We all want to save more money. So why is it so hard to make the number in your savings account go up? Are we just chasing after shiny objects? Or is it inflation? Or maybe lack of willpower?
While these and other obstacles can play a role in the difficulty that saving money presents, saving more money is possible. There are a few hacks to make it easy—even automatic.
Let’s explore five of the most effective ways to save money (spoiler alert: none of them involve saying ‘no’ to lattes) so you can get the most bang for your savings buck.
Focus on the big categories.
Reduce your consumer debt.
Automate your contributions.
Determine what’s important to you.
Gamify savings.
These five strategies will help you kickstart your savings so you can live a better life on your terms.
1. Focus on the Big Categories
Sure, you could cut out trips to the coffee shop and cancel your Netflix subscription to save some cash. But if you’re like most people, that doesn’t amount to more than $100 a month. While saving a Benjamin or two might sound like a lot, it’s just a small sliver of your monthly expenses.
According to the Consumer Expenditure Survey conducted by the Bureau of Labor Statistics, the average American spends 70.7% percent of their budget in the following categories:
Housing
Food
Transportation
Healthcare
Seventy cents of every dollar you spend likely goes to one of these four items. So it makes a lot more sense to clean up these areas of your life, rather than go after the little pleasures or creature comforts that represent a much smaller proportion of your budget.
If you’re wondering how to optimize these categories, here are a few suggestions that might be helpful.
Monetize your house. While most people don’t want to take on a roommate to save on housing, there are other ways to make money from your living space. Several gig economy apps have popped up to help you monetize the parts of your home you don’t use all the time.
For instance, you can rent your whole place out on Airbnb or VRBO when you’re away,
lease out storage space in your garage on Neighbor, or rent out your driveway for
parking on Vanly or Spacer.
Assess your car situation. Do you have a car that you rarely drive? Could you downsize for a lower payment or eliminate your car note completely?
Reducing the number of cars in your household might not be as inconvenient as you think, and the savings here are multiplied when you consider the gas, insurance, parking, and maintenance associated with each auto you own. Even if you use Uber, public transit, or rent a car when you need an extra vehicle, this may be cheaper than owning a second car full-time.
Cook meals at home. Even if you’re not much of a chef, getting a meal kit or heat-and-eat meals to replace a few takeout dinners each week can free up a significant amount of money.
Shop around for healthcare. When you need non-emergency services like an MRI, it pays to shop around to see what different facilities charge. This can save you thousands of dollars, as many healthcare institutions are not as transparent as they should be with prices.
Everyone’s situation is different, but it will pay off to reassess the big-ticket items in your budget first. See what you can do to reduce these expenses, and you’ll get greater traction than you would by reducing discretionary items.
2. Reduce Your Consumer Debt
Debt can drag down even the most dedicated saver’s efforts, especially if it has a high-interest rate. Paying down your credit card balances, personal loans, and other consumer debts may be the most efficient thing you do to up your savings rate. Interest on debt isn’t contributing to a better life for you—it’s just sucking your money away. The sooner you can get rid of it, the better.
If you need motivation, join a debt pay-off challenge online or print out a tracking sheet to mark your progress. Once the balances are gone, all the money you sent to the credit card or loan company can be redirected to your own savings account.
3. Automate Your Contributions
Sometimes we get in our own way when it comes to personal finances. We get distracted, we have competing priorities, and we sometimes just make bad decisions. You can skirt all of these issues by putting your savings on autopilot.
This goes for long-term savings like your 401k or IRA as well as shorter-term accounts like an emergency fund in a savings account.
Talk to your HR manager about automatically putting a certain percentage or dollar amount into your retirement savings. You may even be able to set your account to increase every year or whenever you get a raise. Even if you have an independent retirement account that’s not through your employer, you can set up automatic contributions through a brokerage company.
This system also works for contributions to a savings account. You can put a portion of your paycheck into your savings account so you never even see it or have it pulled from your checking account the day after you get paid.
4. Determine What’s Important to You
Cutting spending doesn’t have to be about depriving yourself. Choose the things that are truly important to you, and give those priorities in your budget. Maybe that’s taking an annual vacation with your family. Or it could be charitable giving, organic food, or sending your children to private school.
By permitting yourself to spend money on the must-haves in your life, you also highlight areas that aren’t as important to you. That way, you know what expenses you can reduce or eliminate to make sure you have the funds for the things you value.
5. Gamify Savings
Are you saving up for a specific purchase, like a new car or to send a child to college? Turning your savings into a game makes things a lot more fun and rewarding. You can do this using an app like Long Game to track your progress, print out a chart to color in as you reach your goals, or simply use a spreadsheet.
If you want to up the stakes, get your family members or friends in on the action and make it a contest to see who can save the most in a month. The dopamine hit you get from setting goals and reaching milestones will be extra motivation to keep you headed in the right direction.
Money and Build a Better Life on Your Terms with AncHER
Saving money becomes much easier once you make a critical mindset shift: it isn’t about deprivation—it’s about committing to spending money only on things most important to you.
Spend lavishly on your top priorities, cut unapologetically on things that just don’t match your values, and set up systems (whether that’s a game, spreadsheet, or automatic deduction) to help you do so. Doing so will boost your bank account, reduce financial stress, and help you live the life you want to live.
Interested in learning more about how you can create financial freedom while enjoying a fulfilling career? Book a discovery call with me today and let’s chat!
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