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8 Easy Ways to Save Money Fast
In Level Three, we advocate that you build a savings of six months’ gross income. As you know, in Level One, you are to have an emergency pool of savings equal to two months of your gross income. In Level Three, you will be building this two month pool of liquid savings up to six months.
Many of our readers tell us that this six months liquid pool of savings in Level Three is more difficult to build because it is tempting to want to begin investing and taking risks. But as Jerry Robinson always says:
There is plenty of science behind this concept of prioritizing savings in your financial game plan. Dedicated savers are better prepared in times of economic crisis because they have quick access to liquid capital to seize on opportunities. Also, good savers make better investors because their access to liquid capital lowers their desire to take on too much risk.
Building your six months savings is one of the most important steps in our entire program.
This savings provides you with a safety net for the unforeseen events that can happen to anyone.
It also allows you to go back and rearrange your Level Two protection in a more favorable way (if you have a sizeable pool of liquid savings, you can afford larger deductibles and obtain lower monthly insurance premiums).
And a third advantage of having your savings is that, as you move into Level Four, you will not feel the need to take on excessive risk with your investments. You will also not need to liquidate your investments as quickly if, for example, an emergency arises, because you have liquid savings on which you can rely on.
In order to build your six months of savings, we recommend saving at least 15 percent of your income every month. For example, if you earn $5,000 in gross monthly income, we suggest saving a minimum of $750 to go toward your liquid savings pool. For some of you, this is no problem. You can easily save 15 percent and may have already begun saving this much or more.
Others are probably wondering, with all your bills and expenses, how can you ever hope to save 15 percent each month?
Regardless of your situation, I believe you can benefit from the following ideas to reduce spending and save more money each month.
Will these ideas make you rich? Absolutely not!
However, these ideas, when implemented consistently, can help you reach your Level Three goal of building six months of gross income in savings. Try to implement at least two ideas this month!
Eight Ways to Save Money Quickly
1. Cut back or eliminate your cable/satellite package. Cutting back on your cable or satellite package can really save you some cash every month. Typically, lowering your plan can save you $5 – $10 each month. This adds up to an annual savings of $60 – $120. Eliminating the cable altogether can save you even more!
And, if you think about it, how many times does the following scenario happen? You have 200 channels, 150 high-definition channels, and 75 music channels, and you sit back in your recliner and say to yourself, “There is absolutely nothing on TV!”
So why pay for something that so often disappoints? Instead, try some of these free or low-cost substitutes.
- Netflix.com ($8-$12): For only $8 per month, Jerry and I get unlimited streaming movies, TV shows, and documentaries on Netflix. We have never been disappointed with the selection, and we have the freedom to watch whenever we want without commercials. The key here is to be able to connect your PC to the TV (most PCs have this capability) or to stream through your gaming console, AppleTV, or Amazon FireTV.
- Hulu.com (Free – $8): Still want to see your favorite shows on TV? Hulu.com is a great alternative. For no cost at all, you can view many popular TV shows the day after they air with limited commercials on Hulu.com. Many of these shows are available for at least a week on the website. For only $8 a month, you can have access to all of Hulu’s archived shows, and the site now offers a wide selection of movies, as well as access through gaming consoles, smartphones, and tablets.
- Amazon Prime Video (Free for Prime Members): Instantly watch movies on your PC, smartphone, tablet, or Amazon FireTV. The Amazon Prime Membership is $99 per year ($8.25 per month) and includes free two-day shipping from Amazon, Amazon Video, Streaming Music, and several other benefits. We have found the selection to be a bit thin compared to Netflix, but there are some shows and movies that Netflix doesn’t have. Plus, when we are not watching a show on Netflix, we pause our subscription to Netflix and just use Amazon.
2. Brown Bag It. If you are eating out every day of the work week, you have a huge opportunity to see some savings stack up in your budget. Let’s say that you spend $6 on lunch five days a week (this is assuming you are eating fast food, but use $10 if you tend to eat at casual dining restaurants).
I have been personally packing my lunch for some time now, and I spend an average of $1.80 on each meal. That is a $4.20 savings each day versus fast food, adding up to a whopping $1,050 savings for the year!
3. Give up the soda. I know, I know, this is easier said than done. However, if you are determined to make a change, it is not impossible. Jerry and I gave up soda about 4 years ago. Not only have we saved quite a bit of money, but we are healthier and actually have more energy than ever!
