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]]>Being told to save more money is often frustrating. You intuitively know that spending less than you make is a good thing, but often life gets in the way. The car needs a new battery, an appliance breaks down, the dog gets sick, and the savings you thought you had suddenly go away in an instant. Does this sound a little too familiar? At the end of the day, if you wait for everything to be “perfect” before you start saving money, you will be waiting forever. Life will always throw punches our way; that is a fact. The good news is we are in complete control of how we respond to those punches. There are plenty of straightforward and practical ways to save money regardless of your financial situation. They might not feel like you are getting anywhere or making a significant enough dent, but a slight change made daily has a dramatic impact on your future. Here are 12 practical tips to save more money and get you a little extra breathing room in your budget and your life.
Stores like Costco and Sam’s have their business models wholly based on customers buying in bulk. When buying in bulk, the number one thing to consider is that it’s not the price of the item you should focus on; it’s the price per unit (or ounce) that really makes a difference. My wife and I have been buying diapers from Sams Club, and we have reduced our unit price from $.25 to $.11 per diaper. This may not seem like a substantial savings amount, but she used 12 diapers a day for the first three months of her life. That’s a significant amount of diapers! By dropping the unit price by a little over half, we were able to get a savings of $151.20 just on diapers alone!
As long as the expiration date of the items you are buying you feel confident will be used by that date, buying in bulk can save you a substantial amount in the long run!
When used efficiently, coupons are one of the most practical tips to save more of your money. Couponing for my wife and I have become a way of life. I’m not sure we have paid full price for anything in our house. If it is not on sale, we aren’t buying it. It’s as simple as that. The average couponer, which is defined as using at least one coupon in a 30 day period, averaged a savings of $36.80 a month, which equates to an annual savings of $441.60.
Sites like Ibotta, RetailMeNot, Honey, and Groupon are just a few examples of ways to get great savings very easily.
This might be the most effective of all of the practical tips to save more of your money on this list.
Do you know what’s cheaper than purchasing something on sale? Surprisingly the answer is not a better sale—it is not buying the item in the first place. Often this is a lot easier said than done though, especially if your money archetype enjoys spending.
If sales are traps for you to spend more money, knowing that about yourself is half the battle! Try some of our budgeting methods to ensure that the savings you get are not chains you are putting on yourself.
Shopping and comparing insurance policies can be a total pain. It can feel challenging to look through all the options and find a policy that works for you. Fortunately, that’s where sites like Policy Genius come into play! Policy Genius users report an average savings of $690 a year by switching their coverage. They make it easy to compare policies, and the savings are substantial. At least take a look because you may be paying more than you need to!
It seems like everyone is offering a subscription these days. It is almost scary how easy it is to pay for multiple different subscriptions such as Netflix, Hulu, Apple Music, gym memberships, Amazon Prime, etc. These prices are manageable individually, but when stacked together, the cost starts to add up.
It’s healthy and necessary to cancel any subscriptions you don’t use regularly. It may feel daunting even to know what subscriptions you have, and if that’s the case, I recommend TrueBill. They can track and let you see all your subscriptions for free in one place!
Depending on where you live, this may not be entirely possible because you might only have one provider that will service the area. However, if you live in a city, make sure you compare the cost of phone and internet plans. By eliminating data plans, phone insurance, and unneeded warranties, you can save a substantial amount on your bill.
Also, think about sharing a family plan with friends to cut back on the cost because they typically offer discounts with more than one phone line. This way, everybody wins!
The average monthly price for cable TV is over $217 a month, equating to $2,604 a year. With how expensive TV has gotten, the cut the cord revolution that is occurring is of no surprise to anyone. There are so many alternatives to cable, thanks to streaming services like youtube, Hulu, etc…
The goal of cutting the cord is to save money, so only purchase a subscription you will use. It is very easy to have ten streaming services with prices over what it would cost for cable if you aren’t careful. But if you are diligent, you can dramatically increase your margin with one or two streaming providers while not sacrificing any of your entertainment value.
One of the most effective on our list of practical tips to save money is to ditch brand names and buy generic. Almost every major retailer has a value brand that is highly comparable to its Name brand partner at fractions of the cost. This goes from everything from medicine, food, cleaning supplies, etc. 99 times out of 100, you are just buying the marketing of the brand name rather than a superior product. Yes, the logo may be cool, but your savings are far superior to any logo.
