One of the best tools for building wealth is to find ways to save money. Even as little as saving an extra $100 per month can help jump start a passive income stream. Saving an extra thousand dollars per year could be used to start a high yield certificate of deposit, invest in the stock market, or pay down some lingering debt.
Here are 9 simple ways to save money that my wife and I have been using to help build wealth and push us one step closer to finding financial freedom.
1. Stop Buying Snacks
I recently calculated that over the past year, I spent on average $50 per month on snacks while at work. I rarely go out to eat for lunch, but would stop by the vending machine for an afternoon soda (or pop as I like to call it). There was also that occasional bag of chips or granola bar that I thought I needed which ended up costing me about $600 extra per year.
Starting last month, I decided to completely cut this expense out from our budget and am still going strong. After a few days of avoiding the snacks, I realized this expense was more of a daily habit or routine instead of any kind of necessity.
How much can you save by cutting out snacks and trips to the vending machines while at work?
2. Take Advantage of Your Library
Our family has not rented a video or watched a pay per view movie in over two years. In the past, we averaged at least one movie rental per week totaling at least $300 per year in extra costs. Instead of giving up watching movies completely or even signing up for Netflix ($100+ per year), we have opted for taking advantage of our local library.
Every single movie we watch is rented from the library for free. While there are a few limitations to using the library, the cost savings of over $300 are well worth it.
We also use our library to check out books for the kids and ourselves. This prevents us from spending $25+ on the latest novels that we may want to read.
3. Drop Your Newspaper Subscription
Do you subscribe to your local newspaper? How often do you actually read it? A couple years ago I was confident we needed to subscribe to our paper. At the time it ran about $180 per year for a home delivery subscription 7 days per week.
After a year of getting the paper and realizing I never read it during the week, we switched to a weekend only paper (mostly to get the grocery coupons). While the weekend subscription is cheaper (about $100 per year), I still have a difficult time reading it. Once our subscription runs out, I plan to cancel the paper all together and ask friends and family for their unused coupons.
4. Payoff of Debt Faster
My wife and I made a commitment late last year to make paying off our vehicle a priority. Instead of spending money on trips or things we don’t need, we wanted to be free and clear of any type of car payment. Our first step was to refinance and get a much lower rate than we had and then start paying down the principal.
In a few months, we will have accomplished our goal and will save well over $300 in interest on our vehicle in a year! Once the car is paid off, the normal payments will be used to help build a dividend paying stock portfolio.
5. Make Your Own Coffee
This money saving tip always seems to show up on most lists, but it is an important one for coffee drinkers (myself included). I went through a stretch where I was spending about $2 per day on coffee on my way to work. While I knew this was costing me extra dollars, the convenience (at the time) seemed to be worth it.
Then one day I finally woke up and asked myself if the coffee I was buying was worth an extra $500 per year? For less than $30, I purchased a new coffee maker for work along with filters and a big tub of coffee that will last the entire year!
I know what it is like to shrug off the costs of paying for your morning coffee, but is it really worth $500 extra bucks?
6. Check Your Credit Card Statements
How often do you check your credit card statements to make sure you aren’t being charge for questionable purchases or recurring memberships you may have forgotten about? I fell victim to this up until 2 months ago. Almost two years ago I signed up for a free coupon service that offered some good deals with no membership fee for a year. Then at the beginning of the second year, a monthly membership started to be charged.
I actually didn’t even use this service and was being charged $10 per month for over a year! When I began studying my statements just recently, I quickly canceled the membership and will now be saving that $120 I lost last year.
7. Check on Your Insurance Payment Cycle
For a long time, I use to prefer to make a monthly payment for my car insurance in favor of making semi-annual payments. This was out of convenience and helped me maintain a monthly budget. The only problem with this type of payment is that a $3 service charge was added each month for choosing this option.
Now instead of opting for a monthly payment schedule, I pay our car insurance twice per year saving $24 in service charges. Not only do I save on the fees, I am also earning a little interest by holding onto this money for a longer period of time.
It may be a good idea to check with your insurance company to see if they add on these extra fees when opting for a monthly payment schedule.
8. Regulate the Thermostat
How cool do you keep your house in the summer? How warm is your thermostat set in the winter? My wife and I have experimented with various temperature settings in our house for over the past two years during every season. In the summer, the A/C is set to go no lower than 82 degrees. In the winter, we don’t turn the heat up past 66 degrees. Properly managing our home energy expenses has helped us save a lot of money.
After asking several neighbors how much they pay for electric (in the summer) and natural gas (in the winter), we noticed a huge savings in our utility bills. Each month, we consistently saved at least $100 compared to what our neighbors were paying who constantly keep their homes in the 70 degree range no matter the season.
Some may think that these temperature setting are extreme (and at first they may feel like it). However, once you get use to it, it really isn’t all that bad as your body begins to adjust. Plus, saving $1,200 a year makes the extremes much more tolerable!
9. Keep Track of Bank Balances
There is nothing more frustrating to me than writing a check with insufficient funds in our checking account. This isn’t because we don’t have the cash to pay our monthly bills. It normally just comes down to the timing of automatic withdrawals and trying to move money around between different accounts. I use to average about 3 or 4 of these per year and would get a $27 fee charged by my bank.
After getting dinged for another one of these charges earlier this year, I finally had enough. Instead of giving the bank an extra $100 every year in extra fees, I am now very diligent about making sure I always have enough funds in my checking account.
Final Thoughts
By making just a few minor adjustments and sacrifices in our daily lives, we managed to save over $3,000 in one year. The majority of these monthly expenses were out of convenience and not necessarily a necessity. Once you start changing your spending and break old habits that cost you money, you will realize the importance of saving.
What simple changes have you made in your life that can be included in this list of ways to save money?
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I was paying $5 a day for lunch and $2 a day for breakfast at work. I only work four days a week, but it was still costing me $28. Now I buy lunch at the grocery store for the entire week for $7. Breakfast costs $7 for two weeks (milk and cereal is cheap and healthier than most options in my area). So I spend about $3.50 for breakfast a week now.
I’m saving $17.50 a week.
Another big loss, which you mention on your list, was from buying tea (or coffee), which was costing me $3 a day. Instead I spent $3 on a box of tea which lasts two to three weeks, saving me $70 or so a month. Combined with savings on lunch and breakfast, I have an extra $140 a month. I’m opening a savings account next week and I’m going to put all of the savings from this and other expense cuts into the account so I can see how much it saves me over the year. I have it figured on paper already, but watching it grow is a wonderful incentive. I’m using all of the money at the end of the year to pay off a small college loan, which in two years will save me another $100 a month.
Thanks for sharing your experience! I find myself in this article: making your own lunch and snack is cheaper and healthier than buying everytime something already done!