Ten Pain Free Tips to Help You Save in 2022

Sometimes it's really hard to save money. There are always things we want to buy, things we want to do, and places we want to go. The trick to saving money is avoiding anything that causes you pain. If you can’t find a pain-free way to save money, then saving money is going to be next to impossible. Given that managing your money is a constructed habit, I recommend following some of the tips below to start building these habits.

  1. Get rid of subscriptions - The first thing you can do to help you save money is eliminate all the subscriptions that you did not use in the past month. A lot of times we sign up for things that are only 5 to 10 bucks a month, but we end up using these subscriptions for only a couple of months. Going through your monthly subscriptions and getting rid of the ones you no longer use is the absolute easiest way to start saving money without feeling any pain. I try to do this once a year, and I'm always surprised to see that three or four new subscriptions were added, which I had not used in the previous six months. And remember, if you get rid of a subscription that you may use in future you can always resubscribe, so be aggressive when cutting out the underused ones.

  1. Share subscriptions - A lot of times people pay for subscriptions that allow you to have five users all under the same payment plan. We do not take advantage of this enough! It’s common for people in the same family or friend group to be individually paying for Netflix, Hulu, or Disney Plus. Look for family members or friends that are paying for the same subscription plan and ask to share it with them and split the price.

  1. Cooking versus eating out - One of the best money-saving exercises is to take a look at the total amount you spend on food at grocery stores and the total amount you spend eating out or ordering in. You can do this by looking at your bank account; they typically separate your groceries and your restaurant expenses. I was surprised to find out that what I spent on groceries is typically the same that I spend on restaurants: about $6000 a year on each. Knowing this, I decided I needed to spend more on groceries and less on restaurants!

  1. Shop for the best deal - In the same way that you cut out your subscriptions based on what you actually used and need, you should search for more competitive alternatives. Are you on the best phone plan for your situation or are you overpaying for services that you do not need? Are you using the cheapest utility company where you live? Are you overpaying for cable if you only watch Netflix and Hulu? Ask yourself which of your monthly expenses could be swapped with a better plan. For example, you can typically start saving money on your home, auto, or life insurance by reevaluating what plan you’re on. There's always another option out there.

  1. Understand where your money is going - A lack of understanding is always a threat to your money. If you do not know where your money is going, how do you know where to start working so that your finances improve in 2022? Go to your bank, click expenses, and look at the monthly and categorical summaries of where your money is going. Besides showing you how much you are spending on each category per month, it also gives you an average. With all this information, you can identify which areas you need to work on!

  1. Create a budget - After completing the task above and once you've identified the areas you would like to work on, set a monthly budget for each of those areas you are doing poorly on and try to stick to them. It won't be easy the first month, but after you see that you’ve done this for a few months, it will really motivate you to keep saving that money. If this is something you would like some professional help with, feel free to set up a meeting with me.

  1. IRA contributions by employer - Make sure that you are hitting the max contributions from your employer. Some employers contribute in relation to what percentage you contribute. In other words, if you give 3%, they will give 3%, sometimes even automatically. It’s important to make sure that you are contributing the necessary amount to get your employer's max contribution. If you are not contributing that amount, then you are leaving free money on the table.

  1. Understand interest rates - What actually is interest? I like to look at interest as paying rent on money. If you have a $100 loan at a 4% interest rate, you are renting $100 at $4 for the first year. This is very important for paying off debt. The avalanche method of paying debt encourages you to pay the debts with the highest interest rates because over time this will save you the most money. The snowball method, popularized by Dave Ramsey, encourages you to pay the smallest loan amount no matter the interest rate so that you can feel the personal satisfaction every time you pay off one of your debts. Whatever method you choose, make sure that you understand the implications of the interest rates on your debts. Click Here to learn more about paying off loans.

  1. Increase your assets - When you spend money, make sure you're spending money on what will help you make more money in the future! For example, sometimes you buy something that you only use for a month. That would be a bad purchase because it does not increase your net worth. However, there are some purchases that will help you increase your net worth, such as buying a house or rental property, or anything that adds value to your life for more than one year. I have a personal policy of being cheap on expendable things, or any purchase that I’ll use for less than one year, and “going big” on long-lasting items which I consider to be assets, or any purchase that I’ll use for more than one year.

  1. Look out for easy online purchases - With the rise of online commerce and the effects of COVID-19 forcing a lot of people to change their habits and start making so many purchases online, it has become easier for you to buy things without realizing it! With just the click of a button, your favorite shoes or favorite purchase from Magnolia can be at your doorstep within days, sometimes hours. This can cause you to spend money without realizing it! I have found a lot of success in advising people to only make online purchases on Saturdays. This is helpful because it takes away the impulse buy, allowing you to think a little bit more about the purchase and see if you actually need it.

Commit to applying 2 of these 10 tips today, and you will be on your way to becoming the new King of Cash. It is very hard to apply all 10 at the same time, but as you build habits and start seeing how much you save with just one of these tips, you will gain the motivation to start the next one and the next one and the one after that, paving the way to your financial success in 2022.

If you are interested in personalized financial coaching and want to stop living paycheck to paycheck, set up a coaching session with me, where I help millennials save an average of $6,000 a year!

By Caleb Basile, CPA

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