12 Easy Ways To Save Money (And Take Control Of Your Financial Life)
Creeping expenses are to your financial life what holes are to a leaky boat where bills begin to bleed into the deck and sink your future. If you find yourself overwhelmed financially, then you need to act now and find ways to save money fast to gain back control.
The problem with most financial advice is that it’s the same cookie-cutter approach that everyone else preaches. If it was as easy as adding up your bills and then following a budget, then most men would not be buried under a mountain of credit card debt and past-due notices.
Budgets are tactics that work in the short-term but fail in the long-term. The goal then is not only to save money as fast as possible but to make it permanent so you never end up in a bad financial position again.
So, to reach that goal you’re going to learn overarching strategies to guide your daily financial decisions. This acts as a compass to steer your thinking and build the habits of fiscal discipline.
Then, you’ll learn a series of proven tactics that will halt the “leaks” in your finances that quietly work their way into your budget. As you combine these strategies with these proven tactics you’ll roll back unnecessary spending and gain greater financial peace of mind. First, let’s talk strategy.
Making Change Permanent
1) Don’t Make Decisions When You’re Emotional or Stressed
Studies find that when human beings are in a highly aroused state, emotions tend to irrationally influence their decisions.
Emotional decision-making will often cause you to make decisions that feel good in the short-term but lead to negative outcomes in the long-term.
There are two forms of arousal states: Internal and external. Internal states are caused by strong personal feelings that lead to eating “comfort foods,” impulse buying, or overcharging on credit cards, among other all too common side-effects of emotionally-based decisions. They feel good in the beginning but over time lead to negative outcomes.
External arousal states are caused by stressful environments or situations. Salesmen are famous in using this tactic to pressure you into making buying decisions by ramping up your stress. They use scarcity (ex. “This is the last one at this price”) or use fear (ex. “If you miss out on this deal then I don’t know if it will ever come around again”). They do it because it forces you out of your objective frame of mind and moves you into the realm of emotional arousal to get you to make an emotionally-based decision.
Recognizing this bias is the first step to making sure that you avoid any situation regarding money while you’re stressed, tired, fatigued, angry, depressed, euphoric, happy, or under the influence of any other emotion that clouds your objectivity. If you don’t, then you’re likely to make a decision that will cost you money.
2) Men Move Towards Pleasure and Move Away From Pain
These are the two basic motivations for every human being. Every decision that you make is filtered through these two motivators and how they will move you towards happiness or away from pain. These motivating factors also explain why people act impulsively at their own expense or avoid situations that are unpleasant to them.
Men buy new sports cars, go on exotic vacations, buy expensive watches, rent luxury apartments, buy music, purchase designer clothes, and much more because they are attempting to move towards pleasure.
But men will also avoid trying to understand their retirement investments or insurance documents, forgo reading the fine print on their credit card’s interest rate or analyzing the long-term costs of their mortgage, and do all they can to ignore their mounting credit card debt because they are attempting to avoid pain.
Once you understand what your true motivations are for your financial decisions (or indecisions), then you can start making more effective choices that lead to a better financial outcome.
3) Prepare and Pre-Commit
At some point, you’re going to find yourself in the middle of a sale, celebrating a promotion with a friend, getting caught up in a last minute victory of your favorite sports team, deciding to have beers with the guys instead of the healthy meal waiting for you at home, and an endless number of other events that will derail you if you’re not prepared.
Maintaining an objective mindset and avoiding emotional arousal along with understanding your inner motivations will help you on your path, but not if you’re not prepared for the unexpected.
To help, you have to analyze what situations you’re likely to find yourself in and then commit to a course of action in advance. By pre-committing to a set of actions in advance, it’s easier for you to maintain discipline and stay on track. This requires a bit of “if, then” thinking but the payoff is huge by helping you stay on track and accomplish your goals.
For example, if you find yourself being asked out for beers after work, then you’ll ask your friends for a rain-check. If you find yourself getting excited about a potential sale of your favorite dress shoes, then you’ll wait 48 hours to decide if you truly need them. If you find yourself wishing you had cable so you could watch your favorite movies, then you’ll rent the movie you want instead of committing yourself to a high cable bill. Having a plan of action laid out in advance will lead to enormous dividends by ultimately keeping you on track.