The average family in the United States spends roughly $3,526 each year on food outside of the home. That’s almost $300 a month on eating out! It is so easy and convenient to buy food on your way home from work, or if you are just simply too tired to cook after a long day, bringing dinner home is often the choice.
By budgeting and cooking your own meals, you can save and eat better on a regular basis! For the cost of a dinner out, you can have steak for a few meals at home. It’s more cost-effective, better for you, and will produce financial margin in your lives without too much sacrifice.
Yes, it is sweat equity time! Thanks to youtube and a quick google search, you can practically learn how to do any home project for a fraction of the cost. Want to learn how to tile, add a deck, fix your brake light, and change your car’s oil? Youtube can help with all of these things, and your savings will be substantial.
My good friend has a Costco membership, and he profits from it every year just by buying oil and following a youtube video to learn how to change his car’s oil. By rolling up your sleeves, how much you can save and learn is remarkable!
Yup. I went there. This is a tough one for many of us coffee addicts out there. Unfortunately, the math doesn’t lie to us. The $5 daily cup of coffee adds up to over $150 a month! We can still enjoy coffee; we just need to work smarter, not harder.
By buying local beans and a quality coffee maker, your return on investment will still be much quicker than buying a cup of joe, and the savings over the long run will be substantial.
My wife loves Marie Kondo. There was a period in life when that was all we had on tv, but you know what? She has the right idea. Clutter causes stress in your life, and by selling things you don’t need, you gain a little cash plus peace of mind.
From personal experience, my own home feels like a magnet for unwanted stuff. My wife and I regularly go through our home and get rid of things that we don’t even know how, when, or where we got them. The best feeling we have is decluttering our home from unwanted or unneeded things, plus the extra cash is always a nice bonus.
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]]>Budgeting. Some of you just cringed at the very mention of the “B” word. We hear it and it immediately triggers something inside of us. To so many of us, it represents the loss of freedom. We fear losing our autonomy, of being put in a box, and if we are being honest, it is terrifying to pull back the curtain and call a spade a spade. An unfiltered look at our finances requires us to be vulnerable. Who likes that?
We often associate our financial situation with our overall value. Our finances bleed into every aspect of our lives so if we are “failing” in our finances, we will often feel like failures as human beings.
We need to separate our value from finances, and the easiest way to do this is by taking control and budgeting. Budgeting is not giving up control or freedom but taking control back and creating more freedom in our lives. Being honest with our situation and owning it changes things. You can’t control the world around you, but you can control your mindset, attitude, and, conveniently, your budget.
Now that we want to take back control in our lives, how do we practically do it?
We just started this journey, but where does it lead? Ultimately, that is up to you. It can be as simple as I want to pay off debt, or I want to create more margin in my life. It could be I want to stop renting and buy a home. Whatever your goals are, list them. I would suggest categorizing your goals into three categories;
Once we have our goals listed, we know what we are working toward and can move to step 2.
Once we have our goals mapped out, we need to get everything together in one place to look at them. We need all of our bank accounts, credit cards, debts, investments, and any other financial information organized and easily accessible.
Several financial platforms can help with this task. Our coaching platform, MINT, and EXPENSIFY are a few I would highly recommend taking a look at and exploring.
Once we have all of the information gathered, we need to do something meaningful with that data.
Once the fact-finding has been completed, it is time to categorize income and expenses into the following categories.
It is important that in this stage we are not making any adjustments until we have all of this information in front of us and categorized.
* What about seasonal or unexpected expenses? As we all know, life happens, so that’s why we have our budget to prepare for the unexpected. When we budget, we create financial margin so that we can handle those unexpected expenses. So inside the flexible expenses category, I would set a dollar amount for an emergency, you may not always spend it, but it needs to be accounted for in your budget.
When designing your budget, there are several different methods you can choose. I will talk about two of my favorite methods below. A quick note before we dive into types of budgets, finances are personal so look at these as references for framing a budget that works for you! The ultimate goal of budgeting is to make sure you save so you can achieve your goals. However, you do that is a good thing!
The 50-30-20 method is great for getting started with budgeting without feeling overwhelmed. It is extremely easy to set up and conceptualize. All we are doing is dividing our earned income into three major categories.
The first category is Needs which represents 50% of our budget. The next category is Wants which represents 30% of the budget. Savings represent the remaining 20%. As long as each given category is within its specific threshold (50%, 30%, or 20%) then you are on track with your budget.
