25 Ways to Save More Each Month by Ben Steverman
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The more we spend unnecessarily, the less money
we save for our true priorities and future needs. That's especially
important in challenging economic times. BusinessWeek asked financial advisors
for tips on how to reduce expenses and boost savings. Changing spending
habits can be difficult, but here are 25 suggestions to get started.
1. Track Every ExpenseFinancial
advisors say the best way to control your spending is to know precisely
where all your cash is going each month. There are several options:
Make a budget; keep a spreadsheet of all spending; or buy a computer
program designed to help manage your finances.
2. Vacation in the Off-seasonReston (Va.)-based financial planner
Frank Boucher says he is taking his beach vacation in early September,
when he found a luxury condo for half its cost during July and August.
Vacationers can also save by staying with friends or visiting low-cost
locations like developing countries.
3. Cut Out Investment Charges and FeesJeff Seymour of Triangle Wealth Management
in Cary, N.C., points out that many investors end up paying 2% to 3%
off the top each year for investing costs. Lower-cost mutual funds and
index funds can slash that bill, savings that compound over several
decades of investing.
Also, save more by taking full advantage of your employer's matching contribution to your 401(k) account.
4. Cut Back on Eating OutFood
is a daily expense that can add up quickly over time, so office workers
can save a lot just by bringing their lunches to work rather than
buying every day. Meals eaten at home almost always cost less than
evenings out, even at more casual restaurants.
5. Downsize Your CarDrivers
stuck with a gas-guzzling SUV might consider selling it and finding
more fuel-efficient wheels. (Of course, that could mean a financial hit
given falling prices for the behemoths.) You can save on fuel and also
on auto loan payments. High car payments are a frequent budget-buster, financial advisors say.
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6. Cut Utility Bills, Especially ElectricityExperts
are full of advice on lowering electricity and heating bills: Buy
efficient light bulbs; lower the thermostat; turn off the air
conditioning whenever possible; turn off lights and unplug appliances
when not needed.
7. Make Sure You Don't Have Too Much InsuranceLife
insurance can be a bad deal if you don't have dependents. For auto and
home insurance, deductibles are often too low, advisors say. "You can
save quite a bit by going from a $250 to $1,000 deductible," says Kirk
Kinder of Picket Fence Financial in Bel Air, Md. "Also, shopping these for prices every couple years is important."
8. Find Cheaper Beverages to DrinkIf
you can break your addiction to fancy coffee, the free office coffee
can be a money-saver over time. Unwilling to give up out-of-office
coffee breaks, some thrifty consumers switch to a cheaper drink at
their local Starbucks or other coffee shop. For alcoholic drinks,
quality wines, beers, and liquor can be found at lower prices with a
little research.
9. Examine Your Phone ServiceDo
you need both a landline and a mobile phone? If you have a cell phone,
do you need long-distance service on your home phone? Canceling one
line could mean one less bill every month. Many people have phone
packages that are too expensive for their needs, so read your bill
carefully.
10. Stop Paying for Premium CableSome
penny-pinchers cancel cable service entirely to save $100 or more each
month. Others lower their bills by cutting out premium movie channels.
11. Drive Less; Consolidate TripsThink
before jumping in the car. By planning and running many errands on the
same car trip, you cut your fuel usage. Rather than driving, consider
using public transportation, or walk, bike, or rollerblade somewhere
nearby.
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12. Use Warehouse Stores WiselyWarehouse stores like Costco or Wal-Mart's
Sam's Club can be great places to get deals, but they can also
encourage over-spending. "Just make sure you go with a list and only
buy those things that you are actually going to consume," financial planner Frank Boucher says. "It makes no sense to get a 'bargain' on a bulk item if you are going to throw half of it away."
13. Lay Down the Law with Your Free-Spending FriendsIt can be hard to keep up with wealthier or less thrifty friends. Some financial planners
advise cash-strapped clients to seek out social companions with similar
budgets. However, if you're honest about your spending limits, true
friends should be willing to adjust their plans by, for example,
choosing a less pricey restaurant.
14. Find Free EntertainmentMovie rentals, cable TV packages,
book purchases, concert tickets—it can all add up. Use your local
public library to read books and rent films for free. Depending on
where you live, it might also be possible to find free concerts,
performances, and readings.
15. Consider Alternatives to a Gym MembershipThe
health benefits of a fitness club membership are only worthwhile if you
go often. But there are other options: Exercise at home, outside, or at
a local parks facility. Or, sign up for individual exercise or yoga
classes rather than a full membership.
16. Cut Your Own LawnMichelle Goldstein of Goldstein Financial Future in Dallas estimates her family saves $40 each time they mow their own lawn instead of calling a lawn service.
17. Be Smart with Credit CardsFinancial advisors
admonish clients to pay off their bills each month to avoid interest
and finance charges. For those stuck with debt, move cash to cards with
low interest rates. Some find they spend less on impulse purchases if they cut up their credit cards and use only cash instead.
18. Annualize Your ExpensesWhen
reviewing your spending habits, roughly calculate how much they're
costing over the course of a year. "Realizing how much things cost over
the course of a year can really help put things in perspective," says
Bob Nusbaum of Middle America Planning in Pittsburgh. For example, if
you spend $10 for snacks and lunch each weekday, that adds up to $2,500
in a year.
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19. Force Yourself to SaveOne way
to save more is to trick yourself. Transfer money automatically from
paychecks into savings or investment accounts. With less available in
your checking account, you'll be more careful about your spending.
Gradually increase your automatic savings rate over time.
20. Institute a Waiting Period for Major PurchasesWait
at least 48 hours before deciding to buy anything over a certain price
limit—$50 for example. After the waiting period is over, "You may
decide that the object desired really isn't worth the price," says
Jennifer Hartman of Greenleaf Financial Group in Los Angeles.
21. Pay Bills Online—Save on Stamps, Avoid Late FeesSet
up your finances so bills are paid automatically or online at the click
of a mouse. "There's no reason to pay for stamps and envelopes and run
the risk of a late-payment fee when bill-pay programs are usually
free," says Walt Mozdzer of Syverson Strege & Co.
22. Make Sure You're Deducting All Business ExpensesChris
Long of Long & Associates in Chicago says clients often make the
mistake of mixing personal and business expenses on one credit card.
That makes them less likely to get reimbursed for expenses by employers
or to deduct expenses from taxes.
23. Buy Generic Drugs and GroceriesStore-brand
products in grocery stores are often made by the same manufacturers as
the brand-name items. If you take prescription drugs, ask your
pharmacist if a cheaper, generic version is available.
24. Buy UsedCars,
books, furniture, and even clothing can be bought used for a fraction
of their original cost. New cars in particular often aren't worth the
extra cost; a lightly used vehicle can save you thousands of dollars
with little or no extra maintenance expenses.
25. Shop Smart Coupons
are a classic way for shoppers to get great deals. Supermarkets vying
for shoppers will frequently run "double coupon" promotions.
Comparison-shopping on the Internet is easy thanks to a variety of
sites designed to help shoppers find the best deals. When retail Web
sites ask for "coupon codes," try to find one by using a search engine.
But whether online or in person, avoid the temptation of
bargain-hunting for items you don't really need. "Most of the time if
an item is 20% off, we waste $8 to save that $2," says Neerja Bhutani
of Bhutani-Palmin Financial Planning in Walnut Creek, Calif.
Copyrighted, Business Week. All rights reserved.
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