Money can’t buy happiness, but it does afford you the luxury of living your best life. Whether your dream involves vacationing in Fiji or having a healthy nest egg for retirement, saving money is a surefire way to reach it in 2022. Here are five simple tricks that can help you cut costs and save more.
One area where you can save a few dollars is on your monthly auto insurance premium. On average, American motorists spend $139.50 on vehicle insurance each month. Whether your premium is higher or lower than the national average, you could still lower the premiums using one of these strategies:
- Compare different insurance companies: Even if you’re happy with your current insurer, there’s no harm in researching alternatives to see if you can find a better deal. For instance, you can compare Geico insurance reviews to State Farm or Liberty Mutual insurance.
- Opt for a usage-based program: If you are a safe driver who drives less than 11,500 miles a year and don’t mind your insurance company tracking your car, then usage-based insurance might be for you. Instead of a standard monthly premium, Pay-As-You-Drive (PAYD) and Pay-How-You-Drive (PHYD) programs calculate your premiums based on your driving habits. While this might not be for everyone, you could save between 10% and 15% on your annual premium.
- Drop cover that you’re not using: Finally, trimming your insurance coverage down to the essentials can also help you save money. For example, you could cancel comprehensive or collision coverage. Find out what your state mandated minimum insurance coverage is first, though.
Saving money, like getting fit or meditating more, is a new habit. If you generally live paycheck-to-paycheck or have never set aside funds in a savings account, then saving money is essentially a new habit for you.
Developing any new habit includes two key cycles:
- Unlearning old destructive beliefs, patterns, and behaviors
- Adopting new healthier belief systems, routines, and practices
Taking a look at your existing thought patterns concerning money is helpful as you go on this journey.
Before you cancel all your subscriptions and memberships, track your spending habits first. Studies in behavior change suggest that being aware of your habits and behaviors are a key factor in changing them. So, simply becoming aware of how much you spend can help you make better decisions about your finances.
You can use a spreadsheet to keep close track of your expenses and organize your expenses into categories like food, recreation, and utilities. You can also download apps into your phone to make it easier to track your expenses when you’re not at home.
Setting a realistic spending goal will increase your chances of reaching it. When creating a spending goal, make it a SMART one:
- Specific: Rather than writing a vague goal, like “I want to save more money this year” try being as specific as possible. For example, your target could be to save $1,200 by saving $100 a month.
- Measurable: Clarity helps your mind focus and sets a clear milestone that you can measure. So, each month, you can review your savings account to see it grow. Measuring or tracking your progress can also motivate you and helps you reinforce your new habit.
- Attainable: While you should try to aim for an amount that will challenge you, avoid setting an impossible target. If saving $100 seems impossible right now, start with $50 and increase it when you’re able to.
- Relevant: Why do you want to save? Relevance is a key component to goal setting. For instance, saving $1,200 this year by saving $100 a month is a good target. Unfortunately, it lacks any relevance. Saving $1,200 for a trip to Lake Tahoe paints a brighter picture. Relevance is the pot of gold at the end of the rainbow. Now, your saving has purpose and meaning.
- Time-bound: Finally, give your goal a deadline. When do you want to have the lump sum? Deadlines further motivate you to reach your goal and change your behavior to reach it.
Next, a tried-and-tested strategy for saving more is to include the amount you want to save in your budget. A budget doesn’t have to be restrictive. It’s simply a way to account for your income. By setting a budget, you’re able to save money while paying your bills and doing things you enjoy. However, there has to be some give and take. If you want to save $100 a month, for instance, you may need to cut back on certain purchases.
Your budget doesn’t have to be a leash, though. The idea is to prioritize your spending, so that you can have more money for what you want most.
Stores have sales periods throughout the year. Some stores might even have payday sales or end-of-month sales. Paying attention to the regular sales periods at your local grocery or clothing stores is beneficial. Then, plan your shopping days accordingly.
You could also join loyalty or rewards programs to potentially earn points or benefit from discounts on your purchases.
The Bottom Line: Just Start Saving
The most effective way to save more is simply to start. Starting small and increasing the amount you save as the year continues will help you see results soon, which will in turn motivate you to keep saving. There are plenty of apps and spending trackers to help you stay accountable with your new financial habits in 2022.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.