What could you do with an extra $300 this month? You could buy a new cell phone, update your kid’s wardrobes, cover your family’s groceries, fund a weekend getaway, embark on that new hobby you’ve been daydreaming about, boost your investments or so much more.
Now, imagine if you saved this $300 every month. That is completely within your reach! Here are four strategies that can help you get there.
- Cut Your Loyalties. Just because you’ve been with the same phone or insurance company for years doesn’t mean it pays to stay with them. Revisit your monthly bills and look for better deals on your cable, phone, Internet and insurance bills. By shopping around you could find a better deal or give yourself some leverage for negotiating a lower rate with your existing provider. It also helps to analyze whether you are still using all the services you are paying for. If you are driving less or if the value of your house has changed, this could translate to insurance savings. If you haven’t gone to the gym in months, canceling this membership could save you $50 a month, or $600 a year. If you are watching most of your television online for free or for a pretty cheap rate (Netflix’s basic plan is $7.99 per month, or $95.88 per year, Amazon Prime is $99 per year and gives you access to Amazon Video), then cut the cable bill, which averages about $99 per month. If you opted for Netflix over cable, you could save about $91 per month or a whopping $1,092.12 for the year.
- Cut Grocery Expenses. In the U.S., we waste about 40% of our food each year, a problem that costs the average family of four about $1,500 per year, or $125 per month, according to the Natural Resources Defense Council. Stop wasting food and start pocketing those savings. Begin by analyzing your trashing patterns. For the first week, make a note of all the groceries you tossed. For the next week, adjust your purchase quantities accordingly. If you find yourself still wasting food, make another adjustment on your next grocery run, and so on. Other ways to reign in your grocery spending: don’t shop when you are hungry, make a weekly meal plan, shop with a grocery list, shop in bulk (like Costco or Sam’s Club) for long shelf-life items that your family plows through and diversify your grocery store routine by including stops to deep discount stores like Aldi and Price Rite.
- Cut Gas Expenses. Think about all the times you drove your car in the past week. Did every trip require the use of your car? You may find that in many cases, you could have easily walked or ridden your bike instead of revving up your engine, which could save you a pretty penny over time. The average U.S. household spent about $2,500 on gasoline in 2014, according to the U.S. Energy Information Administration. If you decided to hop on your bike instead of jumping in your car every day you commuted to work, you could save thousands of dollars a year. According to the cost saving tool on Kiplinger.com, by choosing a bike over a car for a 10-mile roundtrip commute with no toll or parking fees, you’d save $88 per month, or $1,056 per year. If you ditch the car altogether, you could increase those savings by eliminating the regular costs of maintenance, updates and insurance.
- Cut Fees. If you want to slash fees big time, look no further than your retirement and investment accounts. While different funds appear to offer fees that differ by only fractions of a percent, that difference, compounded over a lifetime, adds up dramatically. Here’s a great example from The College Investor, which looked at five different S&P 500 funds in 2014. These funds all “owned the same 500 stocks in the same amount” but the fees varied widely. The most expensive was SPDR S&P500 (SPY) with a fee of 0.11% and the cheapest was Vanguard S&P500 (VOO) at 0.05%. Again, identical funds, identical amounts, but a 0.06% difference in fees. According to The College Investor, if you started with a $50,000 investment and added $5,000 per year, over 30 years you would spend $14,341.51 in additional fees with SPDR S&P500. By opting for the lower-fee fund, you could save on those fees to tune of about $42 per month or $500 per year. You can find out if you are overpaying in fees today by using Personal Capital’s Retirement Fee Analyzer, or FeeX. Both are tools that zero in on how much you are spending in fees each year and suggest ways you can save big time.
Go ahead and pick the easiest of the above options and build from there. Soon you could have an additional $300 at your disposal each month – enough to help you chip away at debt, buy something you need or fund something you’ve been dreaming about for a while.
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