Knowledge

How To Save Money

Don’t you know that the average savings of an American under 35 is just under USD 3,500? This is worrying considering that major hospitalizations in America can cost more than a few hundred thousand dollars and even up to millions.

If this is happening in America, consider what could be happening in the rest of the world where many people live hand to mouth existences? This is why there is an urgent need for many people to save their money as much as they can.

How To Save Summary List:

1. Eliminate Debt
2. Budget
3. Set Savings Goals
4. Save Money In The Bank
5. “Staycation”
6. Spend A Little To Save More
7. Make Packing A Habit
8. Avoid Vices
9. Avoid Luxuries
10. Learn Home Skills
11. Earn More
12. Shop Around
13. Make Things Last
14. Avoid Waste
15. Healthy Habits
16. Quality Over Price
17. Use Coupons
18. Invest
19. Recycle
20. Rent Out Possessions
21. Be Self Reliant
22. Renegotiate Debt


Final Words

How To Save Summary List Details:

1. Eliminate Debt

While it is understandable to go into debt in order to acquire essential things in life like real estate, the same cannot be said for going into debt to buy frivolous things. For example, people go into debt just to buy the latest fashion clothing just so they can impress other people.

Working for a credit card company has exposed me to how debt can drive a person into poverty. I have seen people max out their credit card in days only to end up paying for their credit card debt for years, if they ever do.

A credit card can be a powerful financial tool when used properly, but a very worse enemy when abused. A credit card is not a license to spend but a handy way for making payments without carrying bulks of cash.

Debt interest can accumulate over time such that they become unmanageable. So, pay off your debt as early as you can. Avoid going into debt for things that are not essential for your survival.

Back To Summary List

2. Budget

There are people who make a lot of money but can’t seem to make ends meet, while there are people who make little money but make ends meet. What’s the difference between the two? One has a budget and the other one doesn’t.

A person without a budget is like a headless horse. One moment they could be saving money like a miser and in the other moment they could be spending money like a spendthrift. Mostly in the end, when they actually need money, they have none.

Having a budget means limiting your need to spend lavishly on an expense while at the same time still affording it. For example, you might have a budget for eating out where once you’ve reached your budget, you stop eating out for a certain period.

As a result, you still get to enjoy eating out while at the same time not losing all your money by always eating out.

Unfortunately, for most people, their concept of a budget means only stopping spending when their money runs out. Usually, these same people go into debt after their money runs out. This starts a vicious cycle of debt fueled spending which saddle people in debt for years and even a lifetime.

Back To Summary List

3. Set Savings Goals

It’s not only important to have a budget, one must also have a savings goal. There are people who put all their money in a budget and end up saving nothing. Having a budget can ensure that you always have money on the things you want to spend on.

But if there’s no money saved after budgeting for expenses, how can one save money? It’s still living from hand to mouth albeit a comfortable one. Again, what would you do if a big expense comes along and you have no savings?

For example, you might allocate a part of your budget to saving for your child’s college education or for savings funds especially allocated for emergencies like disasters and hospitalizations.

If you don’t own your own home, you might have a savings goal of ultimately buying your own home. It could also be as simple as saving a few dollars for your retirement. If you think everything through, there is an infinite list of things of savings goals you lack.

This is the reason why you should create a savings goal list just so you would realize that there is a lot of things you should be saving your money for.

If you think savings goals for something are impossible, just consider the fact that a dollar a day would be more than USD 3,650 after 10 years which is more than most people earn in a month.

It means that if you saved ten dollars a day, you would have USD 36,500 after 10 years which is about what some people would earn in a year. It’s like earning a year’s pay without having to do no work.

Back To Summary List

4. Save Money In The Bank

Banks have gotten a bad rap over the years due to their low savings interests and the financial scandals which many banks have been involved in. However, banks are still the de facto institutions for saving money.

Your money won’t earn interest when it’s hidden in your mattress. If you have excess saved money, you should consider other bank products besides your savings accounts.

