Saving is much like exercising: We know we should do it, but make a lot of excuses when we don’t.
In fact, a 2014 survey by the Financial Industry Regulatory Authority (FINRA) found that 39 percent of Americans couldn’t come up with $2,000 if we had an unexpected emergency. While socking away a couple thousand dollars over a year may seem overwhelming, breaking the goal down lets us do it in bite-size chunks, says Anita Renee Johnson, a financial psychologist and author of Big Girls Don’t Cry: Taking the Emotion Out of Finances (Money Wisdom). “If you want to save $2,000 within 12 months, divide that by four,” she says. That means coming up with $500 in savings each quarter. Ready to shore up your nest egg? Follow our plan and end your year at least $2,000 richer.
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STEP 1: GIVE YOUR SAVINGS A BOOST.
No matter how much you’re stashing away today, we bet you can save more. This quarter, commit to putting aside just an additional 1 percent of your take-home pay each month, suggests Lexington, Kentucky–based financial adviser Dana Branham. “Think baby steps,” she says. If you bring home $3,000 per month, that’s $30. By the end of the year, you’ll have an extra $360 squirreled away.
POTENTIAL ANNUAL SAVINGS: If you bring home $3,000 per month, you'll accrue $360.
STEP 2: PUT A GROCERY PLAN IN PLACE.
A single woman spends approximately $260 on groceries monthly, according to the U.S. Department of Agriculture. A family of four lays out between $894 and $1,066. Yet the average American blows between $28 and $43 per month on food that ends up uneaten. One way to waste less is to plan more, says personal finance expert Marsha Horton-Barnes. “If you don’t know what you’re going to cook during the week, how do you know what you need to buy?” Scour your pantry to see what you have and shop only with a list, Horton-Barnes recommends. If you want to shave even more off your bill, consider that Americans are generally offered $1,617 in annual coupon savings, but only take advantage of $11.60.
POTENTIAL ANNUAL SAVINGS: Cut your grocery bill by just 10 percent and a family of four saves approximately $80 per month or $960 per year. If you're single, that will give you $26 or $312 per year.
STEP 3: REEVALUATE YOUR CAR INSURANCE.
We spend, on average, $1,115 per year on auto insurance, according to AAA, yet the cost varies from company to company. “So it pays to shop around,” says Loretta Worters, a spokesperson for the Insurance Information Institute. Increasing your deductible from $500 to $1,000 can help trim 30 to 40 percent off your premium, Worters says. You can also save as much as 25 percent by bundling your home and auto insurance under the same policy or insuring multiple vehicles. If you carpool, you may qualify for a discount based on the number of miles you drive. Finally, if an accident or speeding ticket has left you with high insurance rates, some companies will lower your premium if you take a defensive driving course.
POTENTIAL ANNUAL SAVINGS: Youll get $278.75, which is 25 percent on the average premium.
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STEP 1: STOP IMPULSE SHOPPING.
Many people would think twice about that daily vending machine habit if they had to state what they spent their money on, Johnson says. Enlist an accountability partner for three months. Write down and share with that person exactly where your money goes.
POTENTIAL ANNUAL SAVINGS: Pocket $100 for the two impulse buys you didn't get.
STEP 2: MAKE A SALE.
Chances are you may have something that somebody else wants. At thepricegeek.com, you can see what people are paying for items on Internet marketplaces such as eBay. If there’s a market, use apps like Carousell (carousell.com), SellSimple (sellsimple.media) and Poshmark (poshmark.com) to find buyers for your belongings.
POTENTIAL ANNUAL SAVINGS: At press time, used iPads were going for $102 to $300.
STEP 3: EXERCISE WISELY.
We’re not telling you to neglect your health, but you don’t have to dish out the average $696 per year that a gym membership costs. Buy a treadmill for as little as $200, says Horton-Barnes. If it’s a sense of community you crave, use Meetup to organize a walking, hiking or biking group.
POTENTIAL ANNUAL SAVINGS: Hold on to $696 by nixing that gym membership.
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STEP 1: SECURE A LOWER CREDIT CARD RATE.