The average 12-pack of soda costs around $5, making each can about 41 cents. On the other hand, bottled water can be purchased for as little as 9 cents per bottle (I purchase in bulk at Sam’s Club). Furthermore, on the occasions that you eat out, soda costs between $2 and $3 versus water, which is absolutely free.
Assuming you replace three cans of soda per day with three bottles of water, you would save $28 during the month and $345 for the year (multiply this by the number of people in your home to get a total savings for your family!)
4. Downsize: Do you really need all that space? The American mindset tells us that bigger is always better. Or, as Jerry often says:
In fact, the normal attitude towards a home is to buy as big as you can afford (or even more than you can afford!). Take a serious look at your home and the mortgage payment that goes along with it. This could be an area that can save you a lot of money every month.
In fact, I challenge you to spend some time giving away the stuff you never use and organizing closets and storage spaces. You may find out that you don’t need to upgrade to a bigger house. Also, when deciding on a home, keep in mind the property taxes and insurance premiums for the particular area. These can leave you with sticker shock if you are not prepared.
5. Switch to CFL or LED light bulbs. This option is something that I have recently put into practice. I was hesitant, because I did not want to make the initial investment in the more expensive bulbs. However, when I finally decided to make the change, I discovered that many retailers have sales and specials on CFLs and LEDs frequently. Search your local sales ads, or search online to find deals in your area.
After I switched to the efficient light bulbs, I calculated that previously I had been using almost 1700 more watts in my home with the old incandescent bulbs (assuming all the lights were on at the same time). At this time last year, my electric bill was $30 higher. I’m hoping to save this amount each month throughout the year.
6. Try the local beauty college. Haircuts at salons start between $25 and $45 and only go up from there, depending on the extras you usually get (highlights, waxing, manicures, pedicures, etc). Beauty colleges charge $10-$20 for a haircut and usually $20-$40 for hair color. Most colleges offer all types of hair, nail, and spa services. Some even offer special day discounts or monthly discounts, as well as senior or student discounts.
This may seem like a scary idea (especially to some of the women out there). Here are a few tips to ease the thought of a “newbie” cutting your hair:
- Ask for the student who has been there the longest. You may have to wait an extra day or two for an appointment, but it may be worth the wait.
- Be very specific in describing your haircut, and bring pictures. The more vague you are, the more room for interpretation by the student.
- If you cannot bear to get your haircut by a student, then opt to get only your manicures and pedicures done at the beauty college. This option still saves money! (Assuming you normally get them)
7. Monitor your spending online. By monitoring your spending, you will be less likely to incur those annoying overdraft fees that your bank charges. At my bank, the overdraft fee is $35. If you have to pay an average of four overdraft fees per year, you could save $140 on an annual basis by simply monitoring your spending.
I accomplish this by devoting only one minute per day (or less!) to simply logging in to my online bank account and checking my balance and processing transactions. If there is any issue, I take care of it right away. If you notice your balance is getting low, you can transfer funds from a savings account or another checking account and it will post that day, avoiding any overdraft fees.
8. Implement the “Cash Only” System. When I was in college (and paying for it on my own), there was one particular semester that I needed to save a big amount to pay for school. I came up with a “Cash Only” system at that time, and I cannot tell you how revolutionary it was to me! I still use it to this day.
The “Cash Only” system is similar to an envelope system and works like this. Start with a category of spending in your monthly budget (i.e. groceries, entertainment, transportation, etc). Determine a reasonable budget that would work for you and your family. Then, take that specific amount of money out of your bank account in cash and vow to never use the debit/credit card for purchasing items in that particular category.
For example, you may budget $500 per month for groceries for your family. Therefore, you would start with $500 cash, and divide it among you and your spouse (whoever makes the majority of the grocery trips would keep more of the cash). This way you are never caught at the store without the cash, and you do not have to pull out the debit card.
Once the $500 cash is gone, you do not spend any more money on that category for the month. This will teach you what is important when you go to the grocery store, and the system can potentially save you the biggest amount of money out of all the different ways I have listed in this article.
I hope these ideas will jump start your monthly budget and help you and your family to start saving more money as you continue your journey on The Five Levels of Financial Freedom.
Until next time,
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