My first job out of college paid $38,000 a year. It was an ok job. I drove an hour each way- which is a long way in the Ohio suburbs. I remember thinking that $38,000 was a lot of money, and it is. But then I bought a house and a new car. Suddenly, my jackpot paycheck got a lot smaller. I managed. It was fun. I went out for dinner and drinks. I bought things. I went on vacations. It wasn’t stressful by any means, but it wasn’t perfect. I got thousands and thousands of dollars in raises and bonuses over the years. Every time I got a new raise I’d think that I could start saving more and paying down debt. But every time, I’d just spend more money and do more stuff instead.
Now that I’ve got a couple of kids, I really start thinking about my future. I really start thinking about their future. And now, I need to start thinking about how I can save money. I think there are millions of blogs about saving money, but these 9 tips are the best by far.
401K and Auto-Saving
There’s no reason for you to skip using your employer’s 401k program. Even without a matching contribution, it’s still well worth it. A 401k is an opportunity for you to save money BEFORE it is taxed. AND it grows exponentially (that means A LOT). Even if you’re only putting in 1% of your weekly paycheck into your 401k, you’re saving money. This is the #1 tip for a reason. You’ve heard the old adage ‘pay yourself first’ right? This is your chance to do that. You will regret it if you think you can live off of Social Security in your retirement years. Go to your HR department right now and ask them how to contribute to the 401k plan.
If your company doesn’t offer a 401k, there are other options for auto-saving. One is through your bank. I set up a savings plan through Chase bank. All I had to do was ask. It’s not a lot, but every 2 weeks, the bank moves money out of my checking and into my savings account. It’s a little more liquid than a 401k (it’s a ton more liquid), and it’s not tax-deductible. However, it is causing me to save hundreds of dollars a year.
Another option, which requires a little more legwork on your end, is an IRA or Roth-IRA. These need to be set up through your bank or a stock brokerage. They work the same was as a 401k except that they are not employer sponsored or matched. But it’s still a good way to put money away and grow it for the future.
If you’re a grown-up and you don’t have a budget then you’re dumb. Stop being dumb. Start a monthly budget right now by answering these questions:
How much money is deposited into your account each month? (Your Income)
How much do you pay for your living area? (lease, rent, mortgage)
How much do you pay for utilities? (water, electricity, natural gas, sewage, trash pickup, cable)
How much do you pay for transportation? (car payment, bus fare)
How much do you pay for insurance? (car insurance, cell insurance, home/rent if separate)
How much do you pay for other fixed expenses? (cell phone, cable, internet, Netflix, gym)
What other bills do you pay? (tuition, student loans, credit card debt, etc.)
How much do you spend on groceries monthly?
How much do you spend on dining out?
How much do you spend on gasoline?
How much do you spend on other entertainment? (movies, happy hour, video games)
How much do you spend on clothes/shopping?
How much do you save/invest?
How much do you donate?
How much do you give to your church/synagogue/Buddhist temple?
Take your Income minus your Fixed Expenses, minus your Adjustable Expenses, minus your Smart Expenses. What you have left is your personal profit. This profit can also go into savings. It can go into your vacation fund. It can go towards paying down your debt. It can go toward your Christmas budget. Or you can use it to splurge on things in your ADJUSTABLE EXPENSES section.
I went to Buffalo Wild Wings the other day. I got a snack pack of wings, so did my wife. My daughter got a side of fries (she’s 2). I got a beer, the wife had to get wine. Our total bill was $42.
I went to Kroger and bought 2 lbs. of frozen, boneless chicken wings, a frozen bag of fries, a bottle of barbeque sauce, a 6-pack of ice cold Coors Light (cold as the Rockies), and a box of wine. Our total bill was $31.
I went to Kroger and bought 3 pounds of deli meat, a loaf of bread, and a bottle of mustard. My bill was $10 and I ate for 5 days – $2 per meal.
Eating in is cheaper than eating out. How often do you eat out in a week? How often do you eat out in a month? I used to eat out twice a week, at least. Now I eat out about once every other week. At $42 per meal, I’m now saving over $250 per month by reducing the number of times I eat out.
Here’s another option for you- don’t drink when you’re eating. Get a water for dinner. If you’re like me (or wish you were) you probably don’t usually have one drink per sitting- it’s more like 3 or so… Drink less alcohol and replace it with water when you’re eating dinner. Beer at BWW is $4.50 each. Water is free. A 6 pack of ice cold Coors Light at Kroger is $7.99, or $1.33 each. Get your food and drink at home. OR, hold off on drinking while you eat and save yourself $4.50 per meal. If you eat out twice a week and save 1 beer per meal that’s over $100 per year is savings.
Shop the Edges
Shopping the edges is an official grocery hack (I just invented ‘official grocery hacks’ so far there is only one). It serves two purposes. Think about the layout of your local grocery. I use Kroger, so I’ll describe the layout to you from left to right. On the far left is the produce, deli, and bakery. Then there are aisles of canned, boxed, and bagged foods, then the beer aisle, then the frozen section, and finally dairy. Along the back wall is the meat section.
Shopping the edges means never going down the aisles. Go in and go straight to produce. Get your fruits & vegetables. Then go to the back wall and get your meats- chicken, beef, deli meat. Finally get your milk & cheese on the far wall and head up to the cashier. Skip the chips, canned foods, boxes of cereal and pop tarts, and yes- even the beer aisle (or at least drop down to Keystone Light).
The first purpose this serves is that you’ll save money. The price per serving in the middle of the store is considerably higher than the edges. You’ll also get better quality produce and meat from the produce and meat sections than you will in the canned and frozen aisles.
