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Budgeting & Saving

How to Save Money Every Month

"A penny saved is a penny earned" is a proverb frequently attributed to Benjamin Franklin. In other words, it's a good idea to save money, not waste it.

While saving for the future can seem overwhelming, if you start by just putting away a little more money each month, it may be easier than you think. You can do Benjamin Franklin proud and save money every month by carefully reviewing your recurring monthly expenses, figuring out ways to trim those expenses and sticking to a budget. Here's how.

Review Your Recurring Monthly Expenses

One of the smartest things you can do every month to save money is to comb through your monthly expenses and see where you can cut costs. Here are nine common monthly expenses and tips for saving money on each of them.

1. Housing

Housing eats up a big chunk of Americans' budgets. In June 2020, the typical monthly payment for a 30-year mortgage with a 20% down payment was $1,036, compared with median monthly rent of $1,045 in the second quarter of 2020, according to the National Association of Realtors.

If you have a mortgage payment, consider saving money by refinancing your mortgage if interest rates are lower than what you're currently paying. This could give you a lower mortgage payment and save you a lot over the life of the loan. If you're a renter, look into finding a roommate to split costs, signing a longer-term lease to score a discount or downsizing to a smaller, less expensive place.

2. Utilities

Chances are that electricity represents the largest share of your monthly utility bill. So how can you reduce your electric bill? Start by unplugging unused appliances, adjusting your thermostat to settings that hog less power and turning off unused lights.

3. Food

Feeding yourself isn't cheap. The U.S. Bureau of Labor Statistics (BLS) reported in 2019 that the average American household spent $372 a month on food fixed at home and $288 a month of food prepared by restaurants.

To save money on groceries, try downloading apps that allow you to compare prices at different stores, buying in bulk at places like Costco and Sam's Club and choosing lower-cost generic items. (We'll supply more grocery-buying tips later.)

How about trimming costs on dining out? Consider:

  • Ordering free tap water rather than paying for coffee, tea or soda.
  • Splitting a dish into two or more portions for sharing.
  • Eating out at lunch, which typically costs less than dining out at dinner.
  • Scoping out restaurant coupons and discounts.

4. Transportation

Getting from one place to another costs more than you might think. The BLS said in 2019 that the typical American household runs up $813 in monthly transportation expenses, including car payments and gas. Among the approaches you can take to drive down transportation expenses are:

  • Buying a used car rather buying or leasing a new car.
  • Sticking to your car's recommended maintenance schedule to keep it running smoothly.
  • Cutting back on speeding and hard braking to conserve gas.
  • Tackling simple DIY car repairs.
  • Riding your bike or walking when possible.

5. Cellphone and Internet Service

Keeping connected comes at a price. The typical U.S. household spends $99 a month on cellphone service, according to BLS data released in 2019.

To dial up savings on your cellphone service:

  • Sign up for automatic payments and paperless billing. This could shave several dollars a month off your bill.
  • Pay for a new phone upfront rather than folding the cost into your monthly bill.
  • Keep your phone as long as you can instead of trading it in for a shiny new model every year.
  • Examine your bill to see whether there are any unused features you can drop.
  • Change to a different cellphone provider. You might find another carrier offers lower prices, and you'll frequently receive financial incentives to make the switch.

What about your internet service? Here are a few tips for slashing the cost:

  • Quit renting the router and modem. Over time, you likely can save money by purchasing this gear instead of renting it from your internet service provider.
  • Shop around. You may be able to sign up with an internet service provider that delivers similar quality for less money.
  • Decrease the speed. You might find that a lower internet speed works just fine (and costs less), particularly if you're simply surfing the web and checking email.
  • Check out bundling. If you purchase internet and cable TV service from the same company, you likely can obtain a bundling discount.

6. Clothing

No matter your personal style, clothing costs can pile up faster than dirty laundry. The typical American household spends nearly $160 a month on clothing and related services, according to BLS data released in 2019. You can, however, tailor your clothing budget to a more frugal lifestyle by:

  • Hunting for bargains at thrift stores.
  • Searching for deals at discount retailers like T.J. Maxx, Marshalls and Ross Dress for Less.
  • Buying off-season clothes. For instance, you might pick up a clearance-price winter coat when the calendar turns to spring.
  • Putting off clothing purchases until items go on sale.
  • Steering clear of trendy, expensive garments.

7. Insurance

The typical U.S. consumer pays $200 or more each month on car and homeowners insurance. To lower your insurance costs, the Insurance Information Institute recommends shopping around for coverage by obtaining quotes from at least three insurers. You also can cut insurance expenses by exploring discounts, such as those for bundling policies from the same insurer.

