The average savings rate in the United States is quite anemic. The numbers from 2016 show that the current personal savings rate is around 5.5 percent of income. This is well down from the record high of 17 percent achieved back in May 1975. Additionally, wages have been pretty much stagnant for the past few decades, barely keeping up with inflation. Many people think there is no way that they can save money in this environment. There are, however, steps that you can take to save more money.
Cut Out The Latte
A recommendation for a quick cutting of luxury expenses is a common refrain among personal finance gurus. A daily $5 latte is one example of an unnecessary expense that many people can cut out of their daily lives. Additionally, bringing your lunch to work rather than eating out can cut out even more. If you can save just $25 a week on lattes and/or lunch, you’ll have slightly more than $1,000 in the bank after a year. This is the amount that most financial gurus recommend having on hand for a starter emergency fund.
Look At Cable
Bruce Springsteen came out with a song several years ago title “57 Channels (And Nothin’ On).” How many of us have cable TV and mindlessly watch what’s supposed to pass for entertainment. There are plenty of channels with nothing that we really want to watch. The average cable bill in the US is now $99 a month. It’s possible to opt for a streaming service like Netflix or Sling TV and cut that down to $20 or less. $80 a month in savings equals out to nearly $1,000 on an annual basis.
Drive Your Car A Bit Longer
One of the biggest expenses that American tend to have is related to transportation. Getting a gently used vehicle can be a great way to save quite a bit on depreciation because a new car loses a great deal of its value the minute it’s driven off the lot. Buying a serviceable used car that’s a couple of years old can cut 20 percent or more off of the purchase price. Additionally, driving a vehicle as long as it’s roadworthy cuts down on the interest you’ll need to pay over the long haul. If you can pay off your vehicle and then enjoy a few years without a payment, you could even get to the point where you’re paying cash, thereby avoiding the need for a loan and interest at all.
Look At Your Insurance
Insurance premiums are another major expense. These costs come out of our checking accounts each and every month. If you’ve been with your insurance company for some time, there is the chance that another carrier could offer you a lower premium. The savings is not likely to be in the hundreds of dollars each month, but even $20 a month would be $240 more in your pocket over the course of a year. It pays to call around and get a few quotes to see if you can benefit.
The biggest expense that most Americans have each month is the cost of lodging. The average American spends more than $10,000 each year on a mortgage or rent. Bigger houses also cost more in utilities and property taxes. Cutting this expense by just a couple of hundred each month could easily allow you to save $2,400 a year or more. Also, getting a roommate or renting out a room can put some of the cash that you’re putting toward housing back into your pocket.
When most people look at their budgets each month, they think there’s little that they can save. These five simple tips could theoretically add up to $5,000 or more in cost savings over the course of a year. If you’ve not already implemented them, these steps could greatly improve your financial health without really hurting your standard of living and overall quality of life.