For example, time deposit accounts and other slightly higher interest paying bank products could be better for you instead of considering other high interest paying investments like stocks and forex which are financially risky.

Back To Summary List

5. Staycation

There was a time when only the rich can afford to be tourists. But airplane tickets and vacation destinations have become significantly affordable over the years that being a tourist can be afforded by many. This is the reason why many people take vacations regularly.

However, this doesn’t eliminate the fact that being a tourist is still expensive for the vast majority of people. Many people even go into debt just so they can portray an image of being jet setters.

While there is nothing wrong with being a regular tourist, excessive traveling for tourism only purposes can lead to financial ruin.

The word ”Staycation” has been coined to mean having a vacation without traveling to some far off expensive destination where you have to endure traveling and the annoyance of being around other tourists who may be obnoxious.

For example, movie bingeing on Netflix and similar movie streaming platforms while only eating food delivered by DoorDash and similar food delivery services for days could be similar to being in a tourist resort or hotel where you do nothing and everything is done for you.

You could also play the latest video games for hours on end. Many gamers usually lose track of time when playing a very immersive videogame. This could be a good way to spend your staycation while at the same time making new online friends.

Back To Summary List

6. Spend A Little To Save More

Saving money doesn’t only mean not spending money at all. It could also mean that you spend a little money in order to make more money or reduce more costly expenses. For example, many people usually don’t go to doctors until their sickness has worsened which means higher medical bills.

The same goes for regular car checkups. Most people wait until their car breaks down before they take it to a mechanic. Usually, a simple car checkup can spot car troubles before they turn into expensive car repairs.

The same goes for education. The more a person is educated, the more likely that they would earn more. Many people stop paying for additional education after they graduate from school thinking that this would be the only knowledge they need to get a good job.

However, the world has become very competitive and employers usually favor job seekers with additional education besides the traditional schooling they completed. In the long run, people with more education are paid more and retained more by companies.

Back To Summary List

7. Make Packing A Habit

Pretty much everyone has heard of the story about a worker who became rich because they eat home cooked meals which enabled them to save a lot of money. The same thing still holds today. A home cooked meal is only a fraction of the cost of a restaurant cooked food and could even be much healthier.

But why stop with meals? Why not also bring your own home brewed coffee? A home brewed coffee is also a fraction of the cost of a cafe bought coffee. The same goes with drinking water. Drinking water from home is way, way cheaper than bottled water.

By avoiding restaurant food for your office or holiday meals, you get to save a couple of dollars a day. For example, if you spend USD 5.00 for breakfast and USD 10.00 a day for your office food (not including snacks), you would have spent USD 3,600 a year.

By packing your own breakfast and lunch, you would have saved an amount slightly less than USD 3,600. This amount could be equivalent to working for almost two months without having to do no work but still getting paid.

You would have saved USD 18,000 in five years which could be used to replace your five year old car. As you can see, every little thing can add to large amounts. Even a simple coffee habit a day can be a large amount when counted in years.

Back To Summary List

8. Avoid Vices

We’ve talked about how a simple coffee habit a day can add up to a large amount when counted in years. The same goes for vices. A simple cigarette habit for example, can add up to thousands of dollars when counted in years.

A cigarette smoker doesn’t only smoke one stick a day, but several. A few sticks of cigarette a day could be the price of a meal for one day. If you have a child, this could be the price of your child’s meal or another member of your family.

You also would likely contract cancer if you smoke a lot which further costs you money and more importantly, your health. Cancer is an expensive sickness which could lead anyone into the poorhouse and even death.

A lot of people also consume excessive amounts of alcohol which besides being costly can also lead to fatality. Just like many vices, most alcohol drinkers don’t stop at one but continue drinking until they get tipsy or drunk.

Again, a couple of bottles of alcohol could be worth the price of a meal already which your body needs more. A human can survive without alcohol but cannot survive without eating meals. The price of a couple of bottles of alcohol could be your child’s meal for the day.

