Saving money and cutting expenses are never the favorite dinner table topic, but they are vitally important for individuals and families to discuss. And while there are quite a few drastic ways to save money on your monthly bills, there are actually quite a few small but simple ways to save that you can start TODAY. These seemingly easy adjustments probably won’t have that big of an impact on your day-to-day, but could result in some substantial savings.
Here are five very simple budget cuts that you can make today:
Change Your Thermostat
Did you know that adjusting your thermostat by just one degree can result in up to 10% energy savings? Keeping our homes cool in the summer and warm in the winter is expensive, and takes a lot of energy. And, the amount of energy that you save by adjusting the temperature is substantial. Depending on where you live, the results could be even more staggering.
Part of the reason the energy savings are so high is because most electric companies charge in a tiered rating system, which means that higher users get charged substantially more. This is why even cutting back a little bit can have a dramatic effect, because it can move you out of a higher tier and into a lower one.
Start by seeing if you can handle a temperature of 68 degrees in the winter and 74 degrees in the summer. Throw on a sweater in the winter if it feels a little cool, and make use of a few box fans in the summer if it’s still a bit hot.
Continue pushing until you find a temperature that you are comfortable with, even if it isn’t perfect. If you want to take it a step further, try adding insulation to your attic, and making sure that all your doors and windows are sealed tight.
Make Coffee at Home
Grabbing coffee on the go is convenient, but it’s also extremely expensive. Cut this habit out and you’ll see immediate savings. And, it isn’t very hard to do.
Figure out how to make the equivalent of what you buy at home. If you drink regular drip coffee, this should be pretty simple. Get a cheap coffeemaker, and make sure it has a timer. Set it up the night before, so that your coffee is ready when you get up to leave. One of the biggest reasons people pick up coffee on the go is because they ran out of time to make it in the morning.
If you tend to prefer a fancier drink, like a latte, look into purchasing a used espresso machine. This will add time to your daily routine, as making a latte can take 5 minutes. But, you’ll save yourself quite a bit of money. You can also try purchasing a machine that makes the drink for you, like a Nespresso.
If possible, try cutting back on the expensive coffee drinks. Perhaps only grab one on a special occasion, or once a week.
Turn your Hot Water Heater Down
Similar to point #1, keeping your hot water heater warm takes a lot of energy. Your hot water heater has to keep an entire drum of water hot all the time, so that you have hot water when you want it. Depending on what temperature you have it set to, this ongoing process can take a lot of energy.
You would be surprised how hot you actually need the temperature set to. You might have the temperature set much higher than needed. Test different temperature settings to see how low you can go.
Cut Out On Subscription
Chances are, you have at least one monthly subscription you don’t utilize to the fullest of it’s extent. Perhaps this is a daily newspaper delivery, or the more obvious one: your cable TV subscription. Either way, try finding one subscription that you aren’t making use of, and get rid of it.
If you have an expensive gym membership, perhaps try making a portable home made gym out of a spare bedroom and picking up a few used dumbbells and kettlebells. Or make exercising a family event and workout with your kids!
The list goes on, but for most families, you’ll be able to find at least one subscription to cut out.
Stop Drying with the Dishwasher
Another easy one to put into place right now, stop using the dry setting on your dishwasher. While dishwashers have become a lot more efficient in their water usage, their energy usage for drying has not gotten a lot better. Dishwashers use a tremendous amount of energy when drying dishes, and you don’t really need to use them for this task.
Just wash, and then open the dishwasher up and let the dishes air dry. It doesn’t take any extra work out of you, except to just wait a few hours for the dishes to try.
Saving money is not necessarily a fun topic, but there are simple things you can do right away to start saving. Once you see how easy it can be to save money, you’ll have the motivation to tackle the bigger and more challenging money saving tactics.
Allen Michael is the founder and editor of The Stick Vacuums (https://thestickvacuums.com/), a website focused on helping others keep a clean home as efficiently as possible. Allen stumbled onto stick vacuums while trying to help his family keep their home clean with less work, and has since become an expert on saving money and time in your home.
