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Hello again my One Millennial World people!
What if you could stop living paycheck to paycheck, and start saving money each month? I am going to show you in 5 easy steps how to cut expenses and save money without getting a second job or working overtime.
I am going to show you that it is possible to stop the endless cycle of living paycheck to paycheck, putting everyday expenses on credit cards and start saving in just a few simple steps that should take no more 20 minutes out of your day to accomplish.
A staggering percent of people (especially, us Millennials) do not have a savings account, and if we do, there is less than a $1000 in it. This means people are spending more than they make and living beyond on there means. It also means an unexpected bill or emergency such a car repair or an urgent care visit for an illness or injury could completely wipe out any savings accumulated and/or send people into further debt if the bill is put on a credit card.
This is going to be your first goal. Your first goal is to put away $1000 into a savings account!
These are steps that I have taken in my personal finances to cut expenses, eliminate debt and save money each month so that I can find financial security and one day, financial independence.
Step 1: Open a High-Yield Interest Savings Account.
Even if it is only $10 or $20 initial deposit. This is the first major step you need to take to start saving money.
I am in love with Ally Bank. I opened a savings account with them in 2012, after I became dissatisfied with the interest rate of my savings at a major bank. This, I have learned, turned out to be an excellent decision. My Ally savings account averages 0.87%-1.00% interest rate. It is currently at 1.00%. While, this doesn’t beat inflation, it definitely puts my savings to work and there have been months where I have received over $30 in interest in a single month. Over the months and years, this interest money adds up.
Here are other High-Yield Interest Savings accounts to consider as well:
• Synchrony, 1.05% APY. Plus: Large ATM access.
• GS Bank, 1.05% APY. Plus: Top-rated apps.
• Barclays, 1.00% APY.
• Alliant Credit Union, 1.00% APY. Plus: Credit Unions can be great alternatives to banks.
• Discover Bank, 0.95% APY.
• 360 Savings by Capital One, 0.75% APY.
Here’s why I love Ally the best:
It is an online bank. No brick-and-mortar buildings, which cuts their overhead expenses.
Great Apps for Android, iPhone, and Windows phones.
Great Customer Service with easy online chat.
Strong, consistent APY.
NEW!! Interest Checking account with no fees, no minimums, as well as overdraft protection!
Step 2: Automate your savings bi-weekly/monthly.
Depending on how you get paid; whether weekly, bi-weekly, or monthly, set up an automatic, recurring transfer of money from your checking account (or wherever your paychecks are deposited to) to your savings account (from step 1). Do this first, before you start paying bills and other daily expenses. That’s the key! PAY YOURSELF FIRST!! It could be as little as $5 to $10 to start with.
For example, saving $20 every other week for a year would put $520 in your savings account by the end of the year (taking into account that there should be 26 bi-weekly paychecks in a year). Not a bad start, but add in the interest from your high-yield interest savings account and that’s a approx. total of $542.83 (with 1.00% APY over 12 months). Now you are over half way to your goal of saving $1000, and we are only on step 2!
Let me tell you, this starts to get infectious (in the good way!). Once you start saving little and see how it grows quickly and easily, you are going to want to save more and more money.
Step 3: Review your bills.
There are several ways to decrease your monthly bills. Here are I few that I have done myself to save money.
1. Call your Cable/TV/Internet provider and (ask politely!) to lower your monthly bill.
I just did this for the first actually a few months ago (I should have done this a long time ago) and lowered my bill by $15/month. My sister also did this as well and now she has basic cable and internet for under $40/month!! Key point: It never hurts to ask. They want to keep you as a customer!
**Side Note: I don’t have cable or satellite TV. Why? It’s too expensive! See my post on how much I save monthly by cutting cable and how I still entertain myself at home for much less.**
2. Call your banks and credit cards to get fees waived.
I recently had a very expensive fee week. I hate paying fees with a passion, by the way! #Stoptakingmymoney! March somehow turned into “How much can Lara pay in fees this month?” No joke. First off, my now ex-bank tried charging me a $32 overdraft fee, even though my checking account was not overdrawn. I called them and politely asked if it could be waived and they said… YES! 5 minutes or less, $32 back in my pocket. Secondly, I accidentally paid my credit card bill a day late. Oops!! $27 late fee added. Everybody, makes mistakes. It happens. In my defense, the due date was on a Sunday. In addition, this credit card charges a $45 annual fee, but I have gotten it waived every single year by just calling them and asking for it to be waived (Seriously, every year)! So, I asked if both could be waived and they said… SURE! I just saved $72 in a 5-minute phone call! In all, I saved $104 in fees in one month alone and it only took 10 minutes to do!
