A savings routine is one of the hardest things to develop, especially since there’s constant temptation to spend money. Chances are you can’t walk into a store without stumbling on some amazing sale. And if your friends are big spenders or party animals, you might be flooded with invitations that require spending money.
One of the best things about saving money is there are so many ways to pinch pennies that don’t involve a drastic lifestyle change. Small adjustments you make here and there can save money, and the savings adds up. For example, if you stop eating out for lunch twice a week, you can possibly save $15 a week or $60 a month.
But as you come up with a plan to save more, it’s important to recognize savings habits that can end up costing you more.
Here are five habits that can keep you in the red.
Buying an Item, Just Because It’s on Sale
I’m guilty of this, and it’s a habit I’m still trying to break. I’m not a big shopper, but I do love a good deal. And when I’m able to get two or three times my money’s worth, it’s hard to walk away from a sale.
But buying something just because it’s on sale can derail your savings plan, especially if you buy items you don’t need or barely use. That’s money that could have gone toward another purchase—something you were actually in the market to buy. Or you could have put the cash toward beefing up your savings account.
There are times when you’ll have to shop, and if you’re going to spend money, a sale is definitely the way to go. Just make sure you don’t develop a mindset of thinking you have to shop whenever there’s some blowout sale. What helped reign in my spending was unsubscribing to retail emails. I couldn’t take advantage of sales I didn’t know about.
Opening a Store Credit Card to Get a Discount
Some retailers offer their own store charge account, and at checkout a cashier might ask if you’re interested in opening an account to get 10% or 20% off your purchase. This is tempting. But while opening a charge account saves money today, it doesn’t save money in the long run, especially if you carry a balance on the card for months. I’ve found that store charge card accounts have interest rates that are higher than the rate on major credit cards.
You’ll pay interest for every month you carry a balance. If you open a store charge card account to save on your purchase, yet you don’t pay off the balance in full, the amount you pay in interest can cancel out any savings you received at checkout.
Buying an Extended Warranty
If you’ve ever purchased electronics from stores like Best Buy, Walmart or HH Greg, you’ve probably been offered an extended warranty at checkout. The price of these warranties vary based on the value of the item. And with this extra coverage, the warranty company either fixes or replaces the item if it breaks within a certain amount of time—which saves you money because it’s an expense you don’t have to pay out-of-pocket.
An extended warranty isn’t free. For high-ticket items, you can argue that the cost of a warranty is worth the peace of mind. But what you don’t realize is that the purchase may automatically include an extended warranty for free. If you purchase the item with a credit card, there’s a pretty good chance that your credit card issuer offers a free one-year extended warranty as a cardmember perk. So if the item breaks after the manufacturer’s warranty period end, you may receive an additional year of coverage through your credit card provider.
Buying in Bulk
If you do the math, buying certain items in bulk saves money. But you’ll only save money if you actually use all of the merchandise. I know people who buy food items in bulk because they can get more for their money. But at the same time, some of these people also complain of throwing away large amounts of their bulk food because it spoiled before they were able to consume it all. The point is simple: if you’re going to buy in bulk, only buy what you need, or else you’ll end up wasting your hard-earned cash.
Limiting Earnings With a Regular Savings Account
If you have a savings account and you regularly deposit money into this account, give yourself a pat on the back. You’re on the right track and you’re doing more than most people. But unfortunately, you might be shortchanging yourself if a regular saving account is your only savings account. In this case, your savings account might cost more than what you’re getting in return.
Depending on where you bank, your financial institution may charge a monthly maintenance fee for the privilege of having a savings account, which can be as much as $8 or $10 a month. But when you compare how much you’re paying to have a savings account with the amount of interest the account earns, there may be no comparison. Regular savings accounts have pitiful interest rates, so you’re probably earning pennies off the account.
There’s a better way to save. Take advantage of high-yield online savings accounts which pay higher interest rates, and in most cases, you can open an account with no minimum balance and zero monthly fees. You can maximize your return without worrying about fees eating into your balance.
Just about everybody wishes to save more. And like so many people, you may adjust your spending habits to make this happen. But while your mindset is on the right track, you have to evaluate how you’re saving and ensure you’re moving forward and not backwards.
Cutting Back & Making More Money
As you are working through your budget, you may notice that you are spending more than you are bringing in (this is not uncommon!) and need to make some changes for things to even out. In order to do that, you have two options:
- Cut back on your expenses
- Make more money
The quickest way to remedy your situation is to do a combination of the two. When we are no longer tied to our debt and letting our money control us, we are able to take charge of our finances and decide what is best for us rather than feeling out of control and reactive to our financial situation. With that in mind, here are some areas to consider that may help you:
Making More Money
Know Where you Are Today – Before starting out on any endeavor, it’s important to understand where you are today. I suggest using Personal Capital to get a holistic view of your financial picture. It’s free and easy to use. It can be accessed via your desktop, tablet or mobile device and will provide insight into where you are spending today and where you might be able to cut back.
Blogging – This is one of the first questions I always get asked so I’m including this one first. How can I earn extra income with a blog? As you can probably imagine, that isn’t a question I can answer in just a few sentences! One of the ways to earn extra income through a blog is from affiliate marketing. This can be a tricky topic if you don’t know what you are doing. A fellow personal finance blogger has put together a course called Making Sense of Affiliate Marketing that will teach you how to earn extra income from affiliate marketing. Michelle teaches you the exact steps she has taken to earn $100,000/mo (yes per month) from her blog. I have went through this course myself and loved it, I highly recommend it!