The second purpose is that you’ll eat healthier. You’ll feel better about yourself, and you’ll actually feel good when you eat a good amount of produce & meat instead of Lay’s Chips and sugary cereal.
I get it- there are some times that you need to go down an aisle, baby food & diapers, laundry detergent, cleaning supplies, and beer (what’s up with all the alcohol in this post?). Don’t be dumb- if you need that stuff, go get it. But try to avoid the other aisles and stick to the edges.
This is a recurring theme in my posts lately. Cable is stupidly expensive. I hate it. I wasted so much time and money on cable TV programming and now I’m hooked. I don’t think I could go a full year without watching The Big Bang Theory or Fixer Upper. So what do I do?
There are some options, they don’t get you everything, but they do save you money. If you need to save money, this is a great place to start. My last cable bill was $89.99 for cable + $20 for the DVR so that’s about $110 for cable. Hulu is $7.99 per month, Netflix is $9.99. Between those two I can typically get everything I want. The only thing missing is sports. First, get a HD Receiver (the new ‘rabbit ears’ thing-a-ma-bob) to get your local channels. Now contact SlingTV. Sling will get you ESPN, ESPN2, ESPN3, TNT, and TBS. You also get girly channels like HGTV, Lifetime, Free Form, and CNN. Sling is $20 (they have a $25 and $40 package as well). So Sling + Hulu + Netflix = $38. You’ll still need Internet, but you’ve saved $70 per month by cutting cable. That’s $840 per year. If you invested that into a mutual fund just once and it compounded at standard return rates you’d have over $4800 dollars in 25 years- and that’s just based on the one-time investment of $840. If you also added $840/year for those 25 years you’d see $57,000. So yea- cut cable and you can have $57K.
The 2 Days Rule
What’s the last thing you bought that just sat in your closet and never got worn? For my wife, it’s practically everything she’s ever bought. So we’ve instituted the 2 Days Rule. If we want to spend something that’s not in our budget we have to tell the other spouse. For example, if I wanted a new pair of work shoes I’d tell her about them. Then, I’d have to wait 2 days. If I still want them (and I have the money) then I can buy them after the 2 days.
This will keep you from having buyer’s remorse AND it will end up saving you money. I can’t tell you how many times I end up not buying the thing that I thought I wanted. Usually I just forget about it, but I used to buy the dumb thing AND THEN forget about it… much worse.
This one takes a little work on the front end, but a lot less work in the long run. Set up your bills to be paid automatically via direct withdrawal from your checking account OR have them automatically charge your debit card. This will save you money by eliminating the possibility of you ever paying late fees.
I missed a car payment last year. They mailed me one of those little coupon books and I just forgot to pay it. So my $300 payment increased to $345 for one month. The worst part is that the $45 extra didn’t go toward paying down the debt, it was just a penalty that the bank collected. That was the worst $45 I’ve ever spent. So I set that bill to auto-pay and I haven’t had to think about it since.
Pay Something Off
This is easier said than done. But you’ll save a lot of money by paying something off, especially if you invest your savings.
Imagine you’ve got a car payment of $300 per month. Now, if you pay that car off, you’ll have $300 per month that you can use toward something else. If you invest that $300 ($3,600 annually) into an IRA, over 25 years at 7% you’ll have over $240,000.
Now, even if you don’t invest that money into something, you’ll still be saving thousands of dollars in interest payments by paying that expense off. And you’ll end up, at minimum, with some solid spending cash. But, my #1 tip for paying something off is to take that money and snowball it. Take your extra $300 and put it toward your mortgage, student loans, other vehicle, etc. and pay that debt down faster!
Do Free Stuff
This feels like a no-brainer, but also feels like it needs to be mentioned. There are millions of things you can do for free. Even doing things that you already paid for count as free things. For example, when I was young and without children I used to play video games. Now, when I’m bored, I still have the PlayStation, so playing it on a Saturday instead of going to rent a movie is free (because I already bought the PlayStation). Here are my 5 favorite, free activities that you could start doing:
Play with your kids
I have a 1-year old and a 2-year old (almost 3). Their imaginations are amazing. I take them outside without a single toy and somehow we end up making up a game and playing for an hour. It’s fun, hilarious, and FREE.
Go to the Library
Libraries are incredible inventions. They’re quiet and full of knowledge (too corny?). I like to read, I like to be alone, and I like to be out of the house. The library is the perfect medium for all of those things. Bonus: they have a kids section!
Jeff, I’m not letting you count ‘doing chores’ as a free thing to do. Hear me out on this one. Cleaning accomplishes a lot of things for me. First, I love a clean house. Cleaning it is the only way to get it there. Plus, I usually find something that I’ve forgotten about when I clean. The other day I found an iPod from college. I turned that into hours of fun. Second, I can make money at it. I’m not talking about cleaning other people’s houses; but, I can make money by selling all the crap I find (or donating it and keeping receipts).
Make Out with your Spouse
If you’re not married or dating someone then this might not be free. But for married/dating people it won’t cost money to make out. AND I just read an article on lifecheating.com that gave 15 reasons to make out. They ranged from fewer cavities all the way to looking younger… seem like good reasons. Plus it’s pretty fun with possibilities to go further if you know what I mean.
Go to the park
Parks are awesome. You can walk through the woods or mountains, see a pond or lake, or just play with your kids on the playground. There are multiple benefits to the parks and they’re all free.
No summary, this is the internet, just scroll back up if you want to read them again. Come on guys…
Anyway, what are your favorite money-saving tips for us?