So many of the emails I get asking for help have to do with finances in marriage. You’re in debt, you’re not on the same page, and you don’t know what to do. So today I thought I’d write a post on the 10 best ways to save money! I asked you all for your best money-saving tip on my Facebook Page last week, and here they are, all consolidated.
When we hear the question “what’s your best money-saving tip”, though, we usually think about the regular purchases–groceries, clothing, entertainment. But the biggest parts of our budget are often our recurring expenses–our mortgage, car loan, credit card payments, utilities, etc. So the chance for the biggest savings is often in those big ticket items! I’m going to start with how to save money on those, and then move on to great tips on how to save money on our regular purchases.
Recurring Expenses–Bigger Ticket Items
1. Get Rid of Cable
Do you really need cable? My mother recently got rid of cable because it was costing her almost $70 a month for a basic plan, and all she really watched was the news. She can stream the news on the internet. Instead, she hooked up to Netflix and can now watch the British dramas she likes for less than $10 a month.
We haven’t had cable in 15 years, and we really don’t miss anything. It’s all on the internet anyway.
2. Shop Around for Loans, Insurance
If you need a new car, or you’re looking to renew your insurance, don’t just go with the bank because it’s easiest. Shop around for best deals on auto credit or on insurance. I often balk at doing this because I don’t have the time, but with a little internet research you can often get quotes quite quickly. Have a teen in your house? Pay them $20 to spend an hour getting you a ton of quotes. It’s worth it!
And if you don’t have great credit, auto credit express will help you out anyway. And many local mortgage dealers will as well. So if you need the car or the mortgage, look into it. But above all, start using the other tips so that your credit will improve!
3. Term Life Insurance is Good–every other life insurance policy? Probably not.
If you’re under 50, term life insurance is really pretty cheap, especially if you don’t smoke. Try to insure the main breadwinner in your family for at least $500,000, if you can, so that if the person were to suddenly die, you’d have a comfortable cushion.
But banks and other loan providers often try to “sneak” insurance in to other things, too. Mortgages often come with life insurance–if you die, your mortgage is paid off! It sounds great, but let’s say you owe $150,000 on the mortgage. I can pretty much guarantee you that if you went to an insurance company or a Prime America life insurance broker and took out an additional $150,000 in term life insurance it would be cheaper than the life insurance that goes with the mortgage. So opt out of that.
Opt out of credit card insurance schemes, too. Pay your credit card off in full, and you won’t need balance protection insurance in case of unemployment. And simply get enough term life insurance that these debts would be covered anyway without needing 5 or 6 different policies for each different loan you have.
The one type of insurance people don’t get enough of is disability insurance. If someone dies, it’s tragic, but it’s not nearly as expensive as if someone is in a horrific car accident or something and becomes disabled. And the latter is actually more likely than the former. When you’re disabled, you may have to remodel your house and bathroom and kitchen, you may need nursing care, and you may need other equipment. Don’t skimp here!
One of my regular readers, Leanne, has a great blog called Sensible Money Solutions! And she has some tips for saving money on house insurance, too.
4. Consolidate Your Loans
We often hear that statement, but do we know what it means? Basically, when you owe money in many different places, it’s hard to get a handle on how much you owe and on what you should pay off first. If you have multiple credit cards, and a car loan, and a personal loan, and a line of credit, that’s a lot of loans. Do you know which one has the highest interest rate? Do you know which one you should pay off first?
Often you can get a loan from a bank right now for about 6% interest depending on your credit rating, but many credit cards are charging three times that. Go to a bank and ask if they will help you pay off all of your loans by giving you a bigger loan at a lower interest rate. If you have good credit, you can also look at getting a 0% balance transfer card that will charge you no interest for 15 months or more.
One word of warning: often people prefer to have this consolidation loan in a line of credit, because then they have flexibility in paying it back. I don’t think that’s a good idea if you have a history of wracking up debt. It’s easy to not pay it back at all, or to only pay the interest. It’s better to get a fixed term loan–say five or ten years–so that you are making regular payments and shrinking that loan. It means you’ll have money coming out every month, but it also means that the loan will eventually get paid.
And one more tip: If you owe money on credit cards, don’t have money sitting in a savings account. Sure, it’s nice to feel like you have a buffer, but if you’re paying 15% interest on a credit card, it’s not wise to put money you do have in a savings account where it’s earning .25% interest. Put it against the card, even if you’re going to need that money in a month. It will end up saving you interest!
Save Money on Everyday Purchases
5. Pay with Cash
The biggest cause of debt is people spending without a real knowledge of how much money they have in their account. Now that my daughter is paying her own way in university she’s taking the cash approach. She has figured out how much money she has each week for food, entertainment, and general spending, and she’s taking that out in cash at the beginning of each week. When the money’s gone, it’s gone. And she won’t use her debit card.
