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When people think of saving money, they initially think they need to cut something they enjoy. Instead, people should think about spending more wisely.
I’ve compiled a list of savings ideas that will have little impact on your lifestyle. The long-term benefits are impressive: If you save $200 per month starting at age 30 and invest it at 7%, you’ll have an additional $360,000 at age 65.
1. Lower your utility bills.
Use www.whitefence.com to compare your existing Internet, television, home phone, home security and so on to other service providers in your area. You could also see what kind of deals your existing providers are offering and ask if they’ll give you a better deal.
2. Consider dropping the home phone.
Switch your home phone to Voice Over Internet Protocol (VOIP) using a device such as Ooma or Magic Jack; you can keep your old number. Or, eliminate the landline altogether and use your cell phone or Skype with your friends and family. This article describes some of the options.
3. Lower home and auto insurance premiums.
Consider raising the deductibles on your home and car insurance. By increasing your deductibles you will lower your annual premiums—but be sure that you have access to emergency cash reserves to cover any accident that may occur. You also want to do your homework and make sure you’ve chosen insurance that’s appropriate for your particular home or car.
4. Shop your cell phone plan.
Make sure you’re not paying too much for your cell phone. Go to Myrateplan and enter your current minutes, data and messages to see if you can lower your bill. Also, consider a no-contract cell phone plan; you’ll pay for the phone up front, but the monthly payments are typically reduced.
5. Use cash instead of credit.
You will find that handing out five hard-earned $20 bills is much harder than swiping a credit card. Also, it will help you determine the difference between a need and a want. Paying cash for something you want, but do not necessarily need, will be much harder with cash than credit. According to Forbes magazine, studies have shown people are more likely to complete a purchase if they intend to pay with a credit card than with cash.
6. Focus on the major expenses.
Major items include a new car, house, vacation or other big-ticket items. Spend serious time evaluating these purchases, as they will make much more of an impact long-term than saving $5 on coffee. A few websites that can help:
- Cars: Truecar. You can see what others are paying for your new or used car to confirm you are getting a good deal.
- House: Zillow or Trulia. See what other houses have sold for in the area when purchasing or selling a home.
- Vacations: Kayak is a good place to start for travel deals.
7. Consider private label over name brand goods.
This can be for groceries, clothing or any other item. You can save 30% to 40% just by choosing the private label brand with potentially no loss in value. Costco’s Kirkland brand is a good example of this. Remember, part of the price on a name brand item goes to the manufacturer’s marketing budget. That is not the case with private label products.
8. Cut cable.
For some this is a nonstarter, but if you do not have to watch sports on cable it’s a viable option. The combination of an HD antenna, Netflix or Hulu and the ability to stream content from your computer to your TV means you can still catch your favorite shows. The major networks typically provide recent episodes online for free. Try tv.com for the online options of your favorite content. At a minimum, consider cutting premium channels or set-top boxes that you do not use.
9. Create a forced savings plan.
A budget is not necessary if you automate your saving, don’t spend what you don’t have and pay off your debts monthly. You could have a percentage of your income (say, 10%) automatically redirected into savings, such as your bank account or 401(k), without ever seeing it.
10. Use an online budgeting tool
Online tools can do a lot of work for you. Mint, for example, is a free personal financial management service that tracks your income and spending. It doesn’t force you to save, but it does tell you where your money is going and helps you monitor your savings goals.
You’ll note that none of these 10 tips requires you to make significant changes to your lifestyle today. It is just a matter of spending your money wisely.