Ways to Save Money in Your Budget

Ways to Save Money in Your Budget
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Adjusting Your Budget to Create Savings

It’s not enough to live paycheck to paycheck, blindly hoping things improve or at the very least remain the same. Most everyone’s been there before, but unfortunately, the world doesn’t often reward this strategy. You need to take control of your finances to create a better future and protect against the unforeseen, and that begins with maximizing your savings.

The first step in doing so is to create a budget, so you know exactly what is coming in and going out. This is covered in the previous article, entitled “Establishing Your Budget: The First Step to Financial Success.” Armed with a budget, you can quickly identify your weak areas and how to tighten them up. Here are some ways to potentially cut your monthly expenses.

  1. Refinancing – If you’re paying a high interest rate on your home mortgage, now’s a good time to explore refinancing. As an example of how this saves money, a $160,000 30-year loan at 7.5 percent refinanced to 3.5 percent after five years would save you approximately $425 per month.
  2. Cut Utility Bills – Look for ways to reduce utility expenses, such as using less water, turning off unused lights and equipment, upgrading house insulation and using energy efficient lights and appliances. These upgrades might cost a little more at first, but their efficiency saves you money in the long run.
  3. Go Digital – Although there’s still something nice about a tangible magazine or newspaper in your hand, consider switching to digital magazine and newspaper subscriptions; the printing savings are often passed on to the consumer with cheaper rates and you get a good feeling by being eco-friendly.
  4. Sideline Your Car – If you live within a reasonable distance to work, consider bicycling to save gas and get some exercise. If the distance makes cycling impractical, join a carpool or take public transportation.
  5. Turn off Unnecessary Services – Unless you’re glued to your TV 24-seven, you probably don’t fully utilize those hundreds of cable TV channels and instead default to a few of your favorites that are offered elsewhere. Look for online alternatives, such as Netflix, which might be cheaper and can stream to most modern TVs. Likewise, cellular service usually offers free long distance with unlimited minutes, so landlines tend to be a habit rather than a necessity.
  6. Cheaper Cellular – Shop around for a cheaper cellular plan that fits your actual usage. There’s no need to pay a premium for minutes or data that you don’t use. Furthermore, the cellular market has gotten very competitive, so a competitor could slash your current bill in half without cutting out the perks.
  7. Find Free Entertainment – Splurging at the movies or your favorite restaurant can be a much needed, motivating reward, but make them the rare exception. Instead, enjoy free or inexpensive alternatives, such as bicycling, libraries, museums, parks, etc.
  8. Quit Bad Habits – Now’s a great time to quit smoking or heavy drinking. The average cost of a pack of cigarettes is about $5.51, so a pack a day amounts to about $171 per month. If you invested that money in stocks at 9.37 percent interest (the average yield from 2005 to 2014, according to New York University) that amounts to $340,503 in 30 years; now that’s an expensive habit. So, not only would you earn significant savings by quitting smoking, you could save massively on insurance and medical expenses later.
  9. Learn to Cook – Cooking meals at home and carrying bag lunches quickly add up to substantial savings compared to dining out, and you’ll probably eat healthier.
  10. Pay on Time – When you pay late, you’re likely charged a late fee that could have been avoided. To save on such fees, keep a calendar to remind you when to pay and always pay on time. Likewise, some semi-annual expenses, such as auto insurance, might charge a convenience fee when you pay monthly; budget this expense in advance and put it aside, so you can pay the full amount every six months and avoid the additional expense.
  11. Exercise at Home – If you need the gym to keep you motivated to work out, then by all means, keep the expense. However, you can reap the same rewards for free by running, cycling and doing body-weight exercises like push-ups and sit-ups without paying for a gym membership.
  12. Shop Around – When you need to make a purchase, whether its auto insurance, a new oven or a bicycle, it pays to shop around. Explore all your options and find one that fits your needs for the cheapest price.
  13. Use Generic Brands – When you buy name brands, you’re often just paying for the company’s advertising efforts without reaping any benefits. Choosing generic brands or shopping at cheaper grocery stores and pharmacies can add up to impressive savings.
  14. Pay Off Credit Card Debt – The minimum payment on your credit card is almost all interest, which is wasted money. Pay off your card as soon as possible to remove this monthly expense.
  15. Consider Other Ways – The ways to save money are virtually limitless, so step back and look at your expenses. Decide for yourself if an expense can be eliminated or substituted with a cheaper alternative.

An Example

That’s great, you’re probably thinking, but what effect does it actually have? To illustrate, consider the example from the previous article. In this case, Jane could adjust her budget to reduce costs significantly as follows:

Jane obviously made some changes in her life, but she also created an additional $969 in savings every month. Imagine if Jane invested that amount every month in stocks with a 9.37 percent annual yield. In 30 years, she’d have over 1.9 million dollars saved, which goes to show that a little budget-tweaking could be well worth it in the long run.

At this point, you’re probably surprised and excited by the amount of money you can save each month. That’s great. Now comes the fun part: Putting those monthly savings to good use. Check out the next article, entitled “Constructing a Savings Plan to Eliminate Debt, Create an Emergency Fund and Plan for the Future,” which walks you through your priorities with respect to savings.


This post is part of the series: Guide to Managing Your Personal Finances

This series of three articles will help you manage your finances by creating a personal budget, creating a savings plan and giving you tips for maximizing your savings.

  1. Establishing Your Budget: The First Step to Financial Success
  2. Tweaking Your Budget to Maximize Savings
  3. Constructing a Savings Plan to Eliminate Debt, Create an Emergency Fund and Plan for the Future