Often times, when we are looking for more money, it’s right there in front of us and we just need to save more. Taking simple steps can amount to big savings. Over time, these little amounts can add up to truly massive savings that are impossible to ignore!
Where to begin?
You know how often times the answer to the problem is in the problem itself? Scientists trying to cure a disease immediately comes to mind. They don’t just start in the Amazon rainforest and feed the patient rare plants right? I suppose that could work but what are the chances? Instead, you study the disease itself and try to understand how it works. Then, you can formulate a plan of attack based on what you find…
Well, that’s where we should begin as well. And I’m not saying our lack of saving is a disease. Though, I bet I could make a pretty good argument for it with some people…
I’m just saying that if we are going improve our savings, we need to know what we are spending our money on. Nowadays, it’s all right there in front of you in your monthly credit card statements. If you can, give them a look right now and let’s get to it!
Don’t worry! This will only take a few minutes! I’m not going to take you deep in the weeds on this one. Remember from the last article, we’re not going for that 70% savings rate. We don’t want full upheaval. Just a modified upheaval!
Where Do Those Savings Go?
Most likely, your expenses can be divided into the simple categories you see in the table below. If it’s not all covered, add and subtract as needed.
This table is just meant to help categorize our monthly average expenses so we can all be on the same page. Then, once we have it all sorted, the simple steps to big savings fall right into place!
| Expense | Amount Spent (per month) |
|---|---|
| Housing | |
| Transportation | |
| Food | |
| Phone | |
| Entertainment/Hobbies | |
| Internet | |
| Credit Card Debt/Student Loans | |
| Miscellaneous/Other |
The Big Ticket Items
Looking at the table above I’m going to briefly discuss some of the big ones that aren’t so “simple” before getting to the lower-hanging fruit.
Most likely, your housing, transportation, and student loan debts are somewhat set for the time being. Acting on those would not be considered “simple” by any stretch of the imagination. Those are taller tasks that require more effort (and future posts entitled “Not Quite as Simple Steps to Big Savings”).
But I will say this. It doesn’t mean those can’t be addressed as well. Like I’ve said before, there are a lot of strategies I’ve seen in my deep dives that can dramatically impact those big ticket items as well. If those are weighing on you, reach out and I’ll go back down the rabbit hole for you and report back.
Also, if you don’t have a house, own a car, or haven’t accrued student debt, make sure you do your due diligence before making that commitment. If this concept of saving your money and buying time is appealing to you, then making sensible, informed decisions on those big ticket items can have a major impact on your financial future.
For now though, let’s see what smaller, simpler steps we can take to have a more immediate impact on our savings.
Simple Steps to Big Savings
Really it should be called “Relatively Simple Steps to Big Savings”. It’s still going to take action on your part. Still, relative to selling your car and riding your bike every day to work (I haven’t tried it but it would save tons!) these are quite simple.
Here are my simple steps to big savings with a rationale for each as well!
Step 1: Slash Those Food Expenses!
Two eating habits that add up to huge bucks are eating out and buying whimsically at the supermarket.
As teachers, time is always at a premium. This can often mean we don’t have a lot of time to prepare meals. The result? Some of us grab food on the fly from whichever store is closest. Or, we buy pre-packaged meals.
If you look at it from a dollars to calories point of view, it is way out of whack with what you can get from buying in bulk and preparing meals at home. It’s also usually not nearly as healthy. Spend less and eat healthier? That’s a potential win-win!
A Real-Life Example
One of my co-workers gets a coffee and a breakfast sandwich every morning on the way to work and a sandwich from Subway for lunch.
On the surface, $6 for breakfast and $8 for lunch doesn’t look too bad right? But add it up over a month of school days (call it 22 days) and that’s $308. Over an 180-day school year it’s $2,520!
If he had cooked that egg at home, with a slice of cheese, some bacon and some bread how much would that meal cost? $1 maybe? Then he brews his own coffee and makes his own sandwich, what does it come to? $4? That’s probably high. Those would be some really nice ingredients to get it to $4, but the math is easier so we’ll stick with it.
That’s $10 per school day on breakfast and lunch alone. Over the school year that’s $1,800 in savings.
If I invest those meal savings instead, after 30 years of teaching I have $234,496. So, which would you rather have? Mediocre and less healthy food that is convenient? Or, better quality food and nearly a quarter of a million dollars?
And that’s just breakfast and lunch! I’m sure he goes out to eat or orders out a fair amount as well. That just cuts into savings even more.
You get the idea. Those little amounts add up to huge savings over time.
I encourage you to look at your bills and see how much you spend on food per month. A goal I am setting for myself is $50 per week. If I have that hard number, it helps me stick to it. I honestly found, that once I got used to it, I really didn’t feel like I was making any sacrifices at all. It was also a welcome barrier to buying that random bag of chips that I ALWAYS go for.
This article here at treadlightlyretireearly.com goes into more specifics about how they were able to cut their food bill by 63% and still eat out.
As with everything, each family has their own dynamic and there is no hard and fast rule. My aim is only show you the power of it so that you can make an informed decision for your specific situation.
