Whether you are trying to reduce your monthly expenses to reduce debt, save for a significant purchase, or build your nest egg, there are times when we all need to save more money. Here are some savings strategies to consider.

Everyday Spending Traps

Your day-to-day spending decisions can add up in ways you may not expect. Common behaviors that increase spending may include:

  • Convenience Eating: Everyone needs food, but do we need to buy it from restaurants or coffee shops? Buying food from any place other than a supermarket is a convenience that's priced accordingly. Convenience eating includes coffee, soda, bottled water, candy, meals - the list is potentially endless. Bringing food from home each day can save hundreds of dollars per month. And keep in mind that buying prepared food at the supermarket can be just as expensive as a restaurant.
  • Spending with Cards: Besides the fact that spending with credit or debit cards could potentially lead to high-interest debt or other fees, spending money with cards is convenient - sometimes too convenient. Studies have shown that people generally spend less when they spend with cash. Try giving yourself a certain amount of cash for daily spending and see if you notice a difference.
  • Not Comparison Shopping: A must when considering a large purchase, comparison shopping can yield huge savings when used daily. For example, the generic versions of many supermarket staples can be just as good as name brands. The same rule applies to clothes and personal care items. Prices vary widely for essentially the same product based on the brand and the store.
  • "Saving" with a Sale: Sales may offer a deal but can also lead to unplanned spending. Think of it this way: Even if a sale provides a 50% discount on a $100 purchase, buying something you don't need doesn't save anything. In fact, you just spent $50!

Saving on Financial Services

A bank or credit union should be a place to save money, not lose it. To save money on financial services, consider:

  • Audit Account Fees: Spending $10, $20, or more monthly on unnecessary checking account fees can cost hundreds per year. Many banks and credit unions offer "basic" or student checking accounts with low or no monthly fees. However, be careful of accounts that require a minimum balance or provide a small number of monthly transactions.
  • Automate Bill Payment: Late fees, higher interest rates, and damage to your credit report are some potential consequences of late payments. If you're sure enough money will be in your account to cover the amount due, automatic payments for recurring charges can minimize the chances of late payments and simplify your financial life. If you have student loans, you may qualify for an interest rate reduction with automatic payments.
  • Avoid Alternative Lending: Check cashing services, "fast" income tax refunds, payday loans, and rent-to-own stores are often bad deals. If you're currently unbanked, look for a checking account that can meet your unique needs.
  • Ask for a Rate Reduction: Carrying a credit card balance? You may get an interest rate reduction by calling your credit card company and telling them you're looking for options for cutting your interest rate (including switching to another card company). They may be willing to reduce your rate if you don't have a history of missed payments. It's worth a try!
  • Speaking of financial services, consider automatic savings by setting up an automatic checking-to-savings transfer each pay period. This strategy is a great way to build an emergency fund or save for a goal. In addition, some banks and credit unions offer fee discounts when you set up recurring savings transfers.

Other Savings Ideas

Auditing your everyday spending and financial service fees can result in savings for many people, but here are a few other ideas to consider:

  • Save Windfalls: Gifts, bonuses, tax refunds, or any other unexpected source of cash could either be saved or used to pay down high-interest debt.
  • Cancel Cable TV or Comparison Shop: With the average cable TV bill approaching $200 per month, that's $2,400 per year in savings. Many popular shows and sporting events are also available with a streaming subscription or "over the air" using an inexpensive antenna. Don't want to cancel? Try comparison shopping with a different provider, reducing your channel lineup, or exploring bundle discounts.
  • Cancel Recurring Charges: From unused gym memberships to streaming subscriptions, many people can save hundreds of dollars per year by getting rid of unwanted services automatically charged each month. Regularly review your credit card and bank statements to identify recurring subscriptions you no longer use or need.
  • Economical Entertainment: Enhance your leisure time without straining your wallet by taking advantage of free or discounted entertainment options. Many museums and parks offer free admission days, and local communities frequently host no-cost concerts and events. Always check your local event calendars for free activities before spending on entertainment. This proactive approach allows you to enjoy rich experiences while maintaining your budget.
  • Try Negotiation: More costs can be negotiated than you may expect. Cell phone contracts, home internet service, and dental procedures (if you don't have dental insurance) can all be negotiated. There are no guarantees, of course, but it doesn't hurt to ask.
  • Implement the 30-day Rule: Curb impulse buying with a cooling-off period before purchasing. For example, when shopping online, place the item in your cart but leave it for later. After a day or two, you may find the item was more of a want than a need.
  • Consider Consignment and Thrift Stores: Buying lightly used secondhand items from consignment and thrift stores can result in significant savings compared to purchasing new.

Mortgage Refinancing to Save?

If you own your home, your mortgage payment is likely your most significant monthly expense. While rates have been high in recent years, they do vary over time.

If your mortgage has a high interest rate, keep an eye on current rates. Refinancing may reduce monthly payments significantly if they drop a point or so from your rate. Just remember that mortgage refinancing has pros and cons, even if your payment is lower. So be sure to consult with a knowledgeable professional before refinancing to fully understand the "break-even" point, including both fees and the impact of refinancing on mortgage amortization.

The Takeaway

 Saving money is an essential skill for achieving financial goals. Be mindful of your everyday spending habits, shop smarter, and take advantage of cost-saving opportunities in your financial services and beyond.

 Remember, the strategies outlined here are just a starting point. There are countless ways to save money; the best approach will depend on your unique circumstances and goals. Stay open to new ideas, be creative, and don't be afraid to try new things. With a little effort and dedication, you can develop a savings plan that works for you.