The same goes for gambling. There are for example, people who have a ”lottery ticket a day” gambling vice which again could be the cost of a meal for that day. There are even people who lose all their money and go into debt because of gambling addiction.

While there is nothing wrong with indulging in vices from time to time, there are people who are too weak willed to resist being addicted to them. There are other vices besides smoking, drinking and gambling. The solution is to indulge in vices in moderation just like other things in life.

Back To Summary List

9. Avoid Luxuries

Usually, a person’s earnings is closely tied to the luxuries they indulge in. Usually, the more a person earns, the more they spend on luxuries. As you can see, this is the problem. What a person should be doing when their earning power increases is to save more instead of spending more on luxuries.

As a result, the person’s living standards only improve and not their actual wealth thru saving more money. This could be a problem since the person ends up with more expensive possessions but with no real wealth.

Let’s say an employee got promoted to a manager. This employee might think that they need a more showy car because they are now a manager. This employee might also think that they need more expensive clothes, home, food and so on to befit their managerial position.

They buy these luxuries and adopt a more luxurious lifestyle. As a result, even though they have become a manager, their financial position never improved. They are basically earning more to spend more.

Another thing to consider is that indulging in luxuries also means attracting criminals. You would likely have more chance of being robbed if you are driving an expensive car and wearing expensive clothes and jewelry.

Back To Summary List

10. Learn Home Skills

More and more products and services are being invented which makes life easier and easier to people. For example, you can rent someone to clean or repair your house. You can even have someone deliver meals for you.

But these products and services come at a cost. For example, asking someone to repair your house or fix your car can cost you hundreds if not, thousands of dollars. Even asking someone to deliver food to you can cost you a lot.

If you really want to save money, you should not be dependent on all products and services that can make your life easier or solve your problems at home. For example, learning to cook ”Five Minute Meals” can save you on home food delivery costs.

It is to be noted also that home maintenance skills such as cooking, home repair, gardening, car repair and the likes are much sought after skills today. Many people make a good living with these skills.

For example, coffee brewing is a simple skill yet baristas get paid to do it. There are even businesspeople who have turned the simple skill of home cleaning into million dollar businesses.

Back To Summary List

11. Earn More

People forget that to save more money, they also need to earn more money. You can only do so much Cost Cutting before you run out of ways to save money. Understandably, this is not easy to implement in this day and age when overtime pays are being eliminated.

However, there are other ways to earn more by working more. You can do gig jobs on the side like driving for Uber, DoorDash or Didi and Grab if you’re based in Asia. You can also freelance in such sites as UpWork, Fiverr and Freelancer among others.

You could also sell digital products such as blogs, websites, videos, software, videogames and so on. You can sell digital products with little to no capital using only your free time as capital. There are people who have even made selling digital products as their full-time job.

Back To Summary List

12. Shop Around

E-Commerce has greatly spoiled the consumer in terms of product choices. E-Commerce platforms usually show first the cheapest priced product from the different sellers selling the same product.

But don’t be led to believe that you are buying the cheapest product just because it is advertised in the first page of your search result. Most often, you would see the cheapest price offer after you have browsed more pages in an e-commerce search result.

The same goes for actual shopping. Usually, the shops with the most foot traffic have the highest prices as compared to the other shops in the area which has less foot traffic.

The same goes when buying at stores. Usually, the highest priced products are prominently displayed in a shop while the lesser priced products are relegated to lesser seen areas of the store.

You can see this concept applied for example, by supermarkets. They place the higher priced products near eye level of shoppers in their shelves while relegating the lesser priced products either at the bottom or at the very top of their shelves.

Back To Summary List

13. Make Things Last

You save more money if you don’t have to replace the things you need all the time. For example, most people need cars to go to work five to six times a week. However, many people neglect to take care of their cars.

