10 Dec How To Save Money: 8 Often Overlooked Methods
We discussed in our blog Money Secrets of Financially Successful People that spending less than you earn is one of the key cornerstones of wealth, but it’s also so important in the grand scheme of saving money. Let’s look deeper into what this really means, with some very surprising calculations that may inspire you to make some simple and painless lifestyle shifts. For most of us, we have more bills than income. But what if you reduced your bills? It’s so easy to get stuck in the routine of working and paying, that we often forget we have the power to make huge changes in our lives. Think you can’t do it? Let’s talk about some often overlooked ways people CAN save money.
- Homeowner Tip: If you’re a homeowner, rent out a room or portion of your home for a set number of years until you reach your savings goal. This is a fantastic way to save money and grow your income to debt ratio, and will provide you with years of less stress …which always means a longer happier life! If you were to rent out a lower level of your home for $1,400/mo, before taxes, your added income would be $16,800/year.
- Renter Tip: If you’re a renter, aim to spend no more than 1/3 of your income on rent. If your monthly income is 3K, your rent should not exceed 1K. If your rent is over 1/3 of your income, seek a less expensive rental. One great way to do this is to rent a room in a multi-room house for a designated period of time until your savings goal is reached. Renting a room rather than a whole property is easier when you have an end date and a financial goal in sight, similar to renting out a portion of your home. One year of renting a room @ $650 when 1/3 of your budget is 1K saves you $4,200 per year.
- If you’re a student or in the car market, look into buying a reliable pre-owned vehicle versus leasing that beautiful new car that just came out. Though car financials are complicated and have many variables — here’s a quick snapshot of the difference between leasing and purchasing a pre-owned vehicle.
With car insurance at around $140, auto maintenance averaging around $30/mo for the year, and gas costs around $160/mo, and a down payment typically being around $2K, that innocent looking $250/mo car payment can becoming a whopping $580/mo being pumped into your transportation fund — that’s nearly 7K per year for the term of your lease, which is typically 3 years – that’s $21,000 dollars.
Trust me, not being broke every month is way more beautiful than that hot rod. If you bought a pre-owned car for 5K, at the same car insurance, maintenance, and gas costs, over the course of three years, you’d be saving $6,000, or $2,000 per year.
- If you’re renting an affordable space already, and feel like you’ve already cut all corners, don’t despair! Let’s look at HOW you spend your money each month:
Are you paying a cable bill?
- Did you know that you can hook an HDMI cable into most laptop computers these days and connect it to your television? Video streaming subscriptions cost about 10% of what a monthly cable bill costs, and most news channels have websites that you can stream important updates from for FREE. You’d be saving up to $60/mo, or $720/yr.
What do you pay for your phone bill?
- Have you considered chopping that $100/mo payment in half by opting to use a family plan with a few other reliable friends who are also looking to save? Have you considered asking your phone provider if you’re eligible for a loyalty plan? Most providers provide this discount to customers with a carrier for over 2 years. You could save up to $80/mo, or $960/yr.
What are you spending on coffee or tea out?
- Are you spending up to $5 per day on that morning and afternoon pick-me-up? Let’s take a look at that. If you spend $5 per day 5 days per week, that’s $25/ week. Doesn’t sound so bad, right? But that $25/wk turns into $1,300 per YEAR. Are you serious??
Alternatively, you can purchase 2 containers of coffee at your local store for let’s say $16, which lasts you a month. And you buy a reusable hot cup for $10 online. In total for the year, that’s $192 in coffee alone, plus the one time $10 fee for the hot cup for a grand total of $202, saving you $91/mo or $1,092/YEAR!
What about nights out?
- Are you spending $10 per glass of wine and $15 on an appetizer two nights a week — plus tip ($5) and gas (another $5 if it’s local)?
That’s $70/week. If you bought a nice bottle of wine for $12 at your local Wine Shop, spent $15 on a specialty pizza, had friends over your place instead, and split the cost three ways, you all get a fun night together for $9 per person for $18/week!
You and your buddies can save up to $280/mo just in taking turns hosting hangouts…or $3,360/year.
With these corner-cutting 4 tips ALONE, you’ve got an extra $511 in your pocket monthly. Look at that over the course of a year, and that’s $6,132! Not bad, huh?
The bottom line is…
If a homeowner were to combine all of these tips, you’ve got an extra $22,932 per YEAR. That’s practically a second income!
If a renter were to combine all of these tips, you’ve got a bright shiny new $10,332 in savings. That’s pretty sweet!
Reach out to us if you have any questions, and feel free to post your comments in the section below. Share this article with friends and family to spread the money saving love!
Empire Tax Professionals