Put money in a bank account.
Not spend money.
Forget that you had the money in the first place. You can’t spend what you don’t remember you had in the first place.
When you get the desire to spend, figure out how long you can last with an inferior solution.Example: I have been meaning to buy a new toothbrush holder for four years. I make do, cleaning it frequently, and my laziness with spending for a new one has saved me the $5 of buying a new & better toothbrush holder.
When you must buy a product, find out ways to buy it for a lower price. Buying on a website: take five minutes and search for a 20% off coupon code, or find out when the site runs sales.
I buy my clothes on Black Friday, when my favorite dress clothes store runs 40% off sales. I also get giftcards for that store on my birthday, and that lowers the price further. I was going to get these clothes regardless, but why not spend less.
Consider if credit card rewards are for you. Some people use airline miles hacks to pay for their travel. I get 6% back on groceries on my credit card. I have a grocery store app that earns me about 3% back on my weekly purchases (and I shop at the cheapest grocery store.) When you combine these savings (97% retail price x 94% retail price = 91.18% retail price), my groceries are at least 9% cheaper than your groceries.
If you can do this on all your major life purchases, I can live life at 9% discount.
Or alternatively, my salary is a 9% pay raise over your salary, even though they are exactly the same.
Learn the tax code, and use it to save money. I fully fund my IRA, which saves me 15% of my money, plus the 100% I put into it.
I did some graduate classes, and used my work’s tuition reimbursement and the Lifetime Learning Credit, plus a 20% discount, plus my 1% credit card rewards back, to make the classes very affordable.
Did you know that the cost of last year’s tax preparation is tax-deductable? It probably cost you $50 or less, but that’s about $7 in taxes you save just by learning that one tip. Good return on your value, and creates good tax returns.
Make it hard to spend. I never carry cash to work. I often leave my card at home, unless I need gasoline or have a plan after work. Since I have no money on me, I can’t spend it.
If you have any bad habits, make it really hard to spend there. Stay away from the mall. De-link the bank account from your favorite website. Stop getting daily sales emails.
Save money by stocking up/shopping when your rational brain is working. If I were waiting until 7pm to find dinner, I used to go out and get dinner from a restaurant. It was easy to do when I was hungry and couldn’t think. It only cost a few dollars more. Now I have food for the week at home. A snowstorm could hit, I could spend $0, and still live happily.
Consider the value of how you purchase an item, and try to scale back to the next-best alternative. You’ll be surprised, but you will still survive. I used to have cable, and loved it. How could I survive without TV. We tried an experiment, and I love it more now that I don’t have cable. I had nearly a thousand dollars more a year, and I had better and more creative TV options. I felt like a pioneer, a pirate, and still had better entertainment.
At home, we have disagreements about what movie theater to go to. He loves the $10 movie theater with parking that costs money. I love the $6 movie theater with better seats. I love that it offers $4.50 movie tickets if you come before dinner time. Sure, there may be better ambiance at the $10 theater, whatever that means, but not for the same price that I could get two movies.
Time makes everything cheaper. I feel like we live in a world of deflation. That $4.50 movie can be seen for a $1 at Redbox, or free on Netflix. The thousand dollar computer from the ’90s costs $400 and works far better today. The TV boxed set of my favorite TV shoes is now on Netflix. An Apple iPhone 5c used to be a hot-ticket item, then it became the free-phone-with-upgrade. There will always be a better deal tomorrow with consumer products, and time will help you find a better deal. Don’t buy now for products you think you will rise in the future – the future’s offerings and prices will be better, almost guaranteed. Supply and demand will help prices drop.
My house got $80,000 cheaper from 2006 to 2011. My Beanie Babie collectible unicorn from 1998, once “valued”at $1,000 dollars, is now barely worth 50 cents. Cars, Apple products, clothes in thriftstores, Craigslist – there’s always an ability to get it cheaper if you have the time to wait.
Why buy a 1990s $400 VHS camcorder when you can buy a 2010’s HD-recording old-generation iPhone for cheaper and get the many Megapixels digital camera, the editing software, and calculator thrown in for free?
Stop chaisng now and current, and wait for the price to drop. You might get blessed with a newer and better and cheaper option if you wait.
Cancel all subscriptions, call all bill companies, and question every expense. It’s a fun experiment. From it, I learned that my internet is always going to be 20% to 30% off. My cable doesn’t exist any more, and I couldn’t be happier. My cheap magazine subscription ended. My phone is super-cheap, and on a data plan that I don’t exceed but yet people think is impossible.
There are subscriptions I keep – my exercise membership for one. But I value it because it is an intentional purchase, not just cluttered in with the other greedy grubbers who reached into my pocket. I love paying the $30 a month to have fun, be flexible, and grow strength. I know I get value for that money, and it isn’t crowded out by other less-fun expenses.
Save on your big purchases. Buying a $300,000 versus a $400,000 house saves you five years of payments, plus a ton of interest owed to the bank. And furniture needed to fill the house. I bought a house in the $100,000s, filled it with free furniture, and upgraded slowly on Craigslist. My mortgage is one-third what my co-worker’s mortgage is, and she can’t save money that goes to pay for her house.
Don’t buy expensive cars. Don’t buy mediumly-costly cars. Cars shouldn’t fill you with happy emotions; they should get you from Point A to Point B without costing too much. My coworker spends 2.5 times what I do on cars, and she doesn’t get paid 2.5 times as much so she’s losing money that could be spent elsewhere on her primary goals and dreams.
Set savings goals. If you set a goal and work toward it, you will usually exceed it. I know I usually exceed even my ambitious goals because I make it a fun game of reaching them. Also, make your goal visual, make it easy to chart your progress, and make it social online.
These are the tips I have to living a 35% savings rate, with nobody joking me for being a cheapskate and most people thinking I’m too generous and overspending (I give generously when it’s something of good value, and since I’m not overextended I have money available.)
I think their idea of me “overspending” comes from the fact that I’m not stressed before payday, or when an expense comes up I’m willing and happy to pony up my share.
I spend money on things that make me happy, that make my loved ones happy, that help strangers in need, and I save the rest of my salary. There’s a large portion of my salary I don’t need to spend to be happy.
Plus, savings becomes a game with its own rewards, and I love having fun with this game.