For example, there are people who race their car or do tire burnouts just for fun. By doing so, they exert extra wear and tear to their cars causing it to last much shorter than a car that is driven with care.

There are also people who are predisposed to changing their possessions even if they have not reached their use by date. For example, there are people who replace their smartphones on a yearly basis just because they want the latest model.

The same goes for homes, appliances, electronics and so on. There are people who would happily pay exorbitant product amortization plans just to have the latest model of a certain product.

But think how much money you waste for example by changing your smartphone every year. A high end smartphone can cost USD 1,000 and upwards. If you don’t change your smartphone for 5 years, you would have saved more than USD 5,000.

You could have bought a used car for USD 5,000 after five years. If you stretch this to ten years, you could have bought a brand new car just from the sheer act of not changing your smartphone every year.

Back To Summary List

14. Avoid Waste

There are people who don’t squeeze the last drop of shampoo or conditioner from the bottle. There are people who throw away perfectly usable but smaller soap bars. More importantly, there are people who don’t finish their food.

These seemingly small wasteful habits accumulate over time especially not finishing one’s food. An unfinished lunch can be dinner once saved. A leftover morning snack could be an afternoon snack and so on.

Just think how much a meal or a snack costs especially when bought from a restaurant. Let’s say your restaurant bought food costs between five to ten dollars. Let’s calculate how much a single person who doesn’t cook but only buys restaurant food on a daily basis spends every year.

Five to Ten dollars a day multiplied by 365 days translates to USD 3,650 to 7,300 a year! As you can see, a simple eating habit can translate to a large amount when counted on a yearly basis.

Let’s say this single person doesn’t throw away their half eaten meals. This simple act is the equivalent of saving USD 1,825 to 3,650 on a yearly basis. Of course, this example is a bit on the extreme side. No one buys all their lunch and dinner everyday from restaurants, or is it?

But just imagine if a household doesn’t waste excess food and other household necessities. Food savings alone can run into thousands of dollars in savings, what more if we added all the household necessities that are not wasted.

Back To Summary List

15. Healthy Habits

People don’t usually realize how expensive getting sick can be unless they get a sickness that requires hospitalization. The worst part is that as you grow older the more you would need medical assistance.

The simple act of being a non-smoker for example, can reduce your health insurance costs by up to four times. Insurance companies actually do check if you’re a non-smoker by measuring the nicotine content in your urine and blood for one.

Just by being overweight can add to your daily costs. Usually, when a person becomes overweight their heart rate becomes faster. The overweight person then needs to take heart rate medicines to make their heart rate normal.

Once a person develops a heart rate problem, it stays for life which adds to the daily medicine costs of the overweight person. This doesn’t even add the other sicknesses brought on by being overweight like diabetes which is also requires costly medicines.

As you can see, having healthy habits are not only good for the body but also good for one’s finances. There have even been cases where a worker lost their job because of health reasons which led them to the poorhouse.

Back To Summary List

16. Quality Over Price

Often, in our effort to save money, we buy the lowest priced product without considering its quality. As a result, we sometimes end up with inferior products which are totally unusable to us that we have to buy a better product which costs us more money.

Many people behave this way when buying all sorts of products from food, clothes, cars, real estate and medical services. For example, there are people who buy bargain basement canned foods which not only tastes foul but are even inedible.

There are also people who undergo cheap plastic surgery procedures who end up with scarring, health complications and even death. So, beware when buying very cheap products. The sellers might have cut corners to make their product very cheap which could be dangerous to you, the consumer.

Back To Summary List

17. Use Coupons

Most people shy away from using coupons to get discounts. But as many professional coupon collectors have proven, you can basically just use coupons to buy almost all your groceries. Of course, for this to happen you should diligently collect a lot of coupons.

But where do you get coupons? From Printed newspapers, Grocery store advertisements, Products packaging, Store promotions, Online coupon aggregators and so on. In fact, media related to retail has a high chance of containing coupons and discounts.

