5 Best Practices To Save Money Today

Saving money has always been important to me.

Growing up, we didn’t have money.

I was forced to learn how to save money at a young age, and along the way, I’ve learned a few tricks and tips.

And with Covid-19 still in effect, increasing inflation, and the likelihood of no further stimulus checks, we’re all looking for more ways to save money today.

In this post, I’ll share with you five best practices on how to save money today.

Let’s dive in.

1: Cut Back on Expenses

When it comes to saving money, one of the best things you can do is to cut back on your expenses.

But first, it’s important to note that cutting expenses doesn’t mean living a less-than-average lifestyle.

You can still enjoy life while cutting back.

As Ramit Sethi points out, focus on cutting back on your top 3 cost buckets.

In my finance days, 80% of costs came down to 20% of your categories (Pareto principle).

For most of us, these costs include:

Rent
Dining out
Personal expenses (clothing, toys, etc.)

To cut back on expenses in these areas, determine the following:

Rent

Rent is easily at the top of the highest cost buckets for most.

So reducing this cost can make a significant impact on your savings.

Ask these questions:

Can I find a cheaper place to rent?
Can I room with a roommate?
Can I sublease?
Can I move to a lower cost of living (LCOL) area?

One way to start seeing potential is to plug numbers into your spreadsheet.

Play with scenarios, e.g. “If my rent was $500/mo vs. $1000/mo, what would that look like? Where would I live in that range?”

You’ll quickly start to get some great ideas on how to lower your rent costs.

Dining out

When it comes to dining out, many people tend to overlook the fact that it can be one of the hardest areas to cut back on.

In fact, the average American pays $232 a month for commercially prepared meals and eats out four to five times a week.

Take $232, multiply by 12, and you get a staggering $2,784 spent eating out.

Personally, I’ve spent upwards of $5k on eating out….

That’s savings that could have gone towards investments.

You learn 🤷‍♀️

Questions to think about when cutting back on dining and eating out costs:

Can I cook at home more often, perhaps using things like the Instant Pot?
Can I replace full meals with appetizers?
Can I set a budget goal to eat out at specific frequencies?
Can I dine out only when I hang out with friends?

Be gentle when cutting back.

It’s hard to slash away dining costs, so strongly consider which areas you’re okay cutting back on. E.g. eating out 1x per week vs. 5.

Personal expenses

The next category that eats a big chunk into savings is personal expenses.

Personal expenses, also known as discretionary spending, include:

Entertainment
Travel
Clothing
Toys
Electronics
Gadgets
Movies

To reiterate, there is NOTHING wrong with spending on yourself.

The key, though, is to focus on your budget and what you’ve allocated yourself to spend.

For example, let’s say you allocate $100 dollars every month to spend on yourself. That’s $1200 per year to spend on yourself.

And if you save more than you spent, you can also consider rolling that amount over to next month.

Here are some questions to ask yourself when thinking about cutting back on personal expenses:

How much can I reduce my monthly expenses by cutting back on personal expenses?
Can I make better use of the personal things I’ve already purchased?
How much have I spent year-to-date? Why?
If I increase my budget, how does it impact my overall savings?

Too often, we feel trapped by our budgets. To me, that’s not a real budget.

A budget is flexible and is meant to work for you.

So long as you set a budget for yourself and stick to it, spend away!

2: Find Deals Online

One way to save money is to find deals online.

There are a number of websites that offer discounts on products and services.

You can also use apps like Honey that automatically find you great deals. I love this app because it searches for coupons for you and then automatically applies them to your basket.

How easy is that?

If you’re an entrepreneur, it can be tough to spend on monthly software subscriptions.

Instead, consider lifetime deals.

You can buy lifetime software deals at sites like Appsumo, Pitchground, and SaaSMantra where you pay once and get the product for life.

This is a great way to save money for your business.

3: Use Cashback Rewards Programs

Cashback rewards programs are a great way to save money on your purchases.

By using these programs, you can earn cashback on your purchases every time you make a purchase.

Some of the best credit cards for earning cashback include:

Chase Freedom
Chase Sapphire Preferred
American Express Blue Cash Preferred

Depending on the card, these cashback rewards can add up quickly.

