How to Save Money: 17 Tips
It's a brand-new year, filled with brand-new goals! If you're like most Americans, you're probably hoping to save more money in 2020. NerdWallet came up with 17 tips for how to save money on every day and monthly expenses. Plus, they included tips on setting aside funds for the future! Keep reading to enhance your "money-saving" knowledge and multiply those dollars in your savings account.
Imagine what would happen if you found extra money in your monthly budget. Could you finally afford a real vacation? Could you stock something away for emergencies? Perhaps you'd be debt-free at last.
Saving money begins with your mindset.
Avoid thinking of money-saving techniques as restrictive — although they can often feel that way. At NerdWallet, we think about a budget as a spending plan because saving money doesn’t mean you have to quit spending altogether. It just means you must prioritize some financial goals over others. Depending on how much you want to save, here’s how to do it.
Get serious about a budget.
Ready to get started? We recommend the 50/30/20 budget for smart money management. Devote 50% of your income to necessities, 30% to wants and 20% to savings. If you find one of your allocations exceeds these percentages, make some adjustments to fit the formula.
As you work toward your ultimate financial goal, make sure to put your newfound funds in a good high-yield savings account to maximize your money. Some of the best online accounts pay interest rates as much as 150 times higher than large traditional banks.
Daily money-saving tips:
Simple tweaks to your daily routine can yield small savings that add up over time.
1. Use an automated tool: Find an app or bank account that takes the work out of saving. Digit and Qapital both automatically transfer small amounts from your checking account to a separate savings account. Bank of America does the same each time you swipe your card.
2. Take manual savings actions: Empty your pockets each day and start collecting that extra change. Then take your collection to the bank and put it directly into your savings account instead of your checking account. When you want to watch your spending, use dollar bills instead of credit cards. It's harder to part with cold, hard cash.
3. Prep for grocery shopping: A little work before you go to the grocery store can go a long way to help you save money on groceries. Check your pantry and make a grocery list, then use coupons and loyalty programs to maximize your savings as you shop.
4. Order smaller servings at restaurants: Your social life doesn’t have to suffer for you to save money. Eating out every day will deal a major blow to your bank account, but you can still dine out and stick to your budget. Opt for appetizers or split an entree with your dining companion to save money when you eat out.
5. Get discounts on entertainment: Take advantage of free days at museums and national parks to save on entertainment costs. You can also ask about discounts for seniors, students, military members and other discounts when purchasing tickets for everything including movies, concerts and theme parks.
6. Map out major purchases: Time your purchase of appliances, furniture, electronics and more according to annual sale periods. Don’t buy anything hastily, either. Always wait a day or two before buying to limit buyer’s remorse.
7. Restrict online shopping: Make it more difficult to shop online. When you shop regularly at a retailer’s website, it’s convenient to create an online account to save your billing information. But if you force yourself to input your shipping address and credit card number each time you order, you probably will make fewer impulse purchases.
8. Make your own gifts: The cost of birthday, wedding and graduation gifts can quickly add up. Go the DIY route or save money with affordable gift ideas, like herb gardens and gift baskets.
Monthly money-saving tips:
Lowering recurring payments may require some legwork, but the potential savings make the effort worthwhile. You could save as much as $40 per month by changing your cable package or more than $50 per month by refinancing your car loan. Keep reading for more ways to save on monthly expenses.
9. Lower your car payment: Refinancing your auto loan to take advantage of lower interest rates could save you $1,000 or more over the life of your loan. But that’s just one option.
10. Bundle cable and internet: You could lower your cable bill by as much as $40 per month by changing your cable package. And you could save more than $1,000 over two years by bundling your cable and internet service, depending on your carrier.
11. Switch your cell phone plan: Changing your plan is one way to save money on your cell phone bill, but it’s not the only way. For starters, you may not need insurance. Removing it from your plan could save you nearly $100 per year, per line.
12. Monitor your electric bill: Big and small changes in your energy usage can help you save as much as $550 annually on your electric bill.
13. Lower your student loan payments: Income-driven replacement plans can lower your monthly student loan payments by several hundred dollars each month.
14. Cancel unnecessary subscriptions: Uncheck the auto-renew option on any subscriptions you aren’t using regularly, such as subscription boxes or streaming services. That’ll help cross at least a few recurring charges off your monthly credit card statement.
Long-term money-saving tips
Saving over the long term — to build an emergency fund, take your dream vacation or make a down payment on a new home — doesn’t just happen. It requires planning and discipline. Learn how to set goals, track spending and save on your biggest expenses.
15. Track spending: Get a true picture of where your money goes today by keeping track of your monthly cash flow — your income minus your expenditures. This will also make it easier to mark progress toward your saving goal. NerdWallet offers a free app that helps you track your cash, discover new ways to save and even build your credit score.
16. Refinance your mortgage: Refinancing your mortgage to snag a lower interest rate can save you several hundred dollars each month. You need to get your ducks in a row before refinancing to maximize your savings, so check your credit score and avoid taking on new debt.
17. Set savings goals: Think about why you’re saving. Is a wedding on your horizon? Are you getting ready to buy your first home? Keep that picture in mind. It’ll help keep you motivated. Then set a specific but realistic goal. It may be “save $5,000 in an individual retirement account this year” or “pay off my credit card debt faster.” Use a savings goal calculator to see how much you’d have to save each month or year to reach your goal. It’s OK to start small. Little steps add up.