Creating a savings is difficult, especially if you’re already struggling to pay all your bills. You may believe that if you have access to a significant amount of open credit, you don’t really need to build up a savings or emergency fund. But if disaster should hit and you’re forced to put thousands of dollars on a credit card, you could find yourself struggling financially for years.
Creating an emergency savings shouldn’t be overwhelming. Here are some tips and tricks to putting a little bit of cash aside so you can begin developing the emergency savings you need.
Why a Credit Card is NOT a Savings
A credit card can be great for emergency situations. If your car breaks down and you need a quick way to pay an unexpected few hundred dollars, having open credit on a credit card can really save the day.
But this situation is only reliable if you see a payment for that credit card bill in your near future. Whether you have the cash tucked away in the bank or you have the freedom to pull it out of a paycheck, the only time a credit card is a reliable option for an emergency is if you absolutely have a way to pay it off.
The problem with people using a credit card as a way to get themselves out of an emergency is when they can’t afford to pay off their credit card bill. For particularly expensive emergencies, that bill could sit on the credit card for months, or even years, before it is paid away.
Another issue with only relying a credit card is that you’re likely to spend much more to cover the emergency on a credit card than you would if you have the ability to pay with cash. The interest on credit cards can be high, and as you continue to go months and months without paying your debt off, the interest will only continue to grow. If you can’t afford the emergency in the first place, you definitely can’t afford to pay more in interest than you expected.
Continuously avoiding credit card debt will negatively impact your credit. If your credit score gets too low, you will have a difficult time getting new credit cards, purchasing property like cars or houses, or taking out loans for things like education or a mortgage. Emergencies are usually unavoidable, but you don’t want one to ruin the rest of your life financially.
What is an Emergency Savings
An emergency savings is just how it sounds – a savings of funds to be used in the event of an emergency. These emergencies can range everywhere from losing your job, crashing your car, or an unexpected accident that leaves you with expensive medical bills.
It is impossible to be ready for any emergency that comes your way, but one of the best things you can do for yourself and your credit is create an emergency fund to bail you out of any unforgiving financial situations.
How to Grow an Emergency Savings
If you’re already living frugally, you may think you don’t have enough cash to set aside for an emergency fund. But the reality is that any little bit of money adds up and helps in some way. You may be unable to grow your emergency savings large enough to completely cover the cost of any emergency, but if you can reduce the cost put on credit, you’re helping yourself out in some way.
A general rule of thumb on how much money to keep in your emergency fund is around 6 months of living expenses. This includes rent or mortgage payments, car payments, groceries, and any other bill you would absolutely have to pay in those six months. This is your goal amount to always have within this fund, but at the moment it probably seems incredibly far away. Remember, you don’t need to reach this amount overnight, but the sooner you start saving, the better.
Begin saving by making a small goal, maybe one month of rent or mortgage payments. Set aside as much of your paycheck as you think you can do without, even if it is only a few dollars. You can also spend a bit of time each week earning some extra cash and automatically put that aside for savings. As you continue to set aside little bits, you will slowly but surely reach the goal you have made for yourself.
I encourage you to check out this additional posts on how to make “extra cash” in your spare time:
It is also important for you not to view the money you set aside as a typical savings account. Only take money from this particular bank account in the event of a real emergency, which doesn’t include new clothes or a new car. Keep it limited to emergencies only and you’ll have some cash there when a true emergency hits.
For many people without much disposable income, an emergency fund seems like something completely out of reach. While it may take a bit of cutting back and restructuring your budget, you’ll be happy to have a fund of extra cash if you ever find yourself in a tight spot financially. Setting aside just a few dollars a week can get you on track to a decent emergency fund and keep you from making a bad emergency even worse!
Do you have an emergency fund set up yet? Comment below and let me know!
Setting goals is essential to living a successful life, and this is especially true when it comes to paying down your debt! If you want to find financial freedom, you have to define (and refine) your budget.
