Articles telling you how much money you should be saving are all over the Internet. They’ll tell you how much you should have saved by a certain age, or what percentage of your income you should be saving. If you haven’t been saving up to this point, articles like that might do little more than make you feel guilty about your “failure” to save.
Let’s take a different approach. Let’s look at specific places where you can find savings in your budget, and look at how much you can save. You’ll be pleasantly surprised at the results, especially when you realize these are savings strategies you can implement in your own budget, right now.
This isn’t meant to be a complete list, and some of these tips may not apply to you. They are examples of some common strategies that many people can use to save money. Use this list as a starting point. Look critically at your spending habits and see where you can find savings.
Financial independence starts with being a committed saver. And becoming a committed saver starts with learning to live beneath your means. The 10 strategies to save money below will help you to do exactly that.
10 Ways to Save Money
To show you how much you can save in a year, We’ve provided 10 strategies to save money below. Not all will apply to you, but it’s equally possible you’ll be able to save even more money than these conservative estimates.
Use this list as a starting point. Take advantage of the strategies that will apply to you and replace the ones that don’t with others that are more specific to your lifestyle and spending patterns. Flexibility is a critical part of the money saving game.
Let’s get started…
1. Switch to Generic Groceries
💰 Potential savings: $696/year
The average American household spends about $7,000 per year on food. That works out to be about $583 per month.
Buying generic store brands is typically 20% to 25% less expensive than equivalent name-brand products. If you switch to generic store brands for at least 50% of your groceries, you’ll cut your food bill by at least 10%. If you’re spending the average of $583 per month on groceries, that’ll save $58 each month, or about $700 per year.
2. Replace Cable with a Streaming Service (or Two)
💰 Potential savings: $1.056/year
Cable TV was a great concept when it first came out. You paid a monthly subscription for the service – usually around $20 – and got the benefit of many more channels, fewer commercials (but not always), and better reception in areas where traditional TV signals were weak.
A lot has changed since cable first rolled out. The average cable bill today is over $100 per month. You may have 200 or 300 channels, but you probably watch no more than a dozen of them on a regular basis.
A less expensive option is to go with a streaming service. For example, Hulu offers a streaming library with thousands of TV episodes and movies. They charge $5.99 per month for the basic Hulu service, $11.99 per month for Hulu (No Ads), and $54.99 for Hulu + Live TV – which offers live TV with more than 65 top channels and no cable required.
If you eliminate your cable service ($100+) and replace it with Hulu (No Ads), at about $12, you’ll save $88 per month. On an annual basis, that will save you a whopping $1,056!
3. Raise the Deductible on Your Car Insurance
💰 Potential savings: $201/year
Car insurance is a major expense, and you owe it to yourself to do whatever you can to lower your premium. One of the most effective ways to do this is to increase the deductible on your policy. The average American driver can save $201 per year by raising their car insurance deductible from $500 to $1,000. That works out to be about $17 per month.
This is a risky strategy if you have a history of at-fault car accidents. But if you have a clean driving record over the past few years, this is an easy way to save a couple hundred dollars per year. Make sure you have the funds to cover the higher deductible if you do get involved in an at-fault accident.
4. Brown Bag Lunch Instead of Eating Out
💰 Potential savings: $960/year
With an average meal just at a fast-food restaurant running around $8, you can easily spend $40 per week – or $160 per month – just buying lunch out every day at work.
Brown bagging your lunch at least half the time will save $80 per month. That works out to be $960 per year. Higher-priced restaurants may cost twice as much as fast-food restaurants.
A good way to make this strategy more appetizing is cooking larger meals for dinner, with the extra being set aside for daily lunches. Not only will that eliminate the routine of sandwiches, but you’ll also save more money by cooking larger quantities for more meals.
💡 A good way to make this strategy more appetizing is cooking larger meals for dinner, with the extra being set aside for daily lunches. Not only will that eliminate the routine of sandwiches, but you’ll also save more money by cooking larger quantities for more meals.
5. Skip One Dinner Out Each Month
💰 Potential savings: $720/year
Dinner for two at a moderately priced restaurant (think Applebee’s, Olive Garden, or TGI Friday) is roughly $60, including tax and tip. It can easily top $100 if you include alcoholic beverages, appetizers, or dessert.
Let’s go on the moderate side and say that you average $60 per dinner. (We’ll assume it’s just you and your significant other, and no children.) If you normally eat dinner out once a week, you’re spending at least $240 per month on the low end. If you have kids, you’re spending a lot more.
Eliminating just one dinner out per month can save $60. That will work out to be $720 per year. It may also force you to up your cooking skills, which may eventually result in less desire to eat out in the first place.
6. Eliminate the Daily Starbucks Run
💰 Potential savings: $768/year
The daily Starbucks run has become a common habit in the American workforce. The cost of an average latte at Starbucks is around $4. If you stop to get a latte every day on the way to work you’re spending $20 per week, or $80 per month. That doesn’t include the days when you may order a food item with your latte.
But let’s say you adjust your habit, eliminating Starbucks four times per week (but continuing to treat yourself on the fifth day). You’d save $16 per week, or $64 per month, more if you normally order food items as well.