Always remember to pay off your credit card monthly bill statement in full, so that you don’t owe any interest or debt.

4: Save Money Today Using Coupons

Coupons can be a great way to save money when shopping.

I personally have used both physical and digital coupons.

Hey, a deal’s a deal!

One app that I love using to find digital coupons and deals is Honey.

Honey is a free app that helps you find amazing deals and coupons for you automatically.

For example, when you’re ready to purchase an Appsumo software tool, just hit the Honey chrome extension and will show whether or not it found a deal. See my screen below:

Leverage coupons to your advantage to start saving money today.

5: Make a Budget and Stick to It!

Making a budget is one of the best ways to save money.

When you have a budget, you know exactly how much money you have available each month and what you can spend it on. You can also track your progress over time and see how much money you’ve saved.

What I love to do with my budget is to make it visual.

That means creating graphs and charts to showcase your financial progress.

An app I recommend trying out is YNAB (You Need A Budget).

It can be relieving to see your savings accumulate, which means more money for investments, projects, and more.

Here are some tips for making a budget, all of which can be in YNAB:

List your income sources (W2 job, side hustles, businesses, crypto)
Then list your monthly expenses. Include things like rent, utilities, groceries, transportation, and other bills.
Review your net savings percentage (income less expenses divided by expenses). Higher the percentage, the better (I like to aim for +30%)
With your budget in place, now figure out how much money you need to live comfortably

Making a budget is a powerful activity.

I’ve had my budget since 2009 and review monthly.

It’s a great reminder of why I save in the first – freedom, flexibility, comfort.

Plus, a budget helps you see things differently. Ask yourself, could I make more money via a side hustle?

Hmm….

Save Money Today

Saving money can be tough.

It’s not always easy saving and knowing that you’re also foregoing that fancy trip, car, or big-ticket item.

However, I would argue that it’s worth it.

Not having to work for another corporate?

Sign me up!

I hope this blog post about the 5 Best Practices to save money today helped you.

Embrace the Savings!

Learn some easy ways to find savings in your budget

Nervous about being able to pay down your credit card debt? Perhaps living paycheck to paycheck?

So many of us deal with the daily troubles of life – family, career, money. But money, of all things, tends to drive us towards insanity.

Makes sense though. Without money, we can’t afford to take trips, buy gifts and treat ourselves.

Therefore we need a plan.

Simple steps to setting up a budget

Setting up a budget tends to be the scary, hairy monster that we all try to avoid. Makes sense – who wants to face the reality of how much we truly spend. Here is a simple guide to setting up a budget below:

Create a new account in Mint.com, which takes less than 5 minutes
Connect your existing financial accounts to Mint
Mint will do its best to categorize expenses, however, you will need to check to ensure they’re categorized correctly
Create tags and labels if you wish to view income and expenses as part of projects or events, e.g. I want to see all expenses related to vacations
Once all transactions have been categorized, review your income and expenses for the year or periods that have been aggregated
*Important* – this is your baseline. This is what you actually earned and spent. This is your truth, so review closely.
Once you feel comfortable with those numbers, decide how you want your next budget year to look – do you want save more to put money down on a house, pay down loans, save up for a vacation?
Now budget your numbers you wish to achieve for the year AND month into Mint
Finally, periodically review your transactions (recommend 2x per month) and review your entire month against your budget in the first of the new month – did you meet your budget? how well did you do? any surprises? any area you could cut?

Savings opportunities

The reality is, when it comes to our budgets, it is under our control. Because every time we make a purchase, we’re consciously making a decision. The only way to stop this is to start building in good habits. Here are a few areas to look into to start saving:

Dining out / restaurants – each meal averages about $10. Now assume you go out at least 3 times per week. That’s $30 per week or $1,560 annually. That’s a lot!
Buying out lunch – assume again you’re eating out 5 times per week at work. That’s $50 per week or $2,600 annually!
Internet – lot of us never think about negotiating on fixed costs such as internet, phone, etc. However, with so many options out there these days, lot of these companies are willing to negotiate to keep you around. I’ve personally shaved off $50 or more on a monthly basis by just speaking with the reps. Give it a try!
Gym memberships – an important expense for most of us! Try to see if you might be able to switch to a lower cost gym, e.g. do you really need all the bells and whistles? Additionally, don’t forget to use your medical benefits when it comes to gym memberships. Most will offer reimbursements, so take advantage of those.