Bring in More Money – In some instances, you may not be able to cut back anymore so in addition to cutting back, earning extra income can help you to bridge the gap in your income. Sites like Flexjobs and Moonlighting let you earn extra or full time income from home. I particularly like Flexjobs (more detail in my Flexjobs review) and have used their services in the past when I was looking for a IT Consulting job where I could work from home. The service is exactly as described as they are able to aggregate legitimate work from home professional positions in one place. You can even set up alerts to be notified when positions you are interested in become available.
Start a Side Gig – Do you have a hobby you enjoy? Have you ever thought of making income from it? The opportunities for having a side gig (something you work on in your free time) and earning income are endless these days! I wrote an article on how I’m earning multiple streams of income. What do you enjoy doing that can help you bring in extra income?
Survey Sites – Depending on the survey site, you can get paid cash and or have the opportunity to try free products. I have done many of these over the years and always enjoyed earning the extra money. I’ve also been able to try new beauty products, food items and many other things I wouldn’t normally try, for free! Note: you should never pay for information for these types of sites. Here are a few I recommend: American Consumer Opinion Panel, InboxDollars (ios), Swagbucks, Harris Poll, Epoll Market Research, VIP Voice, Your Surveys, Nielsen Digital Voice, Earning Station, Vindale Research, Panda Research
Ebates – Using Ebates can help you earn cash back. By shopping through Ebates at your favorite stores, you earn cash back on your purchases. Ebates will pay you via check or Paypal. Check it out, it’s a great way to earn extra money for things you are already buying (just make sure you really need what you are buying!).
Rent out Your Space – Have an extra room to rent out & want to earn some extra cash? Sites like Homestay.com connect guests to local hosts in over 150 countries. Hosts offer their guests the chance to live and breathe the local culture, to make friends as well as memories and to explore destinations in a truly authentic way. Homestay hosts can enjoy the fulfillment of being a part of their guest’s new adventures and make some money by renting out their extra space! Airbnb is another great site to use to find places to stay or rent your space out. If you use this link to sign up, we both get a $35 travel credit! And, you can earn another $75 in travel credit when you welcome your first guest!
Consolidate when it makes sense – I’m not always a big fan of consolidating loans but sometimes it can take the pressure off you when you have a lot of payments. (Of course – the trick to that is to stop the behavior that caused you to get all the payments in the first place!) If you are looking to consolidate your debt, I recommend Lending Club. Lending Club is a peer-to-peer lender which means you are able to bypass a traditional bank and get connected with investors who fund your loan and earn monthly returns. Normal credit checks still apply and Lending Club offers unsecured personal loans of up to $35,000 to borrowers with good-to-excellent credit at very competitive rates. I have used Lending Club twice for loans and have been happy with the products and services both times. I highly recommend Lending Club if you are looking for an alternative to a traditional bank.
Cell Phone – change your plan, remove unused lines or ask for a corporate discount. Don’t work at a corporation? Sprint gives a discount for being a credit union member. I personally like Sprint because of the unlimited data, but you may not need that. If not, try Republic Wireless. I know a lot of people who use Republic Wireless and are really happy with the service and the low prices! If your not familiar with the company, Republic Wireless is an innovative new mobile provider, spearheading a wireless freedom movement to return value and control of the smartphone experience to its members. Leveraging the power of the Internet and an engaged community of users, Republic Wireless offers unlimited talk, text, & data starting as low as $5 per month, with no contract required.
Cut the Cable – Years ago I decided to get rid of cable and was able to stream content through my Roku device. I still love my Roku as an alternative to cable and highly recommend it to anyone who is interested in saving money. I wrote a detailed guide on how to get rid of cable and use a Roku device. In addition to my Roku device (where I stream Netflix & Amazon Prime) I also purchased a $6 antenna to watch local channels live. It’s a great set up and has saved me over $1,200 a year!
Find Inexpensive Fun – Looking for a night out but don’t want to spend a lot of money? Yelp Deals, Living Social & Groupon all offer inexpensive ways to go out and have fun without spending a lot of money.
Save Money on Shaving – Shaving is a fact of life and unfortunately buying expensive shaving cream and razors can add up and quick. Years ago I read a tip to use conditioner in the place of shaving cream. I’ve been doing that for many years and it is amazing. I buy a bottle of conditioner from the dollar store and I’m set with shaving cream for quite awhile! Additionally, I discovered a site called Dorco to order razors in bulk at an extremely discounted price. I love this site and use them anytime I need to buy razors. They have mens and women’s razors & razor sets and you can’t beat the price & the quality! Try the Dorco Frugal Gal’s pack and let me know what you think!
Save Money Using Zaycon Foods to Buy Meat – If you’ve never heard of Zaycon Foods, let me tell you about this amazing company. I’ve been using them for the past 4 years to buy my meat in bulk and purchasing this way is a great way to save! The owners of this company have taken the middle man out of the meat buying process and getting food from the farm right to consumers like you and me. They’ve been around since 2009 and the service has been so popular, it’s grown tremendously over the past few years. The way it works is you go online, set up an account, place your order and on the day of your Zaycon sales event, you drive to the location and pick up your food. It’s simple and easy!