4) Make It A Game
Anything worth doing well is worth making a game out of. If you can measure results and gain feedback on an activity, then you can create a game out of it. This makes saving money the perfect game, since you can measure the amount of money saved and track how quickly you can save it. As you do, you gain the benefit of lighting up the motivation centers of your brain and experiencing feel-good chemicals release as you make progress. This makes the game addictive and habit-forming, which is exactly what you want.
Rich businessmen who started their businesses from scratch are good examples of this phenomenon. Since they started with nothing but sheer force of will, they had to keep their expenses low as they built their companies, and so it became an ingrained habit in their lives. Start thinking of your life as the business of “You, Inc.” and start exploring ways you can make a game of cutting your costs and adding to your bottom line and you will make it a constructive habit.
5) Shop Around on your Insurance
Insurance is a multi-billion dollar industry that insures everything from your life, health, capacity to earn a living, automobiles, your home, accidental catastrophe, and just about any other part of your life. But, each year, your rates can still gradually increase.
Most men don’t bother shopping around, since insurance is a boring subject that is sort of taken for granted (this is a “moving away” from factor mentioned earlier) and forgotten about. But, investing some time once or twice a year to review your insurance policies and compare them against potential competitors can lead to big savings almost immediately. Competition among insurance companies is fierce and they are aggressive in seeking new business, which can work to your advantage. By shopping and comparing policies you could potentially save hundreds if not thousands of dollars each year.
6) Renegotiate Interest Rates
Loans and credit cards can end up being some of your biggest expenses if you don’t keep them under control. The average household in North America has about $10,000 in credit card debt alone. Add in auto loans, personal loans, lines of credit, home improvement loans, mortgages, second lien mortgages, and other loans and you can see how easy it can be to get buried under debt. Adding to that, many revolving credit lines have high interest rates that can literally eat your financial life away if you let it get out of control. If you find yourself with an “albatross-of-debt” around your neck, then start looking to renegotiate your rates.
Be warned, this can take some time and effort but if 45% or greater of your total gross monthly income is being used to service debt then you need to act now. The lower rates you’re able to get will help you pay down your debt faster and free up more of your monthly income. With more income, you can save and invest more for your future as well as travel and do the things you always wanted to do without being burdened by high-interest rates. Start by contacting your credit card companies and/or banks. Explain to them that you’ve been a good customer and you’d like to see if they have a better plan that adds more value. See about refinancing your home, car, or existing lines of credit for lower rates and/or more favorable terms. Research better credit card offers with attractive balance transfer incentives and rewards or point programs, as well as lower rates.
Any progress you make to lower your rates and improve terms will increase your monthly income. With more income, you can get ahead by…
7) Paying Down Debt
If you have a lot of debt in your household, then one of the best ways to save money quickly is to start paying it down. Debt can be a scary thing to confront if you have a lot of it but if you start chipping away at it, bit by bit, then you can turn the tide back in your favor. Even better, with each payment you can reduce your monthly obligation and increase your monthly income.
The important thing is to start small and then build up from there. Start by picking the smallest loan or credit card balance and then aggressively pay it off. Once it’s paid off, then celebrate one time with that monthly payment you had been spending up to that point. The next payment cycle, apply that payment on top of another loan or credit card until it’s paid off. Repeat again and again till all debts are paid. Soon, no more debt and a lot of extra discretionary income left over means that you can start living for yourself, not just to pay bills.
8) Reduce Taxes
Next to debt, taxes are going to be the largest expense you have each month. But taxes don’t have to be the burden that most people think they are. Consult with your tax professional first, but you can typically save money by donating your used clothes and goods to charity. You can start a side business and use the deductions to shelter your salaried income and even have it carry over to the next tax year, if applicable.
Consumer debt isn’t tax deductible but if you refinance your home to consolidate all of your debt then your new mortgage interest is now deductible, saving you money down the line. Don’t avoid taxes because you don’t understand them but consult with someone who does and it could potentially mean saving thousands of dollars each year.
9) Skip Cable
Most cable bills range anywhere from $100 a month to several hundred, depending on what you watch. What makes cable viewing so frustrating is that the channels are bundled together as packages so even if you wanted to watch one channel in particular you have to subscribe to a dozen channels that you have no interest in.
