The benefits of saving money each and every month is not a new topic, but each and every year there are new and improved ways to do so. While it isn’t the most exciting of topics, there are few that will have more impact on your long-term finances.
The reason is because money saved every month is… well, just that. Its money you save every month, on an ongoing basis. It’s like embracing the power of compound interest, without ever having to invest a dollar. All you have to do is find a way to save the money. Here are 5 ways to do just that.
I’m not talking about becoming a coupon clipper here. Not that there is anything wrong with that, but that takes a lot of work, and is a significant investment of time. Want to know an easier way? Plan your shopping around sales.
For example, grocery stores have their best prices and largest sales on Fridays. This is mainly rooted in the fact that many people get paid on Fridays, and grocery stores have weighted their sales accordingly.
You can plan your weekly grocery stopping around these sales, and save a significant amount of money. And, this strategy can be replicated across all of your shopping.
Most of these companies publish their sales on their website, meaning you don’t even have to leave your home to plan out ways to save money.
One of the greatest immediate areas you have to save money right away is by cutting down on the things you do away from your home. Every activity outside of your home costs way more than doing the same thing inside your home.
Here are some great examples of what you can do at home to save a substantial amount of money:
- Make your own coffee, rather than buying it at a coffeeshop. With the average price of a home-brewed cup of joe costing only $0.17 per cup, you’ll immediately notice the savings.
- Cook your own meals. You don’t even have to go dirt cheap – even cooking yourself a nice meal will pale in comparison to eating out. An added bonus – cook a little extra and bring it to work with you the next day for lunch. Now you’re really saving.
- Happy happy hour at home. Whether on your patio or in your living room, happy hour at home can be a great way to entertain with friends, while saving a bunch of money. The average markup on a beer is 7X at a restaurant, with wine roughly the same.
- Create a home gym. If you’re like so many, going the gym enough to get your money’s worth is hard. Instead, exercise outdoors and buy a few used pieces of equipment to save some money.
Speaking of advancements in saving money, automated budgeting is at the top of the list. It wasn’t that long ago that people had to track their spending via balancing their checkbook. This manual process was arduous, time-consuming, and flat-out annoying.
Those days are gone. Free online budget apps like Mint.com make it incredibly easy to set up a monthly budget, and then let the app do the work.
You do this by allowing an app like Mint to see the purchases you make across your credit cards, debit cards, and bank accounts. Mint automatically categorizes each expenditure into the proper category, and then allows you to set budgets for each individual category.
Complete with alerts, customizations, and savings tools, apps like Mint make it easy to quickly track your finances. If you’re like me, you’ll start finding areas you are spending money that you didn’t even know about. Old subscriptions, recurring payments – you can start to chip away at these charges now that you know about them.
You might be thinking – how is it that saving up for an emergency fund will help cut my monthly costs? It’s a valid question, but saving up for emergency expenses will have a substantial impact on your long-term monthly spending.
Emergencies come up every year. Sometimes they are minor, such as a flat tire or broken microwave. Sometimes they are much larger, though, like a roof leak or move. Small or large, any financial emergency causes you to have to spend unplanned money.
And, if its money that you don’t have, then you have to find a way to pay for the emergency, and it's usually very expensive. However, if you have the money in an emergency fund, not only do not have to pay an arm and a leg in credit card interest, but you don’t have to stress about it.
Not only does it not cause you stress, but you don’t have to deviate from your financial goals of saving and investing. This triad: not paying high-interest rates, lowering stress, and maintaining financial plans; are what makes building an emergency fund such a fantastic way to save money every month, in the long run.
Out of everything listed so far, reducing your monthly bills can actually have the largest long-term savings. Even just a small savings of $10/month adds up… that’s $120 per year. Do this multiple times, and you’ll create a lot of savings that never go away.
Start by tackling your utilities. Bills like your water, gas, and electricity bills can often be easiest to lower. Keep your thermostat set a little higher in the summer and a little lower in the winter. Use fans to circulate air when its hot and put on a sweater when its cold.
Check your water heater and lower the temperature that you have it set to. This keeps your water heater from constantly heating water to be at your ready. Identify energy and water hogs like dryers and dishwashers, and come up with a few strategies to lower their usage. Try hang drying a few clothes, and drying dishes by hand once in awhile.
Saving money can be really tough at first, but it can actually start to grow on you. Over time, you’ll see the progress you’re making, and it begins to get entertaining.
Set a goal for what you want to do with the money you save. Whether its pay down debt, or save for an investment goal, setting a milestone that you can work towards makes the saving process that much more enjoyable.
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