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The basic equation for building savings is easy—spend less than you earn. But in the real world, this can be difficult to implement as emergencies and lifestyle inflation eat at your progress.
To save money, a good practical first step is to create a budget to track your income and expenses. Once you know where your money goes, you can start to make sure your spending and savings habits align with your vision for the future.
If you're dreaming of a relaxing retirement—or simply want to live without financial stress—you might want to try some of these money-saving tips.
How to Save Money on Bills
Lowering your recurring bills can be one of the most effective ways to free up room in your budget. Your budget will help you keep tabs recurring bills, but you'll need to use your own discretion to decide which ones may not be cost-effective.
At an extreme, you might look into moving to an area with a lower cost of living, downgrading to a less expensive vehicle or, depending on where you live, going without a vehicle altogether. Those are somewhat drastic life changes, but there's plenty you can do to cut down your regular expenses:
- Negotiate your telecom bills: Internet, TV and cellphone plans are monthly expenses you have some control over. Look into what exactly you're paying for and see if you can cut out features or channels you don't need. Your phone or TV provider may offer a cheaper package that still suits your needs. Barring that, you can try to negotiate your bill to nab lower rates—at least temporarily. Mark your calendar and make it a habit to call your service providers once or twice a year to make sure you don't pay more than you need to.
- Shop around for insurance: Maybe you got a great deal on auto, home or renters insurance when you first bought your policy, but it never hurts to shop around. You might find something that costs less and offers the same (or better) coverage.
- Cut your energy usage: Small lifestyle changes such as turning off lights, installing LED bulbs and using smart plugs, can lead to lower utility bills throughout the year. You'll be saving money and lowering your carbon footprint, a win-win.
If you're a homeowner, consider home improvements that decrease your energy usage and make your home more comfortable. Installing insulation, replacing windows and other weatherization projects could save you hundreds of dollars a year. Some households can qualify for government assistance with weatherization .
How to Save Money on Food
Food often takes up a large portion of a family's monthly expenses. Fortunately, there are a few tried-and-true ways to save money:
- Cooking at home rather than eating out is often cheaper and healthier.
- Creating a meal plan at the beginning of the week can keep you from eating out when you're overwhelmed or tired after a long day. Keep ingredients in stock at home for a few easy-to-make favorites as a backup option.
- Make a grocery list based on your meal plan before you go to the store. Stick to the list once you're there to save time and money.
- Be realistic about eating out occasionally and budget for the expense ahead of time.
You can also look for ways to earn cash back or save money while shopping for groceries. Many supermarkets have loyalty programs and apps you can use to find discounts. There are also third-party apps that offer rewards or cash back on qualifying purchases.
If part of your plan is to cook more meals at home, you could also get a credit card that incentivizes shopping at grocery stores rather than dining out. Some of the best cash back grocery cards offer up to 6% cash back at supermarkets—money that you can put back into your grocery budget or set aside for a different goal.
How to Save Money on Entertainment
Entertainment expenses fall squarely under discretionary spending—a want rather than a need. You certainly need entertainment to enjoy life, but you can look for free or low-cost options if saving is a priority:
- Game nights or potlucks with friends
- Volunteer opportunities in your community
- Free concerts or events, especially during the summer
Here's a trick you can use if you find it's hard to stick with your money-saving plan—put your entertainment budget in the same bucket as another fun goal. For example, you could combine your monthly entertainment money with your long-term travel fund.
Next time you're tempted to dip into your entertainment money you'll have to make a choice. Do you want to have a good time now or do you want to enjoy the trip later? Neither answer is right, but the exercise can help you set priorities and make the long-term impact of your present-day decisions more tangible.
How to Save Money on Shopping
Whether you're buying clothes, toiletries or other household essentials, there are many ways to save money while shopping. Often, you can stack multiple types of sales, discounts and cash back opportunities to minimize your net cost.
For example, try this process next time you shop online:
- Look for sales, discounts and coupon codes online. Also, check a store's clearance options and compare prices on multiple websites to see which one offers the best deal.
- Then, check a cash back aggregator to find out which cash back portal will give you the best rate on your purchase. Using the cash back portal's link, you may be able to earn cash back on your purchase even when you use a coupon code or buy a product that's on sale.
- Next, look for discounted gift cards. If you're looking in the right place, you can sometimes find gift cards for major clothing retailers for 10% to 20% off their face value (or more). You'll still be able to use your coupons and earn cash back regardless of your payment method.
- As a baseline, also have a good cash back credit card that you can use to purchase the gift card or make a purchase right from the site. If you frequently shop at a particular store or website, you might want a store card rather than a standard cash back credit card.
Regularly implementing just one or two of these processes could help you save money on almost every purchase. Many of them also work for in-store purchases as you can still look for sales, coupon codes, discounted gift cards and use rewards credit cards to save money.
Put Your Savings To Work
Once you've figured out how to save money, think about how you want to use the funds. You could build up an emergency fund, increase your retirement plan contributions or save up for holiday gifts or summer travel. Or, you could spread the extra money around and put it toward several goals.