Eight Strategies for Rapidly Saving Money

8 ways to save money—and quickly

1. Set a Budget

Understanding where your money goes is the first step to saving it. Setting a budget allows for a clear picture of income versus expenses, making it easier to identify areas where changes can be made. Budgeting also instills discipline in spending habits and fosters a victim mindset towards financial decisions.

If Jill earns a monthly income of $3000, she sets aside 50% i.e., $1500 for her needs, 20%-30%, which is around $900 for wants, and saves or invests the remaining 20%-30% ($750). She was then able to control her overspending while meeting all her requirements.

• Spend less than you earn.
• Identify necessary expenses such as rent, groceries, utilities etc.
• Deduct necessary expenses from total income to create your budget for discretionary spending.
• Avoid temptations to overspend by keeping track of how much you have left on your spending budget.
• Review your budget periodically to ensure it’s realistic and effective.
• Use a budget tool or an app to help manage your spending.

2. Eliminate Debt

Reducing and eventually eliminating debt is crucial. It’s like carrying a heavy burden that slows you down from reaching your financial goals faster. The interest payments alone are eating away at your potential savings. Find ways to pay off your debts quicker, whether it’s by restructuring your loans, paying more than the minimum amount every month, or seeking professional help if needed.

John was able to pay off his credit card debt faster by consolidating them into one personal loan with a lower interest rate.

• Make a list of all your debts, monthly repayments and interest rates.
• Pay-off high-interest debts first.
• Consider debt consolidation or refinancing where applicable.
• Seek assistance from a financial counselor if needed.
• Stop incurring new debt while you are paying-off the existing ones.
• Create a repayment plan and stick to it.

3. Automate Savings

Automating savings is like outplaying your brain at its own finance management game. By setting up an automatic transfer into your savings account, you trick your brain into believing that the funds leftover after the transfer is all there is to spend. You’re automatically saving without even thinking about it.

For instance, Susan sets up a $100 automatic transfer into her savings account every payday so she doesn’t forget or overspend before she can save.

• Set-up an automatic transfer with your bank on your payday.
• Determine an affordable amount for the automatic transfer.
• Consider automating bill payments to avoid late fees.
• Review and adjust the automated savings amount as necessary.
• Dedicate a separate account only for savings.
• Combine automated savings with other saving strategies.

4. Shop Smart

Shopping smart does not mean depriving yourself of the things you love, but rather buying them in the most cost-effective manner possible. This entails comparing prices, looking for sales, avoiding impulse buys, and using coupons where appropriate.

For instance, if Emma needs a new washing machine, she won’t buy the first one she sees. Instead, she waits for a sale (or negotiates a deal), researches different models and their prices, and makes an informed decision.

• Research thoroughly before making big purchases.
• Buy in bulk during sales but only the items you regularly use and are non-perishable.
• Use coupons, discount codes or cash-back apps when shopping online.
• Avoid impulse buys.
• Purchase quality items which may have a higher up-front cost, but will save money in the long run because they last longer.
• Bargain where appropriate.

5. Prepare Meals at Home

Eating out adds up and can become a huge drain on your wallet. Cooking meals at home is significantly cheaper and often healthier. Prepping meals ahead of time also ensures that you eat homemade food even on busy days, reducing the temptation to buy fast food.

Sarah started meal-prepping on weekends and is surprised at how much she’s saving from not eating out as much during weekdays.

• Plan your meals weekly.
• Prep your meals at the start of the week or use slow cooking for easy meal prep.
• Cook in bulk and freeze portions for later.
• Select recipes that share ingredients to avoid wastage.
• Grow your own vegetables or herbs if you can.
• Pack your lunch instead of buying.

6. Ditch Unnecessary Expenses

Some costs seem insignificant but can accumulate into a sizable amount over time. Reviewing these incidental expenses like unused subscriptions or memberships, daily coffee purchases, or constant high-end brand shopping could potentially save considerable amounts.

Upon inspection, Mike realized he was still paying for a gym membership he hadn’t used in six months and an online streaming service he barely tuned into.

• Evaluate your regular bills and cancel redundant or rarely-used services.
• Make your coffee at home instead of buying from expensive coffee shops.
• Opt for second-hand, borrowing or renting instead of buying brand new- especially for items used rarely.
• Consider cutting down on expensive hobbies and substitute with low-cost or free activities.
• Reduce convenience purchases such as bottled water, use reusable bottles instead.
• Avoid late payment charges by setting reminders for bill payments.

7. Energy Efficiency

Improving energy efficiency at home is both environment-friendly and budget-friendly. Lower energy usage means lower utility bills. Simple practices like unplugging appliances when not in use, using energy-efficient appliances, or even using solar power can result in substantial savings.

Josh replaced all the bulbs in his house with LED bulbs, started washing clothes with cold water and saw a significant dip in his electricity bill.

• Switch to energy-saving light bulbs.
• Only run your dishwasher or washing machine when full.
• Consider investing in solar panels for long-term savings.
• Insulate your home to save on heating and cooling cost.
• Unplug devices unused electronics- they consume power even in standby mode.
• Seal doors and windows properly to prevent heat or cool air from escaping.

8. Open a High-Interest Savings Account

Last but not the least, putting your savings into a high-interest account helps to grow them faster. The compounding effect over time adds up more than you would expect. It’s basically earning money on your saved money.

As an illustration, Jennifer opened a high-interest savings account with an APY of 1.5%. By keeping her savings there, she earned far much more than she would have in a regular savings account.

• Do thorough research before choosing a savings account.
• Evaluate different banks’ interest rates and terms.
• Check the compound rate – the more frequently it compounds, the better.
• Avoid accounts with high fees.
• Be aware of any withdrawal restrictions or conditions.
• Stick to FDIC-insured or NCUA-insured institutions for safety.

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