There are really only two ways to save money: spend less or earn more. It’s like dieting: eat less and exercise more. The most effective way to achieve your goal is to do a little of each. But if you truly hate exercising, you can still lose weight by eating less, and if you can’t give up your daily Coke-and-Snickers-bar habit, you can just exercise more.
The same goes when you want to save money. Therefore, half of our ideas for you will center around spending less, and the other half around how to earn more. Goals are more reachable when you have choices, so you can opt for what will best suit your individual style.
1. Track your expenses
You may find it difficult to change your spending habits if you don’t know what they are. Do you ever notice that your bank account is low and wonder what you spent the money on? This is quite common.
Some consumers have trouble using credit cards because they find them so easy and convenient that they pull them out too often and end up buying more than they can afford. If you do not have this problem, however, using your credit card is a great way to track expenses. Capital One offers some advice on how to do this successfully and even improve your credit score in the process.
Limit the number of cash withdrawals you make each month — it’s hard to remember what you spent the money on, and trying to save receipts and keep them all in one place is almost impossible.
If you use your credit card for most purchases, you will be able to see exactly what you spent it on at the end of the month. Thus, you might be surprised at how many times you ate out or how much you spend on clothes and shoes each month.
2. Make a budget
The knowledge of what you spent your money on is helpful, but it’s only a start. You can overspend each month and know why, but it’s important to do something about it.
One good way to start a budget to save money is to list all the things you spend money on, like rent/mortgage, groceries, utilities, health care, vehicle expenses, entertainment, insurance, etc. Separate the fixed expenses from the flexible ones. For instance, you know your rent or mortgage will be the same amount every month, and this is an expense you cannot cut out, so it’s fixed.
After you’ve tracked your expenses for a few months, write down the average amount you spend for your flexible categories, like takeout, clothing, and movies. Do you still have money left over every month? If not, take a look at your flexible expenses and see where you can cut back.
For example, if you ordinarily spend about $400 a month on clothes but you think you could get by on $200, start noticing how often you are in a store and/or online shopping, and make the decision not to buy every time something catches your eye.
Once you are more aware of spending habits, they will be easier to control.
To get started making your own budget, check out the advice from Consumer.gov.
3. Make some long-term changes
Besides trimming the flexible expenses where you can, you may be able to cut down on some of your monthly bills to save money. Some ideas are:
- Get a better cell phone plan. Are you always paying extra for data? Do you need unlimited calls and texts? Go over your latest bill and make a note of what you’re paying for, and see if you really need those services. You may be stuck with some of it until your contract expires, but start shopping now for a better plan so you’ll be ready to switch when it’s time. See what Consumer Reports has to say about the best cell phone plans.
- Revisit your cable bill. These bills have a way of mushrooming. You may be subscribed to a tier of channels you no longer even watch. If your cable is bundled with your internet service, take a look at that as well to make sure that you are getting the best rate. While you are likely stuck with your cable provider until the end of your contract with them, you can still cancel premium channels or services you don’t use to lower your bill. If you’re ready to cut the cord altogether, read this U.S. News & World Report article on how to get by without cable.
- Call your insurance company. If you use one company to insure your car, your home, your belongings and your life, you are likely eligible for a discount. Ditto if several family members in the same household use the same company. Call and check to see if anyone is eligible for a safe driver discount, if it’s wise to still carry collision insurance, and if you need more or less life insurance. Iii.org, the Insurance Information Institute, recommends raising your deductible and asking for a discount if you have a good credit history.
So those are some ideas to help stop the flow of cash out of your coffers, but how can you add money to your bank account?
1. Get a second job
One of the most dependable ways to save money is to earn extra income. How you do this will depend on your location and your skill set. For instance, if you have experience as a waiter or waitress or bartender, getting a part-time job in a restaurant or bar can be lucrative.
These kinds of positions can be great because of the way some industries schedule employees. You can tell them, hey, I’m only available Saturdays — I want to work every Saturday from 5 to close. A lot of establishments would be good with that. (What they won’t be good with is if you never want to work Saturdays. Plus, you wouldn’t make much money that way.)
If your main job provides regular hours that don’t change from week to week, this makes it easier to get a regular part-time job working evenings in retail or the service industry.
Some great ideas for flexible, part-time jobs to earn some extra money are:
- Deliver newspapers, documents, flowers, food, etc.
- Drive for a ride service.
- Tutor kids in school.
- Walk dogs.
2. Invest wisely
We have all heard stories of how people got rich from their investments. We don’t hear as many stories about people who got a mediocre return on their investments — probably because that’s not a very interesting story. But it happens every day.
It’s smart to invest your money because if you don’t, it simply loses value wherever you have put it, even if it’s in a savings account. But it can be hard to decide exactly how to invest it. It is, after all, a gamble, even if it’s a legal gamble.
Kiplinger says most people start outputting their trust in the “experts,” the people who manage their retirement accounts. You choose the level of risk you are comfortable with, and based on this, they choose which funds to buy with your money.
But you can invest your money in other ways as well. You could:
- Buy certificates of deposit.
- Start a 529 college fund account.
- Buy real estate to rent out or flip.
People use it as a metaphor, but there is truth to it: invest in yourself. Get the degree you’ve always wanted, take training classes toward a certificate or study on your own. All of these methods of educating yourself make you more valuable to employers and therefore worth more money. And even if you don’t get a raise from your current employer, you’ll never feel sorry that you got more education.
3. Start your own side business
This could be buying, selling and/or re-selling items (i.e., shop yard sales for items to sell on eBay), but Entrepreneur points out that there are more than a dozen ways you can make extra money without even leaving the house.
Making money from sales can be as simple as selling some junk you have in your basement like your old skateboard to having a gross of T-shirts printed that you designed yourself to sell. The possibilities here are endless — mine your talents for ideas.
You can do the same providing services you are good at, though you will have to leave the house to perform some of them. Some ideas are:
- Fix computers.
- Provide childcare.
- Provide pet care.
- Do hair (braiding, cutting, coloring, blowouts).
- Do nails (fancy extensions with art).
- Fix cars.
- Do home repairs.
- Help with taxes or other accounting/bookkeeping needs.
- Cook or do meal preps ahead.
- Run errands (dry cleaner, post office, grocery store, prescription pickup).
- Be a personal assistant.
Sometimes your financial situation is too dire to be rescued by any of the above suggestions. After all, our suggestions are meant to show you how to save money for a rainy day, not get out of crippling debt or grapple with overwhelming monthly bills.
If you find yourself in these situations, you will have to take more drastic measures. If your car payment is $500 or $600 a month or your rent or mortgage is creeping closer to $4,000, you may need to consider selling your car and getting a cheaper one, moving or getting a roommate. These strategies make big dents in your budget immediately and can bring you the peace of mind you need.
As this post demonstrates, there is always a way to save money, get ahead and add a little more cash to your bank account. Get those creative juices flowing and set the wheels in motion!
For more ideas on how to make money and save money, sign up for our newsletter now!