It’s not enough to make broad goals like “I want to lose weight” or “I will be financially independent”. It’s great to use these as a part of your affirmations but as goals? No.
You must be specific, B-E specific!
You should create and define clear goals that will build towards that momentous success of living a better life on a budget.
Instead of “I will stop using my credit card and pay it off!” Come up with a concrete plan to pay off that card in X number of months. Figure out exactly what’s causing you to use the card now and how you’re going to stop those behaviors.
If physically cutting up the card gives you anxiety, consider freezing it – literally. Put it in a bowl of water and stick it in the freezer. It won’t eliminate your access to it but it’ll certainly give you time to think about whether or not you really need it to make that purchase.
Once you’ve set your goals, take a look at your budget and figure out your plan of action. I recommend starting by immediately cutting your budget by 5%.
The cuts can be made without pain, but you have to be willing to put in the work.
When I started this journey in January, I was able to take our $2,500/month income and trim it up by an additional 8%. I too thought it impossible at first until I took the time to develop an action plan.
Mind Your Time
After evaluating your financial budget, take an honest look at how you’re spending your time. Just as small purchases add up – a $3 cup of coffee doesn’t seem so bad…until you realize a canister of coffee at home would only cost you $10 for at least two weeks of coffee… – so do the “time sucks.”
Sure, maybe you only spend an hour watching TV each night but what if in that hour you could be earning $20? That’s over $7,000/year (nearly $9,000 if that $7k is on an unpaid credit card with 22% APR!)
Kinda crazy to think about, eh?
I’m not suggesting you use every minute of every day to work towards paying down your debt. You must take the time for self-care in more than one way and if that means watching a bit of TV, then go for it! The important part is making sure you’re not wasting hours now that you may not have later.
So there you have it.
In two months, I was able to pay down my debt by over $10,000 by:
Lately I’ve been sharing how I paid off a massive amount of debt in two months. One of the key parts of this is to understand impulse buying.
So today I encourage you to really sit with this post. Grab a pen and paper, it ends with homework. 😉
Identify Why You Buy
Why do we take such great pleasure in buying things? Why does having “more” bring so many such comfort?
Maybe it provides a primal level of mental security, knowing you won’t go without. Or maybe, for some, it’s more of an ego-related feeling – “I’m wonderful and people will know that when they see I have these wonderful things!”
Perhaps it’s because you had nothing growing up and having “more” means staying away from those icky feelings from the past.
Ask the Questions
Here are some questions to help you pinpoint why you buy:
Do you feel the need to “keep up with the Joneses”?
Does your brand loyalty hurt your budget?
Are you distracting yourself from inner dissatisfaction with new, shiny play things?
Do you think brand name guarantees high quality?
Are you addicted to luxury?
If you cannot identify “why you buy” then you will be unable to say “no” when the desire for more arises. By allowing yourself to constantly want, want, want, you are forcing yourself out of the present and living for what might be, for what you might acquire.
That’s not to say you shouldn’t live for the future. As you know, I’m all about developing long-term plans in order to kick debt to curb. However, you should focus on what will be, not what could be.
Think of the Future
As is the case with budgeting your life overall, a long view of your purchases can help with this. A new shirt at full price might be $50 now, but that same $50 taken off of a credit card balance with 22% interest can end up being $60 or more.
Teach yourself how to view a purchase in terms of how much it will cost later on. This will help immensely in avoiding impulse purchases. Like the adage “nothing tastes as good as being skinny feels,” no unnecessary purchase can bring you the peace of mind and reduce your stress like obtaining financial freedom.
Likewise, living in the past isn’t always a bad thing either. Think about where you were a couple years ago and what your household income was. Now think about what your expenses were. Are you spending more because you make more?
If you are in debt, you should not be upping your lifestyle to fit your current salary!
I know so many people who made $40,000/year, got a raise or better job, and instead of putting that additional income towards debt, they have now somehow incurred $10,000 more in expenses (often without realizing it!)