The proper mindset towards coupons would be to treat them as actual money of which they are by their very nature. It is undeniable that coupons have little value when in small numbers, but could be valuable in large numbers.

Once your mindset towards coupons shift from just being promotional materials to actual money, you would use them seriously. This especially applies to savvy entrepreneurs who resell grocery brought products. Coupons could actually earn them more profits.

Back To Summary List

18. Invest

This is an enhancement on saving money in the bank. Investing when done properly could save you more money rather than just saving money in the bank or working more. For example, if you invested on real estate, you could save more money by collecting rent on your tenants.

You could also invest your excess money in the money market. For example, you can invest in mutual funds. A mutual fund like Fidelity Magellan offers superior returns as compared to banking with less of a risk than stocks or forex.

If you want higher but riskier returns, you could invest in the stock market. For example, the US S&P 500 overall has outperformed the total US stock market consistently. This is why investors from all over the world invest in it.

Back To Summary List

19. Recycle

Your garbage bin might just be full of money and you don’t know it yet, well, not literal money of course. But there could be things that you normally put in your garbage which could be worth money.

Cardboards, paper, aluminum cans, batteries, discarded metals and plastics are just some of the few items that you can salvage off your garbage bin and sell to recyclers. While they might not amount to much, they are literally free money coming from your garbage bin.

In some countries, even urine and human waste is recycled and sold. Have excess plant castoffs? You could turn them into compost or fertilizer and sold for some money. Recently trimmed your backyard tree? The castoff branches can be sold in eBay or Amazon as handicrafts.

You could also repurpose some of the things you normally dispose. For example, soda cans can be fashioned into tin toys. Soda and wine bottles can be fashioned to flower vases. Not only are you saving money, but you are also helping the environment.

Back To Summary List

20. Rent Out Possessions

It has been said that you can invest in real estate and then rent it out to tenants so you can save more money. But it doesn’t only have to be real estate. For example, you can rent out your car if you hardly use it. There are actually platforms online that do this.

You could also rent out your electric tools. Again, there are platforms online that do this. Renting out your electric tools just makes a lot of sense. Many people buy electric tools and hardly use them unless they have something to repair in their homes.

Most of the time these electric tools sit idly by in some person’s garage or workshop accumulating dirt and rust which damages them. For example, one could make good profit if they rent out their lawn mower or grass trimmer to a neighbor who doesn’t want to buy their own tools.

Back To Summary List

21. Be Self-Reliant

You could grow your own vegetables, fruits and spices from the castoffs of the vegetables, fruits and spices you buy at the grocery. This way, you don’t always have to buy them at the grocery.

You could also install renewable energy sources in your home like a wind turbine or solar panels. The prices of these products have significantly gone done while their performance have improved.

You could even raise your own animals as a food source if you are really serious about being self-reliant. Just imagine the savings you could have if you could reduce your electricity and food dependence.

Back To Summary List

22. Renegotiate Debt

Financial institutions are always in competition with each other including your debt. This is why it is advisable to regularly check with real estate, car, insurance, business lenders and so on if you can renegotiate your debt.

This especially applies with banks and other lending institutions whose very business model is giving out loans. For example, you might find that you can get better payment terms on another bank as compared to your current bank.

Back To Summary List

Final Words

There are many ways to save money. But first and foremost, you need to have a budget and a savings goal so you have a good chance of sticking to your savings plan. Stick to the basics of life. Avoid indulging in luxuries and vices as much as you can.

If you have any debt, your first and foremost concern should be paying it as early as you possibly can. If possible, regularly renegotiate your payment terms with your lenders so you minimize as much as possible your interest payments.

Don’t waste anything that can still be used especially leftover food. One of the costliest expense of anyone is their food expenses. If possible, turn leftover food into another meal without sacrificing sanitation and taste.

Mentioned above and previously are just some of the methods of saving money. But it boils down to two simple things: Save more than you spend and try to earn and save much more than you currently earn and save.

Back To Summary List