Suze Orman’s Challenge to Savers: Cut $200 Now, Gain $53K Later

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During her long career as a financial expert, Suze Orman has heard from people with all kinds of financial challenges. However, most of them have one thing in common: They tell her they simply don’t have the money to meet their financial goals or resolve their financial issues. 

Fortunately, Orman knows better. When she reviews their line-item budgets, she typically discovers hundreds of dollars that they could redirect to their savings. Finding small ways to cut your spending or put more money away can lead to big savings over time. 

Orman calculates that if someone at age 50 starts saving an additional $200 a month, they could reach age 65 with $53,000 more in savings (assuming a 5% annualized return). That’s not an insignificant chunk of change, especially as retirement nears. 

So, how can you add $200 to your savings now to find yourself with an extra $53,000 — or even more — by age 65? It’s not as hard as you might think. 

Focus on Wants vs. Needs

To paraphrase the great Mick Jagger, you can’t always get what you want, so you might as well focus on saving for what you need. Take a red pen to your spending to figure out what you absolutely need to spend money on and what you can cut. 

Certain necessities like rent or mortgage payments, utilities, and car payments, will always come first. But that streaming service you barely use after your favorite show ended? Not so much. 

Take this approach to a more granular level: You need groceries. But do you need to buy them at a fancy chain when discount grocers like Lidl and Aldi offer lower prices? Could you stock up on dry goods from the dollar store? Think at the micro-level when it comes to cost-cutting — small changes can add up quickly.

Automate Whatever You Can 

Automating bill payments and savings is a great way to stay on track financially, because it literally puts your money “out of sight, out of mind” — and out of reach for impulse spending. 

Putting your major bills on autopay ensures you won’t be behind on payments. This is especially important for credit cards, as missing payments can lead to expensive interest charges and late fees. If you worry about falling behind on credit card payments, this approach can also help keep you out of debt, which allows you to focus on saving rather than playing catch-up on debt. 

You can also set up automatic transfers to various accounts, like a high-yield savings account, Roth IRA, or 401(k) to ensure you’re meeting your savings goals. Once automation is in place, you might be surprised by how quickly your savings grow. Sometimes, the biggest roadblock to savings is simply forgetting to do it, and then your cash is just sitting idle, waiting to be wasted on an unnecessary impulse purchase. Automation removes human error from the equation while reducing the siren call of the extra cash sitting in your account.

Prune Your Utility Bills 

You may think your utility bills are set in stone, but you likely have more control over them than you realize. If you’re a homeowner, investing in energy-efficient appliances can drive down electricity and water costs. Small changes, like adding window clings and doorstoppers to provide additional insulation during winter months, installing a programmable thermostat, and using LED bulbs can also lower your bills.

Even renters have options to cut costs. Thermal curtains, draft stoppers, and window insulation kits are a great way to insulate and keep costs down. On hot days, using a fan and keeping blinds closed can help reduce the need to crank your air conditioning. In the winter, layering up and lowering the thermostat by just a few degrees can make a noticeable difference on your utility bill.

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