I received an email recently from a woman who is a stay at home mom, and who does the finances in her family. Her husband works full-time, but he also spends beyond their budget. She writes:
I ask my husband before he makes a big purchase to please talk to me so that we can see if it is doable or if there are other options. There have been several times where he just spends 200 to 300 dollars without saying anything. And I’m left thinking our account has been hacked or something. He gets mad at me when I ask him to communicate with me because he says it’s his money and I don’t work.
That’s a tough one, but I firmly believe that going to a cash system can help people figure this out! The root of most money problems in marriage is communication. There’s no magic way to get him to stick to a budget; you just have to sit down and talk about it. But if you do sit down, don’t say, “I think you’re overspending.” Say instead, “What do you think is the maximum that we can spend each week each?” And once you’ve both figured out that number, then suggest that from now on, you leave the debit and credit cards at home and you simply take out that cash at the beginning of each week.
I know this is a huge problem in many marriages, but you’ve got to talk about it! And switching to cash is often the best way to stop these impulse purchases. It also gets out of the “you need to check in with me” dynamic that many people don’t like.
6. Use What You Have
“Shop your cupboards first!”
The average family has an extra $300 of food in their cupboards at any one time. And that’s ALL households. If you were to look at only the households with kids, where we grocery shop a lot, I bet it would be more than that.
And here’s another scary thing: the average family throws out 40% of their food. Almost half of fruits and vegetables don’t even make it to your stomach, because they go bad before you eat them.
So eat up what’s in your cupboards, and then shop with a menu plan from now on so that you only buy what you need. It actually leads to a lot less waste, even if you do feel like your cupboards are bare!
Here’s a much longer article I’ve written on how to use what you have.
7. Don’t Buy Stuff You Would Throw Away
Don’t buy disposable stuff. Use tupperware instead of saran wrap or baggies. Use rags instead of paper towel. Use cloth diapers instead of disposable. (And if you’re not too grossed out by it, you can even make your own cloth sanitary pads, which are way cuter and more comfortable).
8. Stop Eating Out!
One of the biggest items on many families’ expense sheets is eating out. This adds up so much faster than you may think. A lunch costs $10, which may not seem like much. But do that twice a week and you’re at $80 a month, or $1000 a year. And dinners out when you have kids get expensive, too!
To stop the lure of eating out, cut down on activities that will leave you rushed at the dinner hour. Buy a few frozen meals (I normally don’t recommend this, but in this case it’s a good idea) that you will use only on nights when you’re too tired/sick/busy to cook, so that it keeps you from ordering pizza.
And what about those snacks that we buy when we’re out? Keep bottles of water with ice in them to take when you go out. Buy granola bars or other treats that you can keep in your car to munch on if everyone wants something sweet. It’s cheaper than ice creams all round, and easier on your pocketbook!
9. Menu Plan–and Then Shop Wisely
I’m not going to say much about this one because I have a whole post on how to save money at the grocery store. But in general, when we’ve planned what we’re going to eat, and we buy only that, we’ll find our expenditures shrinking.
10. Stop the “Buy Now” Messages from Coming Through!
Here’s a counterintuitive one: stay away from malls and stores. Seriously. Only go shopping when you actually need something. Don’t go to a mall just to hang out with a friend. Don’t go window shopping. Only go out with a list, when you need something.
And cancel the catalogs and try to stay away from TV commercials. Don’t fill your head with all the things you could be buying–fill it with more fun with your family instead!
Bonus: 11. Plan Your Big Purchases
Menu planning and making a list for your everyday purchases saves a ton. But so does planning your big purchases!
When most of us buy something big, like a car, a computer, or furniture, we pay for it AFTER we buy it. It’s forced savings, really. We purchase it, and then we pay the credit card or loan payment every month.
You save a ton if you do that savings BEFORE you purchase it.
So if you need a car every five years, then right after you get a car, start saving for the next one. We buy a new computer every three years, so we’re putting money aside every month for that before we need to. And we have a bank account just for that purpose.
And don’t buy a new car, either! Did you know that most new cars are purchased by the middle class, not the upper class? People with a high net worth buy used cars, because it makes no sense to buy a new car. If you do, you’re just paying for the depreciation. We try to buy cars with about 20,000 miles on them. They’re virtually new, and they look great, but they’re vastly cheaper, because cars lose a ton of value as soon as you drive them off of the lot.
We’ve made friends with a car dealer in our small town who sells and services used cars. Now, whenever we know we’re going to need a car soon, we’ll call him a few months ahead of time and tell him what we’re looking for, and he’ll keep his eyes out. It works out great!
So save first, and know when you’ll need to buy big things. That way you won’t have to take out large loans.
Okay, so that was 11 tips, not 10, but I thought of the last one after I named the post!
Now it’s your turn: what are your big tips for saving money? What one tip are you going to implement today? Let me know in the comments!