3 Easy Ways to Save Money

10 minuti di lettura
4 gen 2022

Do you want to get smarter with money in 2022? Here are 3 simple ways to cut back on unnecessary spending and build your wealth.

It’s safe to say that most of us have spent some time thinking about the most effective ways to handle our money and savings.

Many may think that saving money is hard, and this is partly true.

Putting aside cash each month into a saving account that you are not allowed to use is not easy and even counter-intuitive to what society pressures us to do.

Wherever you go, marketers are lurking around trying their best to make you spend money on their products and services. Even when you are on social media, you are constantly flooded with ads that are likely tempting you to spend more money.

As hard as it may be, getting on top of your finances starts with changing your spending habits. And sure, cutting out that $5 latte could be a good place to start. 🙂

But besides this, there are some other, relatively easy, steps you could follow to increase your savings rate significantly.

Follow a budget

Following a budget is one of the simplest money management tactics you can use. All you have to do is to create a budget list to follow your recurring expenses that pop up during the month, and then compare your total spending to your total earnings.

If you're not left with room for savings, you simply go back to your expense categories and decide what you absolutely need and what you can do without.

Although it might look like a no-brainer, you may not realize that some relatively small expenses are actually the biggest contributors to unwise spending habits.

Here are several expense categories you can easily cut back on:

Impulse buys

From department to grocery stores, retailers have some sneaky ways of tricking us into spending money mindlessly.

The most obvious one probably remains the checkout aisle, loaded with tempting (and often unhealthy) products like candy bars, sugary drinks or that cookie that you now crave although you’ve literally just ate. So try skipping the candy and soda, never go grocery shopping while hungry, and your wallet will thank you.

Or, even better, plan all your meals for the week in advance and make a grocery list before going to the store. This way, you should be able to avoid the most unnecessary impulse buys and stick to your budget.

Did you know?

 

  • Half of Americans started spending more on comfort purchases to cope with the Covid-19 pandemic, a recent survey conducted by The Balance showed. Many of which were emotional spending as 56% said they made at least one comfort purchase over the course of the pandemic.
  • For 53% of those, they were food-related comfort purchase, which included groceries, subscription food services, or restaurants.
  • Other popular comfort purchases included alcohol, cleaning supplies, pet supplies, and streaming services.

Another way to avoid impulse purchases is to follow a simple rule, which goes like this: the next time you're tempted to buy something out of the blue, try waiting 24 hours before making that transaction.

Chances are you will realize you don’t actually need that item and, once that happens, you can put aside the money you would've otherwise spent and feel good about yourself.

Buying lunch every day

Of course, you probably heard this advice before: if you want to save money stop eating out.

And let’s be honest, we’ve all tried, but many of us still find it hard to stick to it. And it doesn’t help that food delivery apps let you place an order with the touch of a finger.

But maybe some actual numbers will help you realize how much you can save if you choose to prepare food at home – even if it’s just a few days a week.

  • Each year, millennials spend around $2,240 at the grocery store and $1,670 dinning out, according to a survey commissioned by food producer Sweet Earth Foods.
  • The average American household spends about $3,000 a year dining out, according to the Bureau of Labor Statistics.

Imagine you go out for lunch Monday through Friday for a year, spending $10 a meal, which might look like a pretty good deal. Well, each year, that “cheap” lunch will ends up costing you as much as $2,500.

In short, while it’s more than fine to go out for lunch or dinner from time to time, dining out regularly only for the sake of convenience can make you waste some serious cash on food you could have cooked at home.

So start preparing some of your meals at home and easily save several hundreds of dollars or euros each year.

Unused subscriptions

Finally, many of us have a habit of signing up for that 30-day free trial and then forgetting to cancel it.

Also, are you really getting your money’s worth from the gym membership you got at the beginning of the year?

To optimize your budget, it might be a good idea to look through your last couple of credit card statements to see what exactly you’re paying for in terms of subscriptions to streaming services, software or magazines.

Then ask yourself which you haven’t used in a while that you could get rid of, and cancel them on the spot!

Done? You might have just saved yourself a couple of hundred dollars or euros a year.