But let’s keep going and get to some more simple steps to big savings!
Step 2: Change Your Cell Phone Plan
I know, this one stings a little. And it’s not for everyone, but just let me make my case and you can decide if it’s for you.
Here’s my case, and it doesn’t involve flip phones!
The average American spends $70 per month on their cell plan. For a lot of us it’s more though right? I spend $25 and I do have a smartphone.
The key to this is Wi-Fi.
When cell phones were first starting out, most places did not have Wi-Fi. Now virtually everywhere does. Most importantly, my school does and my home does. That’s where I spend most of my time. And when I am out and about, I still have 1 GB of cell data to use and I rarely even come close to using it all.
When I’m in my home or school, my phone automatically connects to Wi-Fi. That is where the savings lie, and it’s relatively simple to adjust to. As long as I’m not streaming movies when I’m out, it works out great. And if you do run out. It’s very easy to buy more right there (They don’t mind giving a little more data to get paid.) It’s only $5 for an extra gig as well.
My phone is a Samsung and it cost about $100 (a new iphone can cost over $1,000). I hope to get many years from it like I did with my last one. It should also be said that I’m not a tech person, nor do I worry about photo quality. If those things matter to you, I totally get it. We’ll get those savings somewhere else! I know I’m strange in this regard…
But if, like me, you don’t care too much about some of the finer technological advantages, this might be a good move for you.
Considering that an average cell phone bill costs $70 and also allowing for an extra $100 per year to cover the cost of the cell phone ($400 vs $100 over 3 years), the total savings for a switch would be $640 per year.
Over 30 years that comes to $19,200 in savings. Enough for a nice car.
Over 30 years invested, assuming that 8% return, it comes to $79,308. To me that’s worth it.
If it’s worth it for you then check out Republic Wireless. That’s the plan I use. (Note: If you reach out to me I can get you $30 off your first bill (which would make it free with $5 towards your next one), but no worries either way!)
Step 3: Cancel Your Subscriptions!
In my day, when I went door to door to sell magazine subscriptions to raise money for the town soccer team (getting paid in cheap soccer balls), the word “subscriptions” meant magazines like Reader’s Digest.
Now, I’m talking about your streaming services. It happens to all of us right? We get pulled into one streaming service for this show and another for that show. Before we know it, we’ve got 5 services and we can’t even keep up with the content.
But canceling is such a pain right? I can’t explain it either but it’s just so onerous for some reason and I never get around to it.
Meanwhile, month after month, they are sucking money from our accounts and most of us barely even think about it.
But here’ s a little secret that we all know. If you cancel, it’s not permanent. They will happily take your money again!
Here’s a good strategy that I like. Cancel all but one of your streaming services. Then, consume the content on that one streaming service until it starts to dry up. Then, cancel that one and sign up for the next one and repeat.
That way it becomes way more affordable and you can just focus on one service at a time. I also like to think that while I am using Hulu, for example, Netflix is working behind the scenes and around the clock to create a whole bevy of content for me at no cost.
Another strategy is to share subscriptions with friends and family. Just don’t let it become a point of contention!
Bottom line. These subscription services feast on our unwillingness to cancel. They sign us up for a great deal knowing that they’ll keep leaching, little by little, later on down the line.
Stop the slow bleeding out of your savings. Cancel all but one. Then, take solace in the fact that signing back up is merely a click away.
Step 4: Clear Your Credit Card Debt/Always Pay in Full!
Credit cards, when used effectively, can actually be a vehicle to help you save. These days they all offer a certain percent cashback on your purchases. You can then use those accrued points to wipe out real money on future bills.
There’s also travel rewards (which I plan to investigate and report back on) and sign-up bonuses and more. When done right, there are big savings to be had.
But you have to do it right.
The reason credit card companies can offer such great deals is because they depend on you doing it wrong. They bank on the fact that you’ll pay the minimum, or at least not pay in full each month.
Then, they feast! They take massive percentages from the amounts you don’t pay off and just casually add it to your totals. These percentages usually hover in the low to mid 20’s (mine’s 24% so that’s what I’ll use). That means, for every $100 per year that accrue in debt, I give the credit card dompany $24.
But $100 is nowhere near the average figure. Triangulating some sources I see that the average American has a little over $6,000 in credit card debt. That means, at 24% APR the average American gives the credit card companies $1,440 dollars for free each year. Ouch!
If you have this debt, you are not alone. It has become so normalized in our society that we don’t batt an eyelash over credit card debt. (much to the credit card companies delight!) They even boost your credit score for that debt. That should be criminal!
My advice is to take that money back. Before you worry about investing, or anything else, pay off that credit card debt. By investing you are expecting an 8% return but that is only 1/3 of the 24% the credit cards take.
Now you can flip it around. Every dollar you sink into paying off your credit card you can think of it as a 24% return on your investment. That’s amazing! And as that credit card debt dwindles, your future savings automatically go up.
Once you finally get down to zero, let me know how you did it and I’ll celebrate you in a post!
