Saving money is always advisable; when you have cash stashed away, you can rely on it for unexpected expenses, like a job loss or car repairs. However, most Americans don’t have a positive track record for keeping up with their savings needs.
According to one survey conducted in May 2022, 49% of Americans cannot cover an unexpected $400 expense with cash. Another scary statistic: only 31% of Americans have more than $1,000 in savings.
Individuals without any savings face a crisis when the unexpected occurs. Often, they turn to credit cards, family and friends, or even pawn shops to get the money they need. However, borrowing money leads to more debt, and with more debt comes less opportunity to save.
There are ways to build better savings habits. Consider these tips to save $500 next month – without taking on a second job.
1. Cut Out Your Starbucks Habit
Yes, we all love our morning coffee (or afternoon pick-me-up or evening decaf). However, driving through Starbucks on the daily adds up quickly. If you’re guilty of partaking in a regular Starbucks or Dunkin Donuts run, calculate how much money you spend on the habit each month.
The average drink order from Starbucks is approximately $5.07. If you regularly add on a scone, croissant, or another bakery item, your bill may approach $8 or $9. That $8 or $9 may sound relatively innocuous, but over the course of 30 days, you may be spending as much as $270 or more.
Instead of relying on outside coffee shops for your coffee fix, go old school and fire up your home coffee pot. You’ll save some serious money you can use for other things – like your savings account.
2. Stop Eating Out
Eating out is a tradition in America. We eat out while doing errands, when we forget to pre-pack a lunch for work, and when we have something to celebrate, like a birthday.
There’s nothing wrong with eating out. A lovely sit-down meal is an excellent opportunity to catch up with friends and family and experience delicious food. Fast food is helpful when you’re on the go and won’t be home to eat.
However, eating out can negatively impact your ability to save, especially when you do it regularly. A steakhouse dinner for two can easily be $50 or more. If you throw in a bottle of wine to share, you’re looking at prices closer to $80 without a tip.
See how much you spend dining out, and make the shift to eating in. Chances are you’ll see some extra money in your bank account at the end of your month.
3. Overhaul Your Subscriptions
Nowadays, there’s a subscription plan for all kinds of services and products. You can pay to stream entertainment, sign up with your favorite newspaper to read content and use various software solutions to run your business.
However, consumers often sign up for a service they don’t end up using. The service provider continues to charge your credit card monthly, but it seems you never have the time to cancel it – or worse, you aren’t even aware you’re still paying for a subscription.
Look at your bank account and determine how much you’re paying for subscriptions. Think about how much you use them and whether they add value to your life.
If you rarely use the product, it’s not worth paying for the subscription. Similarly, if you have multiple subscriptions for services that are very similar, it’s probably time to cut down to one. Video streaming companies like Netflix, HBO Max, and Hulu are good examples of similar services to which you likely don’t need multiple subscriptions.
4. Turn off the Lights
During the daytime, there’s usually not much reason to have the lights on in your home. You can get adequate lighting simply by opening the curtains or raising the blinds.
If it’s a nice day, turn off your air conditioning or heating and open the windows. A nice breeze can make the house smell fresh and eliminate stale odors.
If your family gets into the habit of only using lights in the evening and minimizing heat and air conditioning usage, you can substantially cut your electricity bill. In the evening, turn off the lights when you’re not in a room.
5. Don’t Buy Any “Extras” for a Month
We’re all guilty of falling prey to that new expensive purse, a massage at the local salon, or a night out with friends. While having fun and buying the things that make you happy are a positive part of life, they can add up quickly and constrict your ability to save.
Put a moratorium on the extras for a month. Spend money only on the things you can’t avoid – rent, food, debt, insurance, and utilities. Everything else is off-limits for 30 days.
Make sure to note all the extra items or services you skip out on during the month and their costs. Chances are you’ll find you save some serious money.
While skipping the extras probably isn’t something you can adhere to all year, it can be an eye-opening experience that gives you insight into your spending habits. You may find a few purchases you can reduce for the long term or even eliminate.
6. Find Ways To Have Fun for Free
Just because you’re focusing on your savings goals doesn’t mean you have to give up on having fun. Look for very low-cost entertainment options. Parks and museums are typically free or charge minimal fees for visiting.
You can plan a family picnic, hiking day trip, or visit the museum you’ve known about for years but never set foot in. Take a walk through your city’s downtown area. Ask your friends and relatives to come to your house for a board game night.
Do a little internet reconnaissance to find cheap activities in your area. You’ll probably find more than a few options that pique your interest without taking a sizeable hit to your bank account.
Saving Money Is a Process
If saving money has been a long-time problem, it will take time to reshape your spending habits. Start with a challenge to save $500 next month using our tips. See how much you have left over and transfer it to your savings account. If you’ve saved the entire $500, you’ve aced the test!
Determine which strategies you can use regularly, and keep transferring the money you conserve to your savings account. With time, saving money will become a natural habit, and you’ll build up the emergency fund you need for times of crisis.