Most cable programming is mindless entertainment anyway, that eats up your time and keeps you from more meaningful pursuits. But, if you are determined to watch a particular channel then consider subscribing to them directly, if they offer that possibility. It’s cheaper and you’ll actually use it versus endlessly scanning a vast array of options. A better option is to consider reading more instead, but only if you…
10) Use the Library
Libraries are underutilized resources in modern society, which is a shame. People buy books at full price all the time, and rarely even read what they bought. In addition, they also get sucked into buying related stuff online that will likely go unused or be forgotten. But, on the other hand, libraries offer a sea of books and literature to enrich your life for free. Go now and get a library card to start reading more. You’ll get smarter and develop “theory of mind,” which studies have shown will give you greater emotional range and empathy. Plus, you’ll save money to the tune of several hundreds of dollars per year.
11) Eliminate Subscriptions
There are a lot of subscription services that offer hours upon hours of entertainment. The reality of it is that you don’t have that much time on your hands to watch all of that, especially since it’s costing you hundreds of dollars each year. Pick one source and eliminate the rest. Even better: eliminate all of them and get some exercise instead. You’ll be healthier, happier, and wealthier as a result. And while you’re at it, rethink your cell phone.
Most cell phone plans add up to $150 or greater each month, which can total up to $1,800 a year. That’s a lot of money you can save by canceling your monthly plan and buying an off-contract cell phone instead. You might not be able to use social media apps but you can use it for business or emergencies for as little as $20 per month, give or take. Either way, you’re saving money by going cheap but still being able to stay connected.
12) Use Coupons
There are countless companies that send you coupons each day if you would only use them. You can save thousands on consumer items and groceries if you’ll just start checking your mailbox, email inbox, and the back of your receipts. Marketing companies spend millions on coupon and rebate campaigns to get you through the front doors and you’d be wise to start putting them to use. Saving money doesn’t have to be a chore or force you to sacrifice like a Spartan by not eating out or scrimping on food.
For a few dollars, you can buy the Sunday edition of your local newspaper and potentially save several hundred dollars from everything to gourmet coffee, lunch specials, food at the grocery store, and restaurant promotions. Also, you can pick up free periodicals at the grocery store that contain dozens of special coupons and promotional offers. Search on the web for “free coupon sites” and you’ll find dozens of authority sites that showcase coupons that can add up to some serious budget savings. Get a small notecard box that you can store and alphabetize coupons and promotions for future use. From the start, you’ll reduce your grocery bill and eating out by a significant amount and save yourself a lot of money over the long haul.
When you’re trying to save money fast, it’s often because you realize that your actions have brought you to a place you’d rather not be. Being buried under bills is depressing and demoralizing but it’s also an opportunity for you to grow. You can reach deep within yourself and prove that you have what it takes to pull yourself out of the hole you find yourself in. To do that, it helps to get more in tune with what makes your truly happy and fulfilled, to help you shift course towards a more positive direction. To help, do this exercise.
A) List 5 actions that you do daily but don’t add long-lasting fulfillment.
This could be surfing the internet for hours or being on social media; indulging in too much TV or fast food; spending too much by yourself at the expense of not spending quality time with your family; being a sloth on the couch, lacking any physical activity. Whatever it is, list the 5 things that you indulge in that give you short-term gratification but fall short of long-term fulfillment and a sense of deep gratification.
B) List 5 actions that you could do that would add long-lasting fulfillment but that you are not currently doing.
Going back to college, writing daily in your blog, walking your dog, spending time in nature, reading every day, exploring your area, getting involved in local charities, hanging out with friends, going on a date, or whatever you know would lead to long-term fulfillment but you’re not doing enough of it — list it all, then narrow it down to five things. And, if you’re not sure, then pick the best thing that you can and then experiment with it. If it’s not for you, then quit doing it and move on to something else. The idea is to spend time finding something that “pops” with you and then go from there. Once you have your list, do more B and less A.
And experiment with it the same way. Push the envelope with it and try new things. Keep in mind, this is simple to do but it’s simple not to do either. However, by starting small and making gradual steps, you’re setting a new course that can literally lead to a new life. As you do, you’ll take on new adventures filled with new experiences instead of being bogged down with dollars and cents. Yes, by all means, put the financial steps you’ve learned here in play and save as much money as you can but keep in mind that it’s not all dollars and cents. It’s about living the life you have with a sense of purpose and satisfaction, not mindless consumption.
Do this exercise often and you’ll be less likely to be seduced by the siren song of consumer spending and its thrill at the swipe of a credit card, and more likely to make a habit of meaningful daily actions that create a thrilling life instead.