8. Credit Card Debt

As of May 2020, the average U.S. household carried $5,338 in credit card debt, according to Experian data. How can you ease your credit card burden and also save more each month? Here are a few tips:

  • Look into swapping higher-interest credit card debt for a lower-interest debt consolidation loan. This could save you on monthly payments and total amount paid—as long as you stop charging on the credit cards you pay off.
  • Evaluate whether it would make sense to take advantage of a 0% introductory balance transfer offer from a credit card company. This will enable you to switch higher-interest debt to a card that provides a 0% APR (annual percentage rate) for a limited time. These offers typically require good or excellent credit. While it might not save you money each month right away, paying off your debt sooner could put more in your pocket in the long run.
  • Reach out to the issuers of your credit cards to negotiate lower interest rates.
  • If you feel you're in over your head, contact a nonprofit consumer credit counseling agency. They can help you work out a plan to pay off your credit card debt. As part of that plan, the agency could collaborate with creditors to decrease the interest rates on your credit cards.

9. Recurring Monthly Memberships and Subscriptions

Recurring monthly memberships and subscriptions are easy to forget, since they're normally paid automatically through your bank or credit card accounts. But if you sift through your account statements, you can take note of those recurring costs and see which ones you can ditch. For example, you might not have visited the gym since you made a New Year's resolution two years ago to get in better shape, yet you're still paying $75 a month for a membership. Or perhaps you've signed up for six video-streaming services when you can get by with two.

Apps like Truebill, Trim, Bobby and Subby can help you manage memberships and subscriptions if you're not eager to do it the old-fashioned way.

Create a Monthly Budget

Now that you're equipped with suggestions on how to cut your monthly expenses, how do you put it all together? Create and stick to a budget. Why is budgeting so critical? Here are four things that budgeting can help you accomplish:

  1. Living within your means. This translates into expenses being lower than your income—allowing you to save more every month.
  2. Achieving your financial goals. For example, you might dream of retiring at age 60 and heading to Africa to do volunteer work or paying off your 30-year mortgage in 15 years.
  3. Eliminating debt, whether that's credit card balances, student loans, personal loans or another type of borrowing.
  4. Saving money to set up an emergency fund, fund a college savings account or contribute to a retirement fund.

Fortunately, there's no right or wrong way to create a budget, which is designed to properly balance how much money is coming in and how much money is going out. Two types of budgets to consider are the 50/30/20 budgeting method and zero-based budgeting. To track your spending, which is the key to any budget, you can:

  • Dedicate a notebook to your monthly budget.
  • Track your income and expenses in a spreadsheet.
  • Download an app like Mint, You Need a Budget (YNAB), Pocketguard or Goodbudget, or use Experian's Personal Finances tool (access this by logging in to your Experian account and clicking "Personal Finances" at the bottom of the page).

Save Money on Monthly Food Bills

As you work on your monthly budget, be sure to keep your food spending in mind. Whether you eat mostly at home or at restaurants, food expenses can chew up your budget. You might want to put these cost-cutting methods on your menu:

  • Cook at home more and eat out less. An April 2020 survey found that among Americans who planned to continue cooking at home in the wake of the coronavirus pandemic, 58% said they'd do so to save money.
  • Create an at-home meal plan at the beginning of each week and adhere to it.
  • Carve out a set amount of money each month for occasional meals at restaurants and don't exceed it.
  • Keep an eye out for grocery store loyalty programs.
  • Consider adding a credit card that supplies generous rewards for grocery shopping.

Save Money on Monthly Shopping and Entertainment Costs

Across the board, there are a number of steps you can take to save money on monthly shopping and entertainment expenses while you're striving to stick to your budget. Here are seven of them:

  1. Sign up for a store's text messages, which can offer deals that you might not find elsewhere.
  2. Verify whether a price on Amazon is the best price available. Price-tracking website CamelCamelCamel and price-tracking app Pricepulse can assist with this task.
  3. Head to the store on holiday weekends. Retailers frequently offer rock-bottom prices on certain items over periods like Fourth of July weekend and Labor Day weekend.
  4. Pick the smallest shopping cart or basket to bump up the odds that you'll buy fewer items.
  5. Check out books from the library instead of buying them.
  6. Watch out for online deals and coupon codes.
  7. Take advantage of entertainment discounts from membership organizations like AAA and AARP.

Put Your Monthly Savings Somewhere Safe

So, you've gotten smart about saving money and you've created a budget to monitor your income and spending. What do you do with your extra savings? If you don't already have an emergency fund, this is a good place to start. Generally, an emergency fund should cover three to six months' worth of living expenses. Having an emergency fund can help you pay for unexpected expenses like a hefty car repair or large medical bill without having to borrow money. Putting your money into a high-yield savings account allows you to earn a little more interest on your money than if it were in a typical bank savings account.

If you've already built up an emergency fund, you can turn your focus to saving for purposes like preparing for retirement, putting a down payment on a house, buying a car or taking a vacation.

The Bottom Line

Saving money on monthly expenses can be rewarding in so many ways. For example, it can help you slim down your debt, put aside cash for emergencies, allocate more funds for retirement and simply ease your financial anxiety. Coupled with creating a budget, cutting your expenses can put you on the path toward enjoying a bigger and sweeter slice of life.

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