When people think of saving money, they initially think they need to cut something they enjoy. Instead, people should think about spending more wisely.
We’ve compiled a list of cost savings ideas with little impact on your lifestyle. The long term benefits are material as 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, etc. to other service providers in your area. You could also see what kind of deals your existing providers are offering to see if they will give you a better deal.
2) Consider dropping the home phone.
Switching your home phone to Voice over Internet Protocol (VOIP) through devices such as Ooma or Magic Jack. For all of these you can also keep your old number or eliminate the home phone altogether and use your cell phone or Skype with your friends and family. Here is link to a recent article with different VOIP options.
3) Lower home and auto insurance premiums.
Raise the deductibles on your home and car insurance as it is unlikely that you will make a small claim anyway. By increasing your deductibles you will lower your annual premiums, but make sure that you have access to emergency reserves. Also, if you have not compared insurance policies in a few years, it may be worth checking your prices vs. the competition. Insurance companies typically offer material discounts for new customers but raise rates over time for existing customers. Here is a link to recent J.D. Power study with the top rated insurance companies.
4) Shop your cell phone plan.
Check your cell phone bill to confirm that you are not paying too much. Try www.myrateplan.com and enter your current minutes, data and messages to see if you can lower your bill. Also, consider a no-contract cell phone plan as you will pay for the phone up front, but the monthly payments are typically reduced. Here is a link to the top rated no-contract providers from Consumer Reports.
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, scientific studies have shown people are more likely to complete a purchase if they intend to pay with a credit card than with cash. That being said, we don’t recommend carrying around a material amount of cash given the risk of theft, but paying cash for daily expenses will make a difference.
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. Recommended websites for a few items are:
- Cars – www.truecar.com – You can see what others are paying for your new/used car to confirm you are getting a good deal.
- House – www.zillow.com or www.trulia.com See what other houses have sold for in the area when purchasing or selling a home.
- Vacations – www.kayak.com 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%-40% just by choosing the private label brand with potentially no loss in value. Kirkland is a good example of this if you shop at Costco. Remember, part of the cost you pay for the name brand item is their marketing budget to promote the brand. That is not the case with private label products.
8) Cut cable.
For some this is a non-starter, but if you do not have to watch sports on cable this is a viable option. The combination of an HD antenna, Netflix/Hulu and ability to stream content from your computer to your TV will result in no loss of your favorite shows. The major networks today typically provide recent episodes online for free. Try www.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 (e.g. 10%) automatically redirected into savings (i.e. bank account or 401k) without ever seeing it.
10) Use www.mint.com.
This is a free personal financial management service that tracks your income and spending. It doesn’t force you to save, but does tell you where your money is going and helps track savings goals.
We’re just getting started.
These are just some initial ideas to try, but you’ll note that none of them require you to make significant changes to your lifestyle today. It is just a matter of spending your money wisely. If you still have questions on how to save money or on your financial future, we recommend working with a fee-only financial planner such as Financial Symmetry.
This blog post was also published in NerdWallet’s Advisor Voices section.