Here is an example of the 50-30-20 rule that would apply to an individual with an after-tax income of $4,000 a month.
| Categories | Amount Allocated |
|---|---|
| Needs | $2,000 |
| Wants | $1,200 |
| Savings | $800 |
Of course, you can change these numbers to match more of your spending preferences, but this is an excellent rule of thumb and starting point when beginning to budget.
If this method doesn’t get you as much clarity as you want into your finances, the zero-out method might be for you.
This is my favorite budgeting method. Where the 50-30-20 is more of a top-down approach, the zero-out method is a bottom-up approach. This budget does take longer to set up and maintain but I have seen fantastic results from those who stick with this!
We already have done a good job of general categorization of our income and expenses, but for the zero-out method, we need a little more detail. We want to know how each dollar that we have earned is being spent. If we are purposeful with our budget, our finances will thank us. Start by defining all of the elements you spend/earn into a list as I have below:
It is important to note that I treat investments and savings as expenses for this method. I prefer to focus on my fixed expenses and investments first, and then the remaining balance I use to allocate for everything else. At the end of each month, we want our income minus all of the categories to equal zero. If it is greater than zero, your income is higher than your budgeted expenses. Fantastic!
If it is less than zero, you are spending more than you are making. First things first, if you find yourself in this situation, don’t panic. Budgeting like this takes some time to get used to. The whole point of this type of budgeting is that each dollar has a purpose to it. So when you are succeeding or struggling in a given area, you know exactly where it is you need to focus.
This method can feel daunting to people because it requires a little more work and getting used to than the 50-30-20 method. I find this method, albeit more work, serves to maximize my savings each and every month.
Here is a quick example of a zero-out method budget.
| Categories | Amount Allocated |
|---|---|
| Rent | $1,200 |
| Utilities | $300 |
| Groceries | $400 |
| Phone Bill | $100 |
| Gas/Car Maintenance | $250 |
| Insurance | $150 |
| Entertainment | $100 |
| Retirement | $800 |
| Emergency | $100 |
| Loans | $225 |
| Clothes | $75 |
| Internet | $100 |
| Travel Fund | $100 |
| MISC | $100 |
| Amount Remaining | $0.00 |
Now that you have created your budget, it is time to start implementing this into your day-to-day life. You will need a way to track the progress of your budget and make sure that the budget is working for you and your lifestyle.
Google Sheets is a great way to track your budget. It has free budget templates, but it does require manual entry and extra diligence to record each transaction manually. Mint is an entirely free option and tracks your expenses and bank account balances, which makes it easy to compare for budgeting purposes. There is also U-VEST which offers financial coaching in tandem with their full financial planning app.
Needless to say, you have options to choose from; just make sure you have a way to execute your budget and a system to track your progress over time.
Whatever budget you deploy, make it a habit! Budgeting is one of the most effective ways to increase your financial margin. Yes, it can feel uncomfortable, but change normally is. If you are married, make sure you and your spouse are together on this. Talk about what is important and hold each other accountable. Accountability is critical to making a permanent change.
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]]>We all know the stress finances can cause in our day-to-day lives, and it is often crippling. We may even feel like we are on the path towards financial freedom for a time but then, as it always does, life throws a curveball. The unexpected car problem hits, financial markets crash, real estate values decrease, your once stable job is making layoffs, the list goes on and on.
Uncertainty is the only certainty that we have in this life, and it causes us to stress and, when stressed, our perspective gets distorted.
We either zoom in on the problem, making it feel bigger than life, or we put our heads in the sand, avoiding the problem altogether. Ultimately stress eliminates the abundance of choices and opportunities around us, blinding us to the many paths forward.
If stress makes us blind to the path, how do we find a way forward, and what does the path even look like?
Imagine a world where the unexpected happens, but you have a plan in place for it. Where your car has a flat tire, and you just fix it: no stress and no worry. What used to be a financial mountain turned into a financial molehill.
Want to learn how to get there and obtain true financial freedom that oozes out into your personal life?
First Things First, To get where we want to go, we must first know where we are now. This step is so critical yet often overlooked. If you are training for a marathon, your current physical condition, training habits, and mental mindset should all be looked at and honestly assessed. When this step is missed, we feel like we are failing, but, in reality, we have just skipped too many steps to be successful.
Where you start matters and identifying that honestly is crucial to your success, so what are the things we need to be honest about? Well, ideally everything, but to gain financial freedom, these are an excellent place to start:
We all have feelings and grew up with expectations regarding money, what it would give, the type of people who have a lot or none, and the power or lack thereof it provides.
