from your paycheck into your savings account.

“Find out how much of each paycheck you can afford to set aside for savings. Your deposits, whether it is $10 or $100, will increase your overall savings beautifully over time.”

The most effective ways to save money range from trimming costs to finding ways (such as side jobs) to increase income. Those warnings that say “don’t try this at home” don’t apply here. Try all of these at home.

Reduce Costs to Save Money

You’re not likely to see bumps in salary more than once a year, unless you routinely receive bonuses or work on commission.

So learning how to cut your expenses may be the most important step to savings.

Don’t look at your monthly spending habits as fixed costs just because you’ve ingrained them over the years. Turn a critical eye toward how you’re spending.

Review everything:  gym memberships and what you spend on takeout food, what you spend on housing and utilities, that $4.95 Caramel Frappuccino you pick up every day on your way to work (and sometimes even to the gym.)

Saving even small amounts add up when there’s so many possible categories for reducing costs.

Save Money at Home

Home is where the heart is… put under stress by mounting costs.

There are many ways you can save money at home by looking at the costs associated with renting an apartment or home ownership:

• Make a weekly food budget
• Shop with a grocery list (and not when you’re hungry)
• Consolidate errands to save miles on your car and gas
• Install a water heater timer
• Routinely change your furnace filter
• Seal drafty windows in the winter
• Put in a programmable thermostat
• Find cheaper insurance

“How diligently did you look for the lowest prices on homeowners’ and auto insurance when you purchased your home or vehicle?” Solomon says. “Not at all? You should always compare prices when buying insurance.”

Make Saving Automatic

Any time you can save without it feeling like a great sacrifice, your chances of building up an emergency fund or even a retirement fund increase exponentially.

Solomon’s advice about having a certain percentage of your paycheck (10%?) deposited directly in your savings account is one way to make saving automatic. Contributing to a pre-tax 401K is even better.

Cancel Unused Subscriptions

Subscriptions spiked during the pandemic as people sought more home entertainment options, convincing themselves they were still saving money because they weren’t spending on vacations, concerts, etc.

But do you really know how much you’re spending on subscription services? Unless your only guilty pleasure is Sports Illustrated or Better Homes and Gardens and you don’t even own a TV, you probably have no idea how much you could save by canceling subscription services you use infrequently.

Break down your monthly bill and see what subscription services you routinely use. Cancel the ones you don’t.

Track Your Spending

One of the best ways to understand where extra money can be saved on a weekly or monthly basis is to track your spending. You might be amazed (or horrified) to see how much you’re spending in certain areas that don’t fall into the category of necessities.

And one way to track your spending is the use of budget apps. Some are even free but you might be able to accomplish the same goal with a spreadsheet.

“You don’t have to get granular to get an understanding of your finances,” Frank Murillo, Partner, and Managing Director at Snowden Lane Partners in Miami, said. “Once you understand where you’re spending, you can start to see where to “trim the fat.” Make reductions where appropriate and start funding your future.”

Pay Off Debt

Murillo suggests a simple exercise to demonstrate the weight of credit card debt that many people carry month to month.

“Understanding your “take home pay” can be a great first step,” he said. “Here’s a few tips:

1. Most of us have direct deposit. Log in to your bank account and average your monthly deposits from the past 12 months.
2. Most of us also charge everything on our credit cards these days. Most credit cards have a “Year End Summary.” Pull that summary for each of your cards and calculate a monthly average.
3. Subtract the amounts in Step 2 from that of Step 1. You’ll start seeing the big picture.”

Making a concerted effort (that means more than the minimum payment) to pay off high interest credit cards might be the single most important step to smart budgeting.

The strategies to pay off debt include:

• Debt Snowball: A method of paying off your smallest debt first, while making minimum payments on other debts. When you pay off the first debt, roll the amount you paid into the next biggest until it’s paid off, and so on.
• Debt Avalanche: Tackles the highest interest rate debt first, while making minimum payments on your other debts. Move on to the next highest interest rate debt once the highest rate debt is paid off.
• Debt Consolidation: Allows you to merge multiple debts into a single debt, paid off by a loan from a bank, credit union or online lender, ideally at a lower interest rate.
• Debt Management Programs: Also merges multiple debts into a single debt at a lower interest rate but doesn’t involve a loan. Provides a carefully constructed payment schedule managed by a nonprofit credit counseling agency.

Don’t Eat Out As Much

If you’re looking for something to make you feel better about the spike in prices at the grocery store, look no further than the menu at most any restaurant.

