How to Save Even More

In the past, we’ve written about how to save more money by paying yourself first, saving 15-25% of your gross income, or saving just 1% more in order to have enough to retire comfortably, send a child to college, or other goals requiring capital needs.

Saving money via payroll deductions, automatic contributions to IRAs and 401ks, and directly into piggy banks (for kids and adults alike) can be considered ways to save money directly. However, there are some ways to save money indirectly – and convert that money into direct savings towards retirement, college, or other financial goals.

1. Turn the lights off (shut the door, close the refrigerator)! This phrase still echoes in my head from when I was younger. My parents could frequently be heard telling me to turn lights off in my bedroom or in the house if I wasn’t going to be using them or needing them. Now, I catch myself telling my own kids to remember to turn lights off – explaining to them that every month, mommy and daddy have to pay to use the lights power that we need. Being frugal with your utilities means having more in your pocket; it adds up. And if you’re one of those folks who argues that it’s not a big deal leaving lights on because you have energy efficient bulbs, think of the following. Would you leave your car running in the garage or at work just because it gets good gas mileage?
2. Don’t grocery shop hungry. When I was in college I can remember several times I would go grocery shopping when I hadn’t eaten for quite some time. This usually ended up with me buying a lot of food (ramen) I didn’t need, wasn’t very healthy, and either ended up getting wasted or sat in my pantry for a long time. One of the best times to go grocery shopping is when you’re full, and after you’ve made a list of the items you need. Being full reduces the risk of buying “with your eyes” and helps keep you focused on only the food items you need. It will also prevent you from buying junk food which is typically the body’s response to satisfy cravings when you’re hungry.
3. Take inventory of your spending. A good way to track needless spending is to get your last three month’s bank statements and go over them with a fine-toothed comb. On a separate sheet of paper write down two columns – wants and needs. Carefully write down the items that are needs (generally food (not dining out), shelter, water, etc.) and those that are wants. This exercise allows you to take inventory of what you’re spending money on – and is generally free from bias since you’re looking at your spending in the past. Get rid of items you don’t use or need such as magazine subscriptions, TV subscriptions, dining out, etc. The wants and needs are relative to you – only you can be the best judge of what is a need and want.

These are just some starting points to use. After considering these actions, take the money you’re not spending and direct it to your retirement, college savings, or emergency fund. Better yet, ramp up your savings to these accounts first (pay yourself first) and then figure out a way to live on the rest. By doing this first, you force yourself to get rid of things you don’t need and can quickly change your mindset to remember to shut off lights, close doors, etc. It’s amazing how frugal and efficient you can be when the money is no longer there to waste – you’ve made it a priority to put it elsewhere – where it will go muc