The relationship you have directly affects your behaviors and decision-making. Your financial journey is 80% behavior and 20% knowledge, so focusing on knowledge while ignoring the behavior is like a sailor preparing to set out on the ocean without a boat; it just doesn’t make sense. Whatever your relationship with money, let’s identify it and accept it. Only then can we build the foundation for lasting financial and personal freedom.
Financial freedom is impossible living paycheck to paycheck. I know it can be scary, but how can we ever change if we can’t acknowledge where we are? Cultivating and sustaining financial freedom requires honesty and acceptance of where we are now and the best/only way to get that information is from a detailed look at your budget.
We must be purposeful with every dollar we have because everyone ends up somewhere, but few people end up somewhere on purpose. This journey never stops. Even once we are financially free, have our safety net in place, and have created financial margin, we must still budget and be purposeful. Being purposeful with our money is not something we do, but it is who we are if we truly want to be financially free.
You will not make lasting or sustainable changes without learning to manage your money and follow a financial plan. It just doesn’t work. There is no shortcut to financial freedom, If that were the case, then lottery winners would never go broke, and professional athletes would be able to retire quickly. When you fail to plan, then you plan to fail.
If you are married, get on the same page with your spouse; if you are single, get an accountability partner. Without someone keeping you accountable, whether single or married, it will make your journey that much harder.
Creating a plan for your future feels daunting, but like with all things in life, it is just about taking it one day and one step at a time.
A good financial plan starts with your goals, and we need to break these goals into three realistic time frames.
Once you have listed your goals, let the goals direct your decision-making and behaviors.
No financial plan is complete without a reasonable budget. Understanding where and how you spend your money is key to creating financial margin. If you can consistently make more than you consume then you have financial margin. I will take margin over income any day of the week and twice on Sunday.
We all have made and continue to make financial mistakes. It is part of life. But how we address and learn from these mistakes is critical to financial freedom. Before we can gain wealth, we must clean up our financial house first!
That means if you have debt, primarily credit card and students loans, then it is time to get serious about eliminating them. There are several excellent options for eliminating debt, like the Debt Snowball and Debt Avalanche methods.
When we have debt, all we are doing is limiting the income available to us, and it crushes our ability to create financial margin and create the financial freedom we desire. How can we build our own house when we are busy building someone else’s mansion?
We don’t need to avoid credit cards and student loans at all costs, but we must plan to use them to our advantage.
Want to learn how to use credit cards to your advantage? Click here!
I have always loved the great Warren Buffet. His investing insight and ability to hold steady to his principles is what has made him the most significant investor of all time. One of his many pieces of timeless wisdom is, “If you don’t find a way to make money in your sleep, you will work until you die.”
The importance of making your money work for you and not against you is critical. The sooner you invest, the more time compound interest has to work its magic. I would highly suggest talking with a money expert about your options and ways to invest that make sense for you and your unique financial situation. There are several ways to make your money work for you, but here are some of my favorite to use.
Investment Vehicles:
I will briefly touch base about some investment vehicles and describe each below. I would highly suggest clicking the links to get clarity on each type of investment vehicle and which ones could be utilized for your specific goals and financial plan.
Stock Market –
The stock market is my favorite way to grow income passively. The S&P 500, since its inception, has averaged between 10 – 11% each year with the opportunity for much more! There are multiple ways to invest in the market, and I will list a few of the most common ways to get involved in the stock market below:
Retirement Accounts –
Taking advantage of tax-advantaged retirement accounts is a fantastic way to set yourself up for long-term financial freedom. If your employer offers a 401(k) matching program, make sure to take full advantage of the match and collect that free money!
Traditional and Roth IRAs are also fantastic options for saving for retirement. You receive either tax-deferred (traditional) or tax-free (Roth) benefits when you invest in an IRA. Both are great options for retirement and have a place in your long-term retirement plan.
When you invest in a Roth IRA, your money grows tax-free! That makes a massive difference in the amount of money you can keep over the long term.
Traditional IRAs give you a tax break today for investing, and then when you withdraw money, it is taxed.
Ultimately the IRA you choose will be directly impacted by your unique financial situation! Tax evasion is illegal, and tax avoidance is wise!
Real Estate Investments –
Your home should be not only a place you live but also an excellent investment that leads to your mission of financial freedom. If you choose a home wisely, it will continue to appreciate for the years to come. We must be diligent in the kind of home we purchase and how we finance the home. The right home with the wrong financing can be a liability rather than the asset it should be.