To round things up, if your goal is to get smarter with savings, start with these relatively easy financial to-do’s to maximize your money:

  • Avoid impulse buying by applying a 24-hour rule to see if you really need an item you’re so tempted to buy.
  • Cut back on eating out (or takeaway) by doing it only on special occasions and not just out of convenience.
  • Cancel unused subscriptions by regularly checking your credit card statements.

Of course, there are many more expenses you could cut out from your budget. But if you start by adopting these 3 money-saving tricks, you might end up with a significant amount of cash you can put aside for extra saving or investing.

Automate your savings

As we mentioned above, saving money is by no means an easy thing to do. This explains why so many workers are behind in building their retirement savings and why around 40% of Americans have less than $400 on hand for emergencies.

And why a survey from 2020 showed that among millennials who plan to buy a home, 63% have no money saved for a down payment.

So if you want to avoid that pitfall and make 2022 the year when you start improving on the savings front, you can stick to one simple move: put your savings on autopilot.

How can I automate my savings?

One way to automate your savings is to set up an automatic transfer from your checking account to your savings account so that money from each paycheck you get lands in the savings account.

For example, if you set up an automatic transfer for $400 a month, you'll end up with almost $5,000 in savings at the end of each year.

Besides, by putting your savings on autopilot, you will have less cash to spend on those needless buys. 🙃

When you have an extra $200 left over at the end of the month, it's easy to be tempted to spend it on something fun. But if that money has already been transferred automatically to your savings, there's zero temptation.

However, if you decide to keep all your savings in cash in a savings account, there’s one thing you should be aware of: the cost of inflation.

(Read our SPOTLIGHT to understand what inflation feels like in real life).

What inflation means for your cash savings

Unless you’ve been living under a rock, you probably have heard that inflation has been rising and is here to stay for some time.

In fact, thanks to Covid, Central Banks, and our global economic situation, inflation has been a big problem for consumers, eating away a large chunk out of the purchasing power of their money.

But what about the money you’re keeping in your savings account, is it safe?

Not from inflation.

Let’s say you put your money in a savings account that pays you interest at 2%. This means that, a year later, you’ll have 2% more money.

But what if inflation is more than 2%? Well, in that case, although you’ve got more money, it can buy less than the amount that you started with.

That’s why it’s important to pay close attention to the inflation rate when you’re thinking about where to put your savings.

So if you want to make money on your savings and investment, you might want to find an asset that can protect your wealth from inflation.

Back up your savings with an inflation-proof asset

When it comes to savings and protecting your wealth, it’s always good to spread your money around and back it up with more stable assets such as physical gold that is traditionally considered a safe haven.

Did you know?

 

A safe haven is an asset that is expected to retain its value (or even increase in value) during times of inflation and market turbulence.

The price of gold is measured with currencies. That’s why, when rising inflation drives up prices and lowers the purchasing power of cash, gold often sees its price rise along with everything else.

For this reason, gold has historically been a safe haven of choice when a currency starts losing its value.

Here’s an example:

Let’s say you have $35 and an ounce of gold. 

In the early 1960s, they would both buy you a well-tailored suit. 

Today, with a high-end suit now priced around $1,200, your $35 could maybe get you... a good pair of socks? But with your ounce of gold now priced at $1,800, you could still easily afford a nice suit with quite a bit of spare change.

In short, while an ounce of gold can still buy you a well-tailored suit, the purchasing power of the U.S. dollar has fallen significantly over time, mostly due to inflation and massive money printing. And this loss in value is also true for the money you might have kept in the bank during that period.

What’s the bottom line?

While for many people saving money might not be an easy task, there’re a few tricks you can adopt to get better with your finances.

One of the easiest ways to do it is to cut back on some of the most unnecessary expenses, such as unused online subscriptions or eating out too often (of course, it all depends on your personal priorities and lifestyle).

Once you’ve cut down on your expenses, you will have some spare cash to put aside.

But, if you decide to keep all your savings in cash tucked away in a savings account, beware that a significant chunk of it will most likely be taken away by inflation.

That’s why it might be a good idea to spread your money around (aka diversify) and keep some or most of these newfound savings in physical gold and precious metals.