Budgeting is a skill that needs to be practiced

Budgeting is like any skill and requires attention, constant practice and focus. Like a sport, in the beginning it’s a very tough process because it unveils a lot of our insecurities.

But just like in life, we have to confront those fears head on. If not, debt piles on, credit gets destroyed, and we’re one paycheck away from being homeless.

So I hope these tips can help you guide to better budgeting. Enjoy!

If you wish to learn more, feel free to reach me at me@yartykim.com

Is a 1.5% interest per month on a relatively small amount worth it?

On Quora, a user posted a great question on whether 1.5% interest per month on a small invested based was worth the effort. Well, it depends.

To provide a more concrete, visual example, let’s assume the following variables on what we might consider a “small” amount:

Assumptions

Assume $1000 initial investment/deposit with no additional deposits thereafter
1.5% monthly interest = 18% by end of year
Assume one year time horizon

Here is what one might expect

As can be shown above highlighted in yellow, you could achieve $195.62 in interest with an initial investment of $1000. Not bad at all.

However, finding an investment willing to yield an annual 17% return would be difficult to find unless you’re invested in higher risk investment vehicles (e.g. hedge funds).

Hope you enjoyed this analysis! Subscribe today to follow along with more tips and analysis!

I make roughly $200,000 a year living in Iowa. Why am I still living paycheck to paycheck?

As posted on Quora!

First and foremost, treat yourself and your finances like a business. Think of yourself as the CFO (chief financial officer) of your household – you manage the budget/finances, goal planning (e.g. new car purchase), retirement savings (e.g. 401k), etc.

So what would you do as the CFO of your household? Well, activities would include:

Overseeing the financial activities and operations of your household
Review your net worth such as your assets (e.g. paychecks, checking accounts) and liabilities (e.g. mortgage)
Analyze your income (revenue) and expenses (discretionary/variable and recurring/fixed)
Review your net savings (net profits for corporations) and compare against your budget
Finally, based on your findings (monthly/bi-monthly/quarterly), highlight performance areas that missed your budget targets and begin optimizing spend by putting together action plans

By developing a simple spreadsheet with all the key information laid out neatly, you’ll quickly spot out the troubled areas that’s forcing you to live paycheck to paycheck. (Food was always my killer!). I also suggest utilizing tools such as Mint and Personal Capital, very easy to use and set up.

Here’s a chart from a budget model I created many years ago that I still leverage today and has helped me continue to find savings and strive for financial freedom (figures are for illustrative purposes only).

How can I turn $1,000 into a steady monthly income?

Follow me on Quora!

Question: How can I turn $1,000 into a steady monthly income?

To repeat what others have said, there are a variety of ways to produce steady income. Whether or not they exceed your expectations/threshold is a whole other question.

For example, place $1000 into a high-interest savings account such as Ally at 1% interest would yield just over $10 of cumulative interest. See below:

$10 of savings interest is still better than $0.

Hope this helps. Good luck!

With what salary can I comfortably afford a $60,000 car?

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Question: With what salary can I comfortably afford a $60,000 car?

Okay, so given the limited information we have, I’ll have to make some assumptions here to help whether or not you can comfortably afford a $60,000 car. Here we go.

First, let’s make some assumptions for the car in terms of what you will pay for monthly payments:

Okay great! Now that we have that cleared away, let’s now assume a frugal budget given each credit scenario as well as salary potential. Moreover, let’s assume your single, living alone with no tenants and have no student debt. I removed 401k/IRA contributions from this analysis for simplicity sake (would add another potential 10–15% from net savings).

Great/Best Scenario

Okay Scenario

Bad Scenario

So as you can, can it be affordable? Sure, depending on what level you are at in your career and what your salary is. However, this is all heavily dependent on whether you stick to your budget and are able to live within your means. Otherwise, you’ll quickly be living paycheck to paycheck, which you’ll want to avoid at all costs.

Hope this provides some visual context to your question. Enjoy!

If you found this engaging and helpful, feel free to visit my website www.yartykim.com!