Eating at restaurants or stopping for takeout on the way home from work is a lot more expensive than scouring your refrigerator, freezer, or pantry for tonight’s dinner or, certainly, meal planning for the week.

There are sound strategies to help save money on food.

“Prepare large quantities of your favorite foods and freeze the leftovers for later use,” Solomon said. “Purchase nonperishable goods. Use coupons for food. Instead of recognizable brands, choose generic or store brands for canned products. Spending less on coffee purchases can also help you save money.”

Save Money on Your Bills

A family member insists on paying for satellite TV and cable TV on the theory that if one goes out for any reason, he has a backup. That doesn’t keep him from complaining when the stock market goes down that he is running out of money.

One way to save is to reduce your internet bill. Providers are more open to negotiating a lower fee than you might think, especially if the alternative is losing you as a customer.

Another way is saving money on utilities. Water use and electricity alone are ripe areas for saving that may seem inconsequential on a daily basis but that can add up over several months.

Solomon recommends fixing leaking faucets, unplugging electrical appliances and using energy-saving light bulbs. All should reduce monthly bills.

“You can also turn your water heater’s temperature down,” he said. “One hundred thirty degrees Fahrenheit temperature should be enough. It also saves energy to insulate hot water pipes and use a water heater blanket.”

Save Money on Rent

Home ownership is out of reach for many people, especially with interest rates spiking as 2022 ends.

Renting may well be a more cost-effective option, though rental costs soared along with the housing market during the pandemic. That’s prompted those feeling the crunch to look for ways to save money on rent.

If taking in a roommate isn’t possible (or desirable) there are other means of reducing rent. One of the most obvious and most effective is to research rentals in surrounding areas. A slightly longer commute to work from a less expensive neighborhood might be worth it if you can reduce your rent.

Budget Your Spending

Finding ways to save money can always help but saving doesn’t become an effective strategy without making a budget.

“You need to tell your money what you want it to do,” Jay Zigmont, founder of Childfree Wealth, said. “Setting a budget both tells what you can and cannot spend money on. Each month you should set a budget and use weekly budget meetings to make sure you are on track.

“(One way is to) switch to using prepaid debit cards instead of credit cards. You can fund your debit cards each month when you set a budget and they will force you to stop spending.”

Saving money without a budget is possible for sure but it’s difficult to sustain. Saving money with a budget provides the frame for a clear financial picture.

Solomon: “A budget helps you identify and work toward your long-term objectives. It compels you to set goals, save money, monitor your progress, and realize your aspirations.”

Knowing how to make a budget is a crucial first step to tracking your spending and can be a gateway to finding more ways to save additional money.

Tracking spending can become habitual when you apply budgeting to your everyday life:

• Budgeting out groceries is perhaps the most common avenue for tracking spending. It entails everything from using coupons to buying in bulk to simple meal planning.
• Saving money on gas is another habit-forming step. How? Fuel rewards programs. Consolidating your errands. Costco gas is typically 20-30 cents cheaper a gallon. The gas savings more than pay for the standard yearly membership.
• Vacations can be budget busters, a chance to splurge and treat ourselves for all our hard work. But flexibility in making airline reservations or hotel reservations can save money.
• Use money apps that help with saving. Acorns is a great way to get a jump start on a savings account. Truebill can help you trim back on your subscriptions. Take advantage of these and use them in your everyday life.

Also, vacation rental services such as Vrbo and Airbnb provide lots of options for housing that offer vacationers the opportunity to cook meals at home and save on inflated restaurant costs, especially in resort areas.

Talk to a Professional about Saving Money & Paying Off Debt

Saving is a challenge. If you’re able to create a budget, are adept at using tracking apps and are self-policing, especially when it comes to credit card debt, you may well be up to the challenge.

“I always tell clients, “Your bank doesn’t pay you 15%, so why are you paying Visa (or any other card company) that much?” Murillo said. “Compounding works great on your investments, not so much on debt.”

There’s help out there if you’ve tried but have failed to get your spending under control and your savings healthy enough to give you peace of mind, if not future security.

Many people underwater in credit card debt have turned to nonprofit credit counseling for assistance.

Saving money and getting your spending under control can feel like trying to tame a wild horse. A credit counselor can advise on how to make a budget as well as suggest a debt management plan if necessary.

Don’t beat yourself up if you’re struggling to save money or if emergencies such as medical problems or job loss roll a hand grenade into your financial goals.

You’re not alone. Given the resources and professional help available, saving should be a goal built less on tricking yourself into putting money away than on a well-considered financial strategy.