How to Save Money
Save money like the pros and really plump up your wallet.
How to Save Money
I come across lots of tips for saving money. Some of them are brilliant, but some are downright ridiculous. The worst suggestions I’ve read lately are to raise your own chickens, grow a mushroom log under the kitchen sink, and stop eating a couple days a week! In this article I’ll share my favorite, practical money-saving tips for ordinary folks. None of them require you to build a chicken coop, get closer to fungus spores than you really want to, or starve yourself on a weekly basis.
I like to think about personal finances from a business perspective. We can get some industrial-strength tips about money management from the big boys and girls at large companies. After all, corporate finance is really just personal finance on steroids. There are five broad tactics I’ll discuss to help you save money at home.
Negotiate to Save Money
The first tactic for saving money is to get comfortable with negotiation. It doesn’t matter whether it’s your gym, hair salon, landlord, or mortgage lender. Make “ask, ask, ask” your new mantra for any bill or purchase that you think could be up for discussion. However, do some homework first and be sure to speak to the right person—someone like a store manager or owner who has the authority to lower a price. Let them know in calm, clear language that you’re cutting back your expenses. If you know their competitor’s prices are lower, mention it. If you’ve looked at renting less expensive apartments that are bigger than yours, give your landlord the specifics. If you’re having trouble meeting your mortgage obligation, let the lender know your potential risk of defaulting on the loan. You get my point; bring the reality of the situation to the other party. Then ask if they have a less expensive payment option or would be willing to work with you to keep your business, instead of losing it.
If you’re buying a big ticket item like a new washer and dryer, and can pay cash, ask if they’d consider giving you a cash discount. That works best at smaller mom and pop stores as opposed to the huge national “big box” retailers. Most stores pay anywhere from two to five percent in transaction fees when you pay with a credit card or an in-store financing offer. Retailers who accept credit cards are generally not supposed to advertise that they will discount the price if you don’t pay with plastic. But they aren’t obligated to turn down any offer that a customer puts on the table. You never know what the other side may be willing to do for you in our current economy.
Lower Your Taxes to Save Money
Another big way to save money is to lower your taxes. For some, taxes are the biggest bite taken out of their income. Take every deduction, credit, and exclusion that you can to legally lower your tax liability or to increase your refund each year. If your income has been reduced, you may qualify for tax benefits that are unfamiliar to you. Do some research to see if you qualify for brand new benefits such as the First-Time Homebuyer Tax Credit, the Recovery Rebate Credit, or the exclusion for forgiven mortgage debt. If you want to learn more, Money Girl show 113 was about the homebuyer tax credit and you can also do a search at irs.gov for new tax law changes. Episode 159 is devoted to ways to reduce your taxes, so head on over there for more.
Manage Fixed Costs to Save Money
The next tactic that businesses always use to save money is to manage their fixed costs. Fixed costs are expenses that don’t change much, or at all, from month to month. They might include yourhousing, utilities, insurance, groceries, or car payments, for example. These are the toughest expenses to eliminate, but watch them like a hawk to ensure that they don’t increase. Buy select groceries in bulk when it saves you money and keep your eyes peeled for sales and coupons. Shop insurance companies each year for more competitive rates—insurance.com is a great resource for this. Determine if you can bundle services such as phone, cable, or Internet for a lower bill. Or consider going totally cellular and eliminating a telephone land line altogether. Billshrink.com is a free savings tool that finds the best deals on expenses such as cell phone plans and credit cards.
Make More Interest
Smart companies and people know that savings and investments, large or small, are precious resources. Be sure that money you’ve accumulated is parked in the best spot. If it’s not earning interest (or is earning very little) move it, pronto! Look for a high-yield savings account or money market deposit account at an FDIC-insured institution. Online banks have very competitive interest rates and may even offer a new account bonus.
Pay Less Interest & Fewer Fees
And on the flip side, eliminate all interest payments or service fees that you can by paying bills on time and declaring war against the accumulation of credit card debt. Interest saved is interest earned. If you’re getting a tax refund, a wise way to use it is to pay down high-interest debt. You can also pay less interest by maintaining a high credit rating. An impressive credit score qualifies you for lower interest rates on credit cards and many types of loans.
Also, take a look at any bank fees you’re paying. Here are five banking expenses that you should be able to eliminate:
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ATM Fees. I recommend never using ATMs unless you can do it for free. Often there’s no charge to use your own bank’s ATM. There are premium checking accounts that credit you back all or a certain number of ATM charges per month as an extra benefit.
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Checks. Many banks give you free checks. And even better, most offer free online bill pay service, so you can reduce other expenses associated with paying bills such as printer ink, envelopes, and stamps. For more about online bill pay and banking you can read or listen to my episode 120.
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Overdraft Fees. Many banks offer overdraft protection for your checking account if you also have a second account, such as a savings, credit card, or line of credit. I don’t really recommend opting in for overdraft protection instead of setting up a linked account, and you can read more about that in my Quick Tip on overdrafts.
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Statement Fees. If your bank charges for paper statements, opt for an e-statement that’s free of charge and more earth friendly.
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Transaction Fees. If your bank charges fees when you exceed a certain number of checks, withdrawals, or deposits for your checking account, consider changing banks.
For more tips on saving money please see my episode on shrinking your bills.
Administrative
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Hundred Dollar Bill image courtesy of Shutterstock
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.