Breaking the Habit
Well, one of my favorite things to do is to keep a gratitude journal. I recommend against notebooks, simply because the covers are often flimsy, and you want to be able to carry this around with you. Any time you’re feeling down or you’re tempted by an extravagant purchase, pull out your journal and write down five things you’re grateful for.
Doing this will make you happier overall. I guarantee it.
Another thing to help you on your road to satisfaction with less is to consider where less already makes you happy.
I recently read a great book called The Brain That Changes Itself and one part that really stuck with me was that the more you practice saying no, the easier it’ll become.
So for today: Practice saying NO. Not just to others, but to yourself. Not only will this go a long way in helping your financial state, but it’ll actually re-wire your brain and lead to a healthier, better life overall. How cool is that?
Which is easier for you – saying no to others or to yourself?
If you want to maximize your tax refund this year, there’s ONE guideline to follow: stop seeing it as “free money”!
Maximize Your Tax Return
When the new year begins, people are often really struggling with debt. You want to set a resolution to become debt free but you’re coming off of the holiday season with bags of presents that translate into slips of paper covered in financial regret.
It’s easy to see why you might look to tax return time with a glimmer of hope.
The problem, however, is that more often than not, tax returns are seen as a way to buy new stuff. The cheapest time to buy cars, for instance, is right before tax season. The dealers want to get rid of old stock and they know people are about to have pockets full of “discretionary” money.
I know a lot of people who get their tax returns and buy handbags, TVs, go gambling, buy an ostrich, or whatever other things suddenly become a “need” in their eyes.
Now I’m not here to judge, I’m just sayin’…
That money isn’t just given to you by the government! It is money that you earned, one way or another, that the government was holding until your tax variable whosits decided you didn’t owe them anything.
Tax Money Isn’t Bonus Money
If the government wasn’t taxing that money out of your check, would you just drop 15% of your paycheck each month on carnival games and gumballs?
For the 99.9% of us who aren’t Willy Wonka — of course you wouldn’t!
Please stop thinking of it as free money and start realizing it should be allocated towards paying down your debt.
There’s no doubt that there’s a psychological high to getting a big windfall dumped in your lap, but if you truly have a good grasp on your financial situation, you know that “windfall” could translate into so much more.
By allocating my $5,500 tax refund this year towards my debt, I saved myself nearly $1,300 that I would have otherwise paid out in interest over the next year.
Was it tempting to spend that money on a vacation or some nifty new cleaning supplies? Yes absolutely. I totally believe in treating yourself once in a while, but I also know it’s better to front load your life and pay down debt now versus having it stick to you for decades.
How to Make the Most of your Tax Return
If you’ve already received your tax refund this year, I want you to take a genuinely honest look at how you allocated that money. Did you spend it wisely? Or did you spend it in a way that’s going to cost you so much more in the long run? How can you do better next year?
Seriously make note of this and then I want you to hop over to FutureMe – a website in which you can write an e-mail and schedule it to be sent to your future self.
Write a quick e-mail and motivate your future self to do better next year. Schedule it to be sent on January 2nd of next year so you don’t forget to do better!
Break Down the Spending
If you haven’t yet received your tax refund, I want you to open up your list on debts that you wrote out when creating a budget. Figure out how you can best allocate that money. Is there a bill you can pay off entirely? Or would it be better to divvy it up among a few of them? Figure out a plan and FOLLOW THROUGH with it! Budget your estimated tax return towards your debts, not towards a trip or new frivolous purchase.
And for those of you who don’t get returns (or worse – have to pay!) now is a good time to re-evaluate that situation. Chances are good that you have less being taken out in taxes with each paycheck than the rest of us. That’s great provided you’re spending it wisely. But if you don’t yet have a strong hold on your financial situation, then maybe you should talk to your employer about changing up your W-4. While I don’t necessarily advocate asking the government to save your money for you – there are ways to trick yourself into saving otherwise – it’s not a bad thing if you then allocate your return towards debt.
Tell me in the comments below: what will you do with your tax refund once you’re completely debt-free?
Will you celebrate by finally treating yourself without guilt or will you invest/save it?