Two out of three consumers who asked their credit card companies for a lower rate got it, according to a 2014 survey by creditcards.com. If your card issuer says no, look for other ways to reduce the amount of interest you’re paying, Owens says. You might switch to a card with a 0 percent introductory interest rate. Credit unions often have competitive rates, or you can consider a consolidation loan through a site like mycreditunion.gov.
POTENTIAL ANNUAL SAVINGS: Moving to A $1,000 credit card balance from a card with a 15 percent APR ro one with a 12-month 0 percent promotional rate gets you $150.
STEP 2: EMBARK ON A SHORT-TERM SPENDING FAST.
Saying you will give up massages and spa days forever is unrealistic. But you can cut back for a brief period. Commit to one or two months of spending only on necessities, suggests personal finance blogger Tatanisha Worthey, creator of A Mitten Full of Savings. Worthey challenged herself to a spending fast one month. “I was actually able to save a few hundred dollars,” she says.
POTENTIAL ANNUAL SAVINGS: Pocket $300 after three months of putting away $25 a week. Want to save more? Save longer!
STEP 3: PUT YOUR SIDE HUSTLE IN MOTION.
Cutting back isn’t the only way to retain cash: If you make more, you can save more. Sacrifice your spare time for three months to get a part-time job or really work a side hustle, says Branham. Consider, Uber drivers make an average of $19 per hour, the company reports.
POTENTIAL ANNUAL SAVINGS: For three months, spend each Saturday working five hours at $15 per hour and make $900.
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STEP 1: REDUCE THE COST OF RECREATIONAL ACTIVITIES.
Americans typically spend $2,728 per year on entertainment, according to the U.S. Department of Labor. Much of that is for television, as we shell out, on average, $99.10 per month on pay TV services, according to Leichtman Research Group. But you can decrease that number by negotiating with your providers. When Worthey threatened to cancel her cable subscription, a salesperson offered her a deal of $20 per month. “They may tell you no, but you have to learn how to be firm,” Worthey says. If your cable company doesn’t comply, it’s easier to walk away these days, thanks to Internet streaming businesses. For example, Sling Television (sling.com) charges $20 per month for live television, news and sporting events, while Hulu (hulu.com) provides access to current season television shows for as little as $7.99 per month.
POTENTIAL ANNUAL SAVINGS: Shaving $30 from your cable bill will net you $360 per year.
STEP 2: AUTOMATE ECONOMIZING WITH AN APP.
If you try to be frugal by sacrificing your weekly manicure, you may end up spending on something else if the funds remain in your checking account. However, you can avoid this by using apps that can make your extra saving automatic. One such app is Digit, which tracks your spending habits and then pulls a few dollars periodically from your checking account to stash away. The amounts can be small—as little as $5—but for Worthey it has made a big difference. “It might save me $50 a week without me even thinking about it,” she says. When money is set aside, the app lets you know how much you saved that day and the updated balance of your checking account. When you’re ready to withdraw it, it’s available at any time. Other savings apps include Level (levelmoney.com) and Unsplurge (unsplurge.com).
POTENTIAL ANNUAL SAVINGS: Download an app that saves you an extra $15 per month, and you'll save $180 in a year.
STEP 3: WHITTLE YOUR CELL PHONE BILL.
The average cost of a monthly wireless account is $132, which adds up to $1,584 annually, according to J.D. Power’s 2015 U.S. Wireless Smartphone Satisfaction Study. “Unless you’re a really heavy cell phone user, one great place for savings is to switch to a pay-as-you-go provider,” says Horton-Barnes. Services such as Consumer Cellular offer plans as low as $10 a month and you don’t have to pay for minutes you don’t use. Other ways to keep your phone bill down include tracking your data usage so you don’t go over your limit and joining up with friends to take advantage of family service plans. Also, avoid doing the most data-intensive tasks on your phone, such as downloading video and streaming music.
POTENTIAL ANNUAL SAVINGS: Cutting the average cell phone bill by 20 percent will save approximately $316.80 per year.