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No matter what your financial goal is, chances are that saving money is the foundation to achieving it. Without savings, it doesn't matter how well you plan or invest. But if saving is so important, why do so many people neglect to save enough?
I suspect one of the main reasons is that we tend to view saving the same way we see dieting: as a painful form of deprivation. Another reason is that we think that small savings just won't make much of a difference. Fortunately, there are relatively painless ways to save more that could make a big difference:
1. Insurance. Forget about 15 minutes saving you 15% on your car insurance. According to a Nerdwallet study, the average American can save 47% or $859 a year (about $70 a month) just by shopping around for lower cost auto insurance. This doesn't include the myriad of other ways you can save on insurance by increasing deductibles, eliminating unnecessary coverage, bundling from the same carrier, and looking for other discounts.
Savings: $70 or more a month
2. Cell Phone. Research has found that the average person spends about $100 a month on their cell phone plan and about half of Americans with unlimited cell phone plans use less than 10 GB of data per month and could save over $268 a year by switching to a plan with capped data. Many people don't realize that there are also now a host of small, pre-paid cell phone carriers that provide service from the big four networks at much lower prices. For example, I have a pre-paid plan with Verizon VZ that costs me $25 a month for unlimited talk and text and 5 GB of data on what has been called the network with the best coverage in the most places in the US.
Savings: $22-75 per month
3. Fitness. The average gym membership is about $58 per month and over 60% of memberships go unused. I'm not suggesting that you don't work out. After all, fitness has both health and financial benefits too.
Instead, consider joining the trend of working out at home, which you may have been doing anyway due to the pandemic. You might even find you’re more likely to work out if you didn't have to "go" to the gym. There are plenty of free workout sites and you can also get any equipment you need (like space-saving adjustable dumbbells) pretty cheap (and often barely used) on sites like Craig's List.
Savings: $58 per month
4. TV. It’s been estimated that people save $85-115 a month by cutting the cable cord. Figure out if you really watch all the channels you pay for and if not, consider downgrading to a cheaper package. You can always upgrade again if you change your mind. With services like Netflix NFLX ($9 per month), Hulu ($6 per month), and Sling TV ($30 per month), it's easier than ever to take a step further and cut that cable altogether, even if you like to watch live sports. With the one-time expense of a good HD antenna, you can also get over-the-air local TV stations for free .
Savings: $85-115 per month
5. Checking Accounts. Monthly maintenance fees for basic checking accounts at the biggest US banks are typically $10-12 per month. The good news is that free checking accounts are actually easy to find if you know where to look. In particular, some free "reward checking accounts," will also reimburse you for ATM fees you're charged and even pay interest rates up to over 4% if you're willing to jump through some hoops to qualify.
Savings: $10-12 per month plus extra interest
6. Other Bills. You don't always need to change your services to reduce their cost. If you're happy with the services you're paying for, see if you can negotiate down what you're paying for them. If you're just not a negotiator, there are services like BillCutterz and BillFixers that will search for discounts on your existing services and try to negotiate down your rates without changing your service. The latter claims to save the average customer $350 per year. They generally only charge you half of whatever they save you so you can give it a try at no risk...or try negotiating yourself and keep all the savings.
Savings: $29 per month
Total Savings = $274 or more per month
To see the real impact of these savings, let's take a look at three different scenarios. In one, you're trying to pay down the average American household's credit card balance of over $6k at an average APR of about 20%. In the second, you're putting money away in a savings account for emergencies. In the third, you're saving in a tax-free Roth IRA for a retirement that's 30 years away and earning an average annualized real return of 5% on your investments. Here's what re-directing $274 per month could mean for you in each scenario:
Applied to credit card debt as extra payments = debt-free in a year and over $700 in interest saved
Applied to savings for emergencies = over $16k in savings in 5 years
Applied to a Roth IRA for retirement = over $218k (in today's dollars) extra for retirement
What did you deprive yourself of to achieve those savings? You're still fully insured, enjoying your cell phone on a strong network, exercising probably more than you did before, enjoying your favorite TV shows, avoiding annoying bank fees, and paying lower bills. You didn't have to bring lunch to work, clip coupons, or turn your thermostat down. You didn't even have to give up your morning latte.
Of course, your situation or goals may require further savings. (You may even decide to cut out that latte once in a while.) But why not start with the easy stuff?
The Link LonkAugust 31, 2020 at 09:00PM
https://www.forbes.com/sites/financialfinesse/2020/08/31/6-easy-savings-tips-for-big-gains/
6 Easy Savings Tips For Big Gains - Forbes
https://news.google.com/search?q=easy&hl=en-US&gl=US&ceid=US:en
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