Having a high savings rate will help you achieve your retirement goals faster. There are essentially two sides of the equation where you can focus –
- Driving down your expenses
- Increasing your income
Both are really important and many will argue, myself included, that the income side is the better thing to focus on because it really has unlimited growth. I’ve written on career hacking and negotiating for a raise before and I plan to write more on the income side. However, today we’ll focus on driving down expenses.
It’s the new year and a good time to be thinking about ways to reduce your expenditures and increase your savings, so here goes…
1. Cell Phone Service – changing cellular providers can be easy despite what you may believe. I used to be with Verizon and loved their coverage. However, I started learned about cheaper options and decided to take the time to investigate. And now you can benefit from my research! Go to this article or this one to read all about it. I choose three providers to compare and contrast before ultimately deciding on Cricket. With this move, I was able to cut my monthly cell phone bill basically in half.
2. Shop Your Home & Auto Insurance – I know this seems like a pain rather than just clicking auto-renew – trust me I did that for years. Actually, when I owned a house I had the same home owner’s insurance policy for 15 years. I currently don’t own a home but I do have a car and in the last two years, I’ve started shopping for the rates. I choose least three (can you tell I like the number 3) carriers to compare every six months when the policy renews. The first time I switched I realized nice savings. Now I just consider it prudent to check. It really only takes an hour or so of work.
3. Meal Prepping – this is by far my favorite life hack. I cook all my meals on the weekend and always have something in the freezer to consume. It saves me time, decision fatigue, and money. Get creative and you might be able to do it without recipes! When you buy ingredients in bulk rather than pre-packaged meals, you spend way less per serving.
4. Pack Your Lunch – this one kind of goes hand in hand with number 3 but buying lunch is such a common thing that I think this deserves its own spot. Sure eating out once in a while is fine and it’s also fine to do every day if that’s what you value. Although, you can save a pretty penny by packing your lunch more often than not. Furthermore, when you prepare your own meals it’s typically healthier. If you are interested in ratcheting up your savings, start packing your lunches! My Mom taught me this skill and it’s stuck with me my whole life.
5. Consider Alternate Transportation – Most of us have jobs we need to get to and the American way is to drive there. However, that is certainly not the only way. Maybe you can walk or bike to work? Or perhaps you can take public transportation? Maybe, just maybe it can be a combo of one of those three options. Additionally, there is the option of carpooling. My point is there are options that might be more cost-effective, result in exercise, and reduce your carbon footprint. Not too shabby, eh? Afterall there is a cost to commuting.
6. Cut the Cord – I currently have zero cords to cut but I know many people who have saved a chunk of change from canceling cable. Fiology Lessons has an awesome article with resources on cord-cutting.
7. Save Going out to Dinner for Special Occasions – Going out for dinner can get expensive. I realize this is a great way to socialize and meet with friends but there are other alternatives. Consider having a potluck or cooking dinner for your friends and playing board games. It can be a lot more intimate in the comforts of your home. Moreover, when you do something often it becomes less special. Let it be the exception rather than the norm.
8. Stop Stopping for Snacks & Coffee – Yep, I mean you. These items don’t cost a lot individually but they add up over time. If you are on the road a lot, keep snacks in your car. Previous to my current digs which allows me to walk to work, I used to live with my folks when paying down my debt. I drove 45 minutes one way to work and so I started keeping snacks in my car. Ideal car snacks are things that can be self-contained and don’t require refrigeration like nuts, granola bars, fruit, and homemade trail mix.
I realize half of these tips involve food. I really think about eating a lot, LOL! Actually, I’m pretty sure we all spend a fair amount of time buying, preparing, and consuming food so it deserves our intentional focus.
These are all areas I’ve focused on and I’ve realized the gain. Of course, when you drive down your monthly expenses you’ll want to have a plan for the savings otherwise you’ll just spend it on something else. How about buying some index funds? Rumor has it, they’ve been on sale lately. 😉
Do you have any other tips to add to this list? What are you willing to commit to reducing? How about picking one for this month and then adding more in the subsequent months?