**Some companies will only do this once a year for you. So try to avoid getting fees in the first place (obviously), but everyone makes mistakes. Remember to be polite and it never hurts to ask. **
3. This can also work on lowering credit card interest rates as well. Interest rate of credit card debt can be a real killer. If you are paying high interest rate of 13% or more, it can make it impossible to get out debt in the first place because so much of your money is actually going to interest. If you have $10k in credit card debt at 18% APR, you can expect to pay $1,800 per year in interest alone! Ouch!
If the companies aren’t willing to lower your interest rate to save you money, and you have a large amount of debt to pay off such as $10k or more, sometimes a low-interest personal loan can get you out of debt quicker and save you money. LendingTree is a good place to start looking for a personal loan.
4. Auto Insurance. It’s very easy to shop around online for car insurance nowadays, although you might be bombarded with calls and emails from companies looking to get your business. However, I find bundling to be the real saver here. I have Auto, Home and Valuables bundled together. I actually don’t pay anything extra for the valuables policy, but I do get an extra discount for having it (the discount is more than the premium of the valuables policy). So, it’s kind of like I am being paid to have it.
5. Gym Memberships. I opened my gym membership in 2008. I was good about going to the gym regularly at first, but once I started working as a nurse, my attendance started becoming more irregular and infrequent. I kept the membership over the years because I thought I would find the time and motivation to increase my attendance, but let’s be honest, this hasn’t happened. Not to mention, I live in Colorado, and I would much rather go hiking than go to a smelly gym. I was paying around $33/month, which amounts to almost $400/year. I figured this was a waste of money since I was only going maybe 1-2 times a month. So, I finally cancelled my membership.
In addition, a few new gyms have opened up in my area only charge $10/month. Plus, there are a few recreation centers that charge daily drop-in rates as low as $3.50/day- no membership required.
So, even if you attend a gym on a regular basis, it might be a good idea to shop around for prices at other gyms, or look into recreation centers. Recreation centers can also have a large range of adult and kid-friendly activities and classes such as swimming, dancing, arts & crafts, etc.
Step 4: Download and Utilize These Free Apps.
There are some great apps out there to save you money. I have tried out several, because I am always on the hunt for ways to save money, even if it’s just a few dollars. Here are the ones I think are easiest to use with the great savings potential (but obviously, not a comprehensive list).
Mint by Intuit. This is my favorite app in the whole wide world. It’s an easy, secure budgeting app/website that you can link all your financial accounts to (banks, credits cards, loans, investments, etc.) It gives you a great snapshot of your entire financial picture and also gives recommendations on how to save money, eliminate debt, etc. This app helped me pay off $35,000 in student loan debt in 2 years!
Personal Capital. “The Modern Way to Track & Manage Your Net Worth”. Another great financial snapshot app. I just started using it, but it comes highly recommended by other personal finance champions.
Acorns App. New interesting concept. This app automatically invests spare change from your checking account with an approx. $12/year fee.
Gas Buddy. Free app lets you find the cheapest gas prices near you. There’s is also the potential to make money each week just by signing up and reporting gas prices in your area.
Walmart App. My aunt told me about this app. It is the easiest app ever. All you have to do is download the app, scan your Walmart receipt barcode within a few days of purchase and wait for an email saying you got money back. It compares local prices for the items you purchased, and if another store had a cheaper price, Walmart will match it and give you the money back. I don’t get money back every time, but majority of the time I do. No coupons to clip, easy to use app!
Ibotta App. “Better than a Coupon”. Allows you to find rebates and promo codes in order to save and get cash back when you shop.
Step 5: Take advantage of any 401k match your employer offers.
This is free money! Yes, you have to put in your own money to get the match, but it’s still practically free money that will go a long way for your future and retirement, so take it. Obviously, a 401k is a retirement account and not accessible for withdraw (without penalties) until retirement age. However, I cannot stress enough how important it is to start saving for retirement as early as possible. The earlier you start saving for retirement means your contributions have longer to grow and this growth could potentially lead to hundreds of thousands of dollars more by retirement age. I will devote another blog post entirely to this point in the future. Right now, I want you to utilize all the money being offered to you by your employer, because you need it, you deserve it, and you already work hard for it. So, if your employer has a 3% match, make sure you are contributing 3% every paycheck.
**Side Note- I didn’t start saving for retirement until I was 25. I wish I had started saving earlier. I was afraid it was going to be hard or difficult to manage, but it has not been. There are many retirement options out there. Check out this post where I discuss how I invest my money for the future and why it is important to start as soon as possible.**
Millennials are falling way short on saving money and living within their means. This recent article from CNBC, explains how 67% of us have less than $1000 in savings.
This is devastating!
But, it doesn’t have to be. By implementing theses 5 easy steps, and only taking a few minutes each day you can learn how to budget, cut expenses and start save money!
Next Goal: $1000 is good…$5000 is better. There are many more ways and ideas to come and how to save more money! Stay tuned.
Thanks for reading!