7. Have a Garage Sale Twice Each Year
💰 Potential savings: $400/year
If it’s one thing Americans are notorious for, it’s building up large inventories of stuff. Some people even buy bigger houses or rent remote storage space to hold it all.
Don’t throw any of your stuff away. What you consider junk could be items other people will pay real money for. At a minimum, plan to sell it at a garage sale. If you hold a sale twice a year, you can convert your “junk” to cash.
In my family, we’ve averaged about $200 per garage sale. By having two sales per year, that’s $400. If you average the $400 across 12 months, it works out to be about $33 per month.
You don’t have to limit selling excess household items to garage sales only. You can even more easily sell those items year-round through online marketplaces, like eBay, Craigslist or Facebook Marketplace.
💡 You don’t have to limit selling excess household items to garage sales only. You can even more easily sell those items year-round through online marketplaces, like eBay, Craigslist or Facebook Marketplace.
8. Kick the Smoking Habit
💰 Potential savings: $2.292/year
It’s now an article of faith that cigarette smoking is the single worst habit for your health. That should establish a negative motivation to quit smoking. On the positive side, it’s also one of the single best ways to save money.
Kicking the habit can save $188 per month if you normally smoke one pack of cigarettes per day, at the national average cost of $6.28 per pack:
At $188 per month, you’ll save $2,292 per year. You can double that if you smoke two packs of cigarettes per day, which will save you nearly $4,600 per year. That’s real money, with better health as a bonus!
See just how much you can save by quitting smoking using this calculator:
➗ Go to the full page to use our calculator and see just how much money you can save by quitting smoking.
9. Take Advantage of Spending Round Ups
💰 Potential savings: $300/year
If you’re looking to save money, one of the best ways to do it is through a dedicated savings app. An app like Acorns – which not only helps you save money, but also invests the savings – enables you to save money as part of your typical spending patterns.
Acorns works by connecting with your checking account and credit cards. Through a process referred to as Round Ups, each purchase you make is rounded up to the nearest whole dollar. If you purchase a latte at Starbucks for $4.25, Acorns will round the purchase up to an even $5 – which will either be deducted from your checking account (if you use a debit card) or charged to your credit card. The “spare change” on the purchase – $0.75 – will go into savings.
Let’s say you make an average of 50 purchases per month using your debit and credit cards. With an average round up of $.50, you’ll save $25 per month. Acorns will even transfer that money into a managed investment account to help you grow your savings.
Acorns is designed to let you save money by spending money. The strategy is totally passive, so you won’t have to do anything different from what you’re already doing to get the benefit.
10. Set Up a Babysitting Swap
💰 Potential savings: $1.200/year
Depending on where you live, the cost of a babysitter runs between $11 an hour and $22 an hour. The average of the two extremes is $16.50 per hour. If you use a babysitter once each month, for an average of five hours, the typical charge will be $82.50. If you commonly tip your babysitter, the average cost could reach $100.
When my own kids were young, my wife and I got around the babysitter cost problem by setting up a babysitting swap with close friends – another couple who also had young children. The arrangement was mutually beneficial – we each got to have a night out on a regular basis without the high cost of hiring a babysitter.
If you work out a babysitting swap, and you normally use a sitter at least once a month, you’ll save $100 every month. This was one of the best money-saving strategies we hatched when our kids were young. And it also made the relationship between us and the other family much closer.
Bringing the 10 Money-Saving Strategies Together
We’ve been looking at these strategies individually. Now let’s look at what happens when we put them together:
|Spending Category||Average Monthly Cost||Reduced Monthly Cost||Monthly Savings|
|Switch to Generic Groceries||$583||$525||$58|
|Replace Cable with a Streaming Service||$100||$12||$88|
|Raise the Deductible on Your Car Insurance||n/a||n/a||$17|
|Brown Bag Lunch Instead of Eating Out||$160||$80||$80|
|Skip One Dinner Out Each Month||$240||$180||$60|
|Eliminate the Daily Starbucks Run||$80||$16||$64|
|Have a Garage Sale Twice Each Year ($200 X 2 sales)||n/a||n/a||$33|
|Kick the Smoking Habit||$188||$0||$188|
|Take Advantage of Spending Round Ups||-||-||$25|
|Set Up a Babysitting Swap||$100||$0||$100|
|Total Monthly Savings||$713|
Notice that without even doing anything radical – like renting out a room in your home to a boarder or buying a cheaper car – the total monthly savings from the combined strategies easily top $700.
But where you can really see the benefit of these money-saving strategies is in the annual savings – that’s over $8,500 per year!
Now it can be justifiably argued that not all 10 strategies will apply to everyone. If you don’t have children, you won’t be able to take advantage of the babysitting swap. If you’re not a smoker, there’s no habit to kick. But the flipside is that you may save even more money than the table above indicates. For example, if you normally eat dinner out twice a week, and you cut it down to once a week, you’ll save $240 per month, rather than $60.
The point is to use the strategies as a starting point and customize them to your own lifestyle and spending patterns. There are thousands of dollars just waiting to be saved in the typical household budget.
This is a starting point. Adapt these strategies, adopt new ones that fit your lifestyle and spending habits, and start saving!