Rental properties are an excellent way to build wealth and create ongoing, consistent income. You can even use them to live rent-free!
There are many ways to grow your income passively, but it is all about managing the risks and creating the margin in your life to invest freely. Find someone to help educate you and create a plan to grow your money according to your goals. Remember, no step is more important than the next. As Dory would say, “Just keep swimming”!
5) Be actively involved in your financial future
Once you have laid your foundation, don’t stop working! Your financial plan requires constant attention and adaptation. Everything from actively managing your money, updating the budget, and optimizing investments must become a regular part of your life.
Managing your money can feel overwhelming. Get with a financial expert to help walk through this journey if it feels that way.
A good financial planner can help with:
Ultimately financial freedom isn’t easy, but it is attainable. No matter where you are on your financial journey, it is never too late to start, and there is always a way forward. Embrace the journey. Cultivate personal and financial freedom. And always remember, you’ve got this!
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]]>If we know debt is scary, why do so many of us find ourselves in positions of crushing financial obligations and drowning in debt? Well, maybe you start off with just a little debt; perhaps you purchase the new car, take out a student loan, or you borrow a little just to make ends meet. A little debt doesn’t feel overwhelming, but debt has a way of growing and growing until one day you wake up, and the minimum payments are too much. The debt has grown to a number where you feel paralyzed. Debt takes away options and adds stress to our financial and personal lives. You know it’s time to make a change, but often with debt, it feels like one step forward and then two steps back. Let’s get out of the water and on your way to financial freedom!
In order to get debt-free, you will have to make accelerated payments, which means paying more than the minimum or the agreed-upon amount. Now obviously this means we must find in our budget a way to increase the amount we can pay each month. I tell everyone to start by making an additional $100 a month to contribute to their bills. There are several ways to do this, from restructuring your budget to online surveys and many things in between. This may seem impossible, but that is our stress talking. When we are drowning in debt, we are unable to see things clearly. We are in survival mode. In order to tackle debt, we have to find a better way to look at our situation and find a way forward.
My two favorite debt handling strategies are the debt snowball method and the debt avalanche method. Both are highly effective at tackling all kinds of consumer debt ranging from personal, home, medical, and student.
Both the debt snowball and debt avalanche are centered on paying off one debt as fast as you can while paying minimum payments on the others. Focusing on eliminating one debt as quickly as possible and then rolling the balance into the next debt keeps the momentum and gives you tangible results to keep moving forward. These strategies differ by which debt you choose to start with. By the end of this article, you will have a deep understanding of how to deploy either the debt snowball or debt avalanche into your finances and begin your journey into financial freedom.
Let’s look at this example and see how the debt snowball would be applied to this specific situation. The first step would be to gather all the debt information and list it out, as I have done below.
Now that we have all the debt information listed, we can tackle the problem. Our current debt obligation by just paying the minimum payments totals $795 a month.
Now let’s say through budgeting and generating income through a side hustle, we have $1,000 available for paying off debt. Our standard month payout would like this:
Once the car loan is paid off, you would apply the $280 that you were paying for the car and apply that to the next smallest loan; in this case, it would be the personal loan. It would look like:
If you keep stacking payments together until the snowball gets large enough to knock out all of your debt, you have successfully stopped drowning!
This strategy is great because it gives you a win early but you are not minimizing the amount of interest you are paying with this strategy.
Let’s look at the same scenario as above and see how the debt avalanche would work to stop us from drowning. It still starts with listing all debts out with their payment and interest rate information, but now we are going after the highest interest rate instead and don’t care about the balances. Our first-month payment structure would like
After the credit card has been paid off, we would apply the $430 to the personal loan because it has the second-highest interest rate. The example payout structure is listed below:
As you can see, this method reduces the amount of interest you pay over the long term by eliminating the highest interest payment first regardless of balance.
When you are drowning in debt, it can feel very scary but it is up to us to get out of the water. Ultimately both of these strategies work, and I recommend whatever system you feel more comfortable with. I often tell people to use a hybrid approach and combine the methods. I think the psychology of winning is critical in making a change. The debt snowball lets you see progress even though you are not minimizing interest payments. But, who cares! When getting out of debt, the most important thing is making and following a plan to get out of it! But if you are disciplined and stick to it, your wallet will thank you for following through with the debt avalanche.
As always, you have so many options available to you. The most crucial step is always the next one. You got this!
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