When you let your finances run on autopilot, it can be easy to lose track of all the places where you could save money. Worse, if you are not vigilant enough, lifestyle creep can catch you by surprise. Don’t miss out on any opportunity to save money and optimize your finances.
I will share with you 6 practical hacks that will help you keep more of your hard earned money in your wallet. It has helped us boost our monthly savings rate dramatically from a meager 10% to all the way up to 60%.
1. Avoid Credit Cards
If you thought that credit cards were a godsend for you and gave you an easy way to earn some cash back, I am sorry to break the news; they aren’t. If you believe you could outsmart the credit card companies by selecting different cards tailored to each of your spending needs, think again. I know you have run the numbers and have optimized the credit cards to be used for a specific purchase like grocery, gas, air tickets etc, but I invite you to take a step back and stop using them.
Take a 30-day challenge to avoid using your credit cards for any purchase and watch how your mind starts processing every purchase you make.
How to implement it
- Stop carrying any credit card in your wallet. If you stop carrying credit cards with you, the question of you pulling one out, to pay for any purchase, is automatically ruled out.
- Remove credit cards added to all your digital payment systems like Google Pay, Apple Pay, etc. This will further prevent you from using your credit card to make any purchase with them.
- Remove credit card on all of the e-commerce sites like Amazon, Walmart, Macy’s etc. This forces you to reach out to your debit card in order to make any purchase.
- Go to all your service providers like Electric, Cable, Cell Phone provider, etc and update the payment method to use your debit card. I know it can be scary and time-consuming but go ahead and do it.
2. Never Shop Your Groceries On An Empty Stomach.
It’s been my personal experience that when you are hungry you tend to lose your ability to think logically. Your brain doesn’t have the energy to think straight. A hungry stomach makes you process everything from a scarcity mindset. So if you walk into a grocery store on an empty stomach, you will automatically load up stuff into the cart you would otherwise not buy.
The next time you go shopping for your groceries make sure you are full. Have a list of items you wish to buy handy to avoid any impulse purchases.
How to implement?
- Always plan shopping for your groceries either after your meal or soon after your breakfast.
- Make sure you jot down all the items you plan to shop on your phone or a sheet of paper. It’s so easy to spend $100-200 extra in Costco if you aren’t watchful.
- It’s also helpful to identify which store is ideal for a certain product. E.g. We always buy milk from Costco but the fruits can be an overkill for us. So we end up buying them at Sprouts. Go with a store that gives you the maximum bang for the buck.
3. Meal Planning
If both of you are working, you’ll have a hard time preparing every meal at home. It can be very easy to exceed your eating out budget while still spending a considerable amount of money on your groceries. It can be a good idea to step back and see what really makes sense for you as a household.
For 30 days track how much you spent on eating out vs groceries. Make sure it doesn’t exceed 6-10% of your overall budget.
How to implement?
- Kick start your day with a heavy breakfast. Make yourself a healthy sandwich or better go with a smoothie. It has helped me personally cut back on a lot of calories.
- Try to pack your lunch to the office every day. Avoid the urge to grab your lunch from a eat out place, every day. A simple burrito or a sandwich can cost you anywhere between $10 – $12 and can add up quickly add up to 200+ dollars a month.
- Prepare meals in bulk. My wife and I are both working and it leaves us with very little time to cook every meal from scratch. So what we found helpful was to prepare items in bulk. I can always pack the leftovers for lunch, the next day.
- Always try to balance between eating out vs cooking at home. If you eat out more, cut back on your groceries and cook at home, and vice-versa.
4. Shop Around For Cheaper Insurance Premiums
One of the places which can silently eat away a lot of money every month is your insurance premiums. A great way to save money is to switch to a provider with a better plan, for on your auto or home insurance needs. You’d be surprised how much you could save if you shop around to get a better deal. You can either look for lower premiums or find another policy provider that can give you same or better coverage for the same price.
I recently shopped for my auto insurance and I switched from Nationwide which jacked up my premiums by a whole $85 a month. I didn’t have any claims and I felt cheated with this absurd hike in my monthly premium. I was pleasantly surprised when I got a much better deal for a lower premium from another company which not only gave me more coverage but also gave me umbrella insurance at a very nominal price. Awesome!
Make a list of all the insurances you carry and list down their monthly premiums. Now go online and shop for the best possible rates for each of them. Go ahead and make a switch if you find a better deal.
How to implement?
- Try to bundle your auto and home owner’s insurance to get a better deal.
- If you have any advanced degrees or are married or have a
clean driving record with no recent claims, you can be eligible for some discounts on your auto insurance premiums. Make sure you negotiate it.
- Always get quotes for several companies before finalizing with any insurance provider. Shop until you get the best deal possible out there. It shouldn’t be hard if you use one of the online aggregator sites that can search through multiple providers and allow you to compare them side by side.
5. Review All Your Subscriptions
One of the perks of writing a budget is that it surfaces all the leaks in your wallet. You get to know about all those places where your money is going and you can decide if it’s worth it. When I looked at our budget, I had subscriptions ranging from $3.99 a month on music app to $100 a month on my internet service provider. I also subscribed to other entertainment providers like Netflix, Yupp TV and I barely used their services.
List down all your subscriptions and their monthly payments. Go over each one them to see how much each one of them is being used. Pull the chord on the ones that don’t make the cut.
How to implement?
- I have written about Clarity Money earlier. It’s an excellent tool to help you cut back on unnecessary subscriptions.
- Identify the usual suspects like your cable TV bundled with a phone line. If you don’t watch a lot of TV like me, it might be time to cancel that cable TV subscription.
- Also look for any memberships you may have like Amazon, Costco and see if they make sense. I have decided to cancel my Amazon Prime membership this year since I didn’t feel it was worth it.
- If you want to still use the services, consider switching to a more basic plan. I recently downgraded my Costco membership from Gold Star Executive to Gold Star. It brought down my annual membership fee by 50%. I did the same with my Netflix subscription too as I switched from a
monthlyplan of $10.99 to $7.99.
6. Pay Yourself First, Everybody Else Can Wait
This is one of the first things we do with every paycheck. Before we allocate money for anything else, we decide how much we need to set aside for our savings. It is a very fundamental change in the way we have begun to handle our money. Thinking about our savings first, lets us prioritize spending our money on things that matter.
Starting from the next paycheck, pay yourself first and then budget your money for other things. Flip your spending by using the formula:
Expenditure = Income – Savings
How to implement?
- If you have an employer-sponsored retirement savings plan like a 401K, go ahead a start saving money with every paycheck. If you have an employer match, I would first begin with saving the minimum amount to get the match. If there is no match, start with at least 6% and increase it every year.
- If you don’t have a retirement plan offered through your workplace, go with a Traditional IRA or a Roth IRA. I would recommend opening with a brokerage firm like Vanguard or Fidelity.
- If you have an HSA offered through your employer, grab that opportunity and start maxing it out. It’s a great way to avoid tax and build savings for medical expenses tax-free.
- In order to meet your short-term goals like a vacation or a house purchase, open a High Yield Online Savings account. I have personally opened mine with Marcus Bank, Goldman Sachs. It gives a great interest rate of 2.05 APY, at the time of this writing.
- If you have kids, go ahead and start contributing small amounts towards their 529 Plan. It’s never too late to save for college.
- Once you exhaust all of the above with the maximum allowed amounts, I would look at investing in a taxable account.
What are some of the hacks you have in place to save more money? Leave a comment.