From then on out, always pay your credit cards in full (there’s usually a setting for it do automatically pay in full on your credit card site ). We all know how hard-earned your money is. You deserve every penny of it!
Step 5: Take Back Your Fashion Cents!
I’m not sure that headline works at all (It doesn’t). And honestly, I am the last person to be talking about fashion. I just wear flannel and wait for it to come back into style every 12-15 years. Nevertheless, I want to make a case because it’s one of the simple steps to big savings that can have a profound impact with minimal effort.
Like I said before, fashion’s not my thing. All I know is that the fashion industry is an insatiable juggernaut. It churns out new style after new style and we, as a nation, keep buying it and feeding the monster.
I’m way out of my element here but I think it’s pretty safe to say that new clothes cost a lot of money right? I think it’s also safe to say that they go out of style relatively quickly.
So, in order to keep up with the newest styles, a person needs to spend a lot of money rather frequently.
Then, a few years later, when that person tries to sell those clothes that they spent a ton of money on, they can’t really get much for them at all.
So, most likely, to clear out closet space for new expensive clothes, that person eventually end up donating them.
But so does everybody else.
The end result is that they get thrown away. From an environmental standpoint, and doing some quick searches, it looks like we throw out over 14 million tons of clothing per year in this country. That also has huge environmental ramifications that I won’t get into here, but is easy enough to research.
I know I’m sounding all “high-horsey and judgy” here. I’m really not trying to! I just want to give you facts, but I’m also not trying to hide my opinion on what I think to be the better course of action.
If you ask me, I would tell you to mostly give up on the fashion game. It is way too expensive to keep up with and the value of your purchase diminishes way too rapidly. It’s also hugely detrimental to the environment.
Instead, how about one new outfit a year, and buying used for the rest? Because, as a nation, we are obsessed with keeping up with the latest trends, it means you can benefit from it. There are loads and loads of lightly used clothes out there that you can buy for a fraction of the cost. My wife loves thredup. If you do a limited number of purchases, you can cut back on environmental impact from shipping as well.
Or, another option is to just ride with what you’ve got. That costs nothing and it comes back in style every 12 years or so.
But realistically, there is probably some combination to be had that still amounts to very big savings. We’re all different in this regard but look through past expenses and see how much fashion is costing you.
The average American spends around $1,400 per year on clothing. I probably spend around $28 but that’s a whole different kind of problem! Would it be reasonable to get that down to $400 per year?
That’s $1,000 per year, which we know adds up to big savings over time!
It’s something to think about at least…
Step 6: Scan for Miscellaneous Expenses
If you are serious about making changes to improve your savings rate, then it’s probably not a big ask for you to take an honest look at your expenses and try to uncover some miscellaneous expenses that might be adding up. No judgement and don’t beat yourself up.
Maybe you collect beanie babies? I don’t know, and I’m not telling you to stop either.
I just think it’s worthwhile to do a cost/benefit analysis. Ask yourself, does the new beanie baby bring you long-term joy? You probably get a rush when it first arrives right? But in 6 months does that specific one still make you happy?
If so, go for it. If not, maybe it’s time to weigh whether it’s worth spending your hard-earned money on.
Personally, I tend to get really into something, buy up all the gear, then lose interest. It’s taken me quite a while to learn this about myself, but I think I finally have a good grasp on it (but if you need any seed growing equipment or golf clubs, or olive trees or equipment for making mead, etc. just shoot me a message!)
Summary of Taking Simple Steps to Big Savings
Debt causes stress. Sometimes when we are stressed, we buy things. I certainly do. But if we buy things haphazardly, we just accrue more debt which leads to more stress. It’s a downward spiral.
At the core of it, many of our purchases are, in some way or another, an attempt to buy happiness. But it’s a lot harder to be happy when you are constantly stressed over money. And really, we all know that happiness can’t be bought.
So, for me, it became incredibly worthwhile (and relatively simple) to significantly improve my savings rate. Now that I’m used to it, I truly do not feel like I’m making any sacrifices at all.
I also know that I am significantly improving my financial outlook for the future and that is a comfort to me.
I estimate, based on some of the simple steps to big savings listed above, I could easily save the average American $6,000 per year right off the bat with minimal effort. Based on the $2,500 monthly salary we referenced in the last post about drastically improving your savings rate, that’s a 20% savings rate almost instantly. Already we have doubled the conventional savings rate of 10% and we haven’t even gotten to the big expenses of housing, cars, loans, etc.
If we invest that $6,000 we just saved at the assumed 8% return rate that the market averages, it gets us over $725,000 after a 30 year career. That’s game over right there!
And maybe not all of those steps are for you. But how about starting with one? Once you see that it doesn’t negatively impact your life at all, then you can try another.
With such minimal effort, taking simple steps to big savings is absolutely a worthwhile endeavor. In fact, over time, these simple steps can be life changing…
Thanks for reading and please don’t hesitate to leave a comment below. If you have a place where you harvest big savings or you just want to leave a thought, then I want to hear about it. If you prefer, feel free to contact me here.
0 Comments
2 Pingbacks