How To Save Money: 10 Proven Tips To Build Your Savings
When it comes to saving money, 57.4% of Americans have less than $1,000 tucked away, according to a recent GOBankingRates survey. Reasons for this included:
- The COVID-19 pandemic
- Having too much debt
- Being unemployed
- Residing in an area with a high cost of living
If you have limited savings and want to learn how to save money fast, read on. Here are some tools and ideas to painlessly boost your savings.
What Are 10 Ways To Save Money?
Even if you have convinced yourself that you are not a saver, think again. Taking advantage of ways to save here and there can help your savings account balance rise in a hurry.
1. Make a Grocery List
One of your largest controllable expenses is food, but there are plenty of ideas about how to save money on groceries. They start with planning. Review grocery store ads, plan meals and make a shopping list — and stick to it. By doing so, you’ll find the best buys and avoid impulse purchases. Plus, by having a list, you’ll ensure that you get everything you need and don’t have to make a return trip, saving gas money as well.
The U.S. Department of Agriculture has looked at average weekly grocery costs for families whose spending can be categorized as thrifty, low-cost, moderate and liberal. According to its December 2020 report, a thrifty family of four spends an average of anywhere between $135.10 and $154.90 a week on groceries, while a family that spends liberally dishes out $263.70 to $308.70 each week. The cost range varies based on the age of children in the household.
Assuming the family spends at the low end of the range, the thrifty family will pay $585.30 for groceries each month, with the liberal spenders paying $1,142.40. That’s a difference of $557.10 per month (or more than $6,685 per year).
2. Clip Coupons and Use Store Apps
The Sunday newspaper is full of coupons that usually range from 25 cents to $2 off, but you don’t need to be a subscriber to take advantage of manufacturers’ coupons. By joining your store’s loyalty club, you’ll save money on each shopping trip just by presenting your card. Once you’re a member, download the store’s app or register on its website for further savings. Most retailers, ranging from Target and CVS to your local grocery chain, offer downloadable coupons on their mobile sites. The value is deducted at the cash register automatically.
3. Buy Store Brands
For thrifty shoppers, store brands provide a viable, and valuable, alternative to national brands. The Private Label Manufacturers Association reported that in 2019, the sales of store brands increased by 4.1% — three times more than with national brands. That represented a rise in annual sales of $5.4 billion on total sales of $136.5 billion. The trade group estimated that consumers saved $35 billion during the year on groceries and household goods by buying store brands instead of national brands.
4. Avoid Wasting Food
Remember the old expression “waste not, want not”? That’s true when it comes to food. The U.S. Department of Agriculture estimates that each year, the average family of four throws away $1,500 — or about $125 each month — in uneaten food. The USDA has several recommendations to avoid food waste:
- Organize your refrigerator and pantry so that food that will expire more quickly will be pushed to the front and not shoved to the back and forgotten.
- Understand food date labels because many foods can last slightly beyond an expiration date.
- Download the agency’s FoodKeeper app, which can help track of storage times and use-by dates for food in your refrigerator.
- Freeze excess food for use at a later date.
- Use expiring foods as part of another meal, such as by putting overripe fruit into a smoothie.
5. Eat at Home
Eating at home can help you save money and eat healthier foods. A study published in the American Journal of Preventive Medicine noted that frequent home cookers showed a decrease in per capita food expenditures of between $273 and $330 per month. Plus, it indicated a decrease in per capita away-from-home food costs of between $65 and $133.
6. Cut Nonessential Expenses
Cutting recurring expenses, particularly nonessential ones, is fertile ground for savings.
Think about what bills you pay monthly. Determine which ones are nonessential. Do you bundle internet, phone and cable to save money? Do you have subscriptions to magazines or online services that you rarely use? Did you sign up for a special promotion for a service that you never canceled and now are paying full price for?
Consider how much you can save by cutting out nonessentials. A poll commissioned for insurance company Ladder in 2019 found that Americans spent $1,497 per month on nonessential items that included the following expenses, among others:
- Eating out at restaurants: $209
- Drinks with friends and co-workers: $189
- Subscription boxes: $94
- Cable: $91
- Paid apps: $23
- Bottled water: $17
7. Transfer Credit Card Balances
According to Experian, the average American has a credit card balance of $5,315. Say you owe that amount on your credit card, and you’re paying an interest rate of 18% APR. If you are determined to pay it off in 12 months, you’d owe a monthly payment of $488 and pay $442 in interest. But, if you transferred the balance to a credit card that offered a promotional APR of 0% for one year, your payments would drop to about $443 a month, with no interest. At the end of the year, that’s a savings of about $540 in payments alone.
8. Make IRA Contributions
If you don’t have a traditional individual retirement account, open one. The benefit of a traditional IRA is that your contributions are tax-deductible when you make them, and your taxes are deferred until you withdraw the funds at retirement, presumably when you fall into a lower tax bracket. In 2021, you can contribute as much as $6,000, or $7,000 if you’re 50 or older. The funds are fully tax-deductible provided neither you nor your spouse is enrolled in a retirement plan at work.
9. Check Your Car Insurance Coverage
Car insurance policies should be reviewed annually to make sure they still fit your needs.
Good To Know
The Insurance Information Institute says that ways to reduce costs include reducing coverage on older cars that have dropped in value or asking your insurer for discounts if you don’t drive a lot. In addition, increasing your deductible to $500 from $200 can save you 15% to $30% on your premiums, and increasing it further to $1,000 can save 40% or more.
Of course, as with all things, it pays to shop around as car insurance costs can vary widely. The Insurance Information Institute recommends not shopping just on price. It encourages consumers to review a company’s financial health and ask friends and relatives to share their recommendations and experiences.
10. Use Your Library
How many entertainment services such as Netflix, Hulu, HBO Max and Prime Video do you have? If you subscribe to all of these, you could be paying $38.96 or more each month, depending on the plans you’ve selected. In addition to books, many libraries offer DVDs and CDs for free. There’s even an app called Libby that allows you to download e-books and audiobooks using your library card.
Save, Automate and Compound
Want to know how to save money and pay off debt? Put your monthly savings into a high-yield savings account. Consider how much you can set aside, such as a certain percentage of your paycheck, and automatically transfer that amount from your checking account to a high-yield account each month. Harnessing compound interest is a get-rich-slow scheme, so you need to start as soon as possible.
There are other automated tools to help with your saving. Acorns helps you invest spare change from your everyday purchases into the stock market. It rounds up purchases made on your linked credit and debit cards to the next dollar and invests the change. You can select from a range of risk levels.
The Bottom Line
You now have actionable ideas on how to effectively save money on your monthly controllable and nonessential recurring bills. Remember that saving is a marathon and you need to let your money build over time.
If you don’t already have one, open a savings account with a local bank or credit union or an online bank so you’ll be ready to set aside your savings. Then, take one of the money-saving hacks listed above to get started, and keep track of how much you saved in the first month. As you incorporate more of these strategies into your financial life, you can also create a financial plan to help you maximize your savings.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- USDA. 2021. "Official USDA Food Plans: Cost of Food at Home at Four Levels, U.S. Average, December 2020."
- USDA. "Consumers."
- American Journal of Preventive Medicine. 2017. "Cooking at Home: A Strategy to Comply With U.S. Dietary Guidelines at No Extra Cost."
- Private Label Manufacturers Association. "What Are Store Brands? Who Makes Them?"
- Experian. 2021. "Experian 2020 Consumer Credit Review."
- Insurance Information Institute. "Nine ways to lower your auto insurance costs."
- Ladder. "National Life Insurance Day Survey 2019."