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7 Small Savings Tips That Add Up To Big Savings, According To Financial Experts
You have to crawl before you walk and walk before you can run. Don't dismiss the power of baby steps, whether you're talking about a toddler or your finances. Small money moves can add up to big savings.
The notion of saving may seem intimidating if you think you have to save at least $1,000 a month to be taken seriously as a saver. While for sure that would be great, truth is, consistently saving small sums over time is a smart strategy too.
So, exhale. Vow to go small and win big. Here's how to do the small things that will boost your savings:
Start with a cup of coffee
You've heard it again and again: Skip Starbucks and make your coffee at home to save money. But before you dig in your heels and stick with your java jaunts, do the math.
"It sounds cliché but cut back on your daily runs. If you spend $5 a day, five times a week, that's $25 a week and $100 a month is $1,200 a year. If you make coffee at home instead of buying it every day, you can save up to $1,000 a year that you otherwise might have just thrown away," says Erika Kulberg, a personal finance expert and founder of Erika.com.
Set it and forget it
Make it easy on yourself. Automate your savings.
Have a specified amount taken from your paycheck deposited directly into your savings account. Start with $50 a month and you'll painlessly save $600 a year. The following year increase the monthly to whatever is comfortable. "You will never have had the chance to spend it, so you won't even notice that it is gone," says Kulberg.
You'll also save money by automating bill payments. When bills are paid on time, you don't waste money on expensive late fees, like the average $32 a month for credit cards.
Use cashback and rewards programs
Don't forget about cashback apps and rewards programs for your normal consumption. Rakuten or a credit card rewards program can give 1 to 5% cashback on your average spending.
"Over the course of a year, that can add up to at least $200–$500 or more," says Kulberg.
Hit the pause button
Step back and think before you make a purchase.
"Do you really need it? Would you go back to the store for that one thing? If you would, get it. If not, wait or skip it," says Scott Lieberman, founder of TouchdownMoney.com, a website designed to help people make financial decisions.
If nothing else, impose a 24-hour wait rule for purchases over a certain amount, say $300 or more. If after a day you feel like what you're buying is more a need than a want, consider it if you can afford the item.
Cancel forgotten subscriptions and unused services
Subscribing to that new streaming service sounded good when everyone was talking about the hot new show, but when was the last time you tuned in? Review subscriptions and memberships.
"Although subscriptions are a convenient way to pay for goods and services, many people get trapped into auto enrollments when trials expire or sign up for a service and forget about their small monthly bill that gets paid automatically," points out Andrea Woroch, a budgeting expert.
Those costs add up. She says one study found that 30% of subscriptions go unused, which costs the consumer an average of $25 each month. Over the course of the year, that makes a difference, especially if you have several memberships and subscriptions. Woroch says apps like Trim help you identify and cancel subscriptions you don't use or want.
Stop wasting food
You know how expensive a trip to a grocery store is these days. Yet, a survey from HelloFresh found that people typically throw away about $63 worth of weekly groceries, much of that is leftovers that don't get eaten. But that's around $3,000 a year wasted that could be sitting in your bank account.
This should be an incentive for you to meal plan and shop with a list and stick to it.
Pay yourself first
This is one thing just about every financial planner will tell you to do. Think of yourself as a bill. When you get your paycheck, you are first in line to be paid. Set aside some money to put in your savings before you dole out money to anyone else.
The takeaway
It's the little things. Says Holley Cary, a vice president and senior financial planner with First Horizon Advisors, "Small steps go a long way. Start small and actionable, and then grow into bigger strategies."
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