One of the largest challenges our members face is how to free up some room in their monthly budget. The recommended percentage of your net income that should be going to savings is 10-15%. Advice from financial experts to make this happen can range from giving up your daily Starbucks coffee to selling your car and taking public transportation. Many times this type of advice is simply not realistic for the average person. So how can you make a significant dent in your expenses without making extravagant compromises? Here are 5 tips for saving money in your budget that show results.
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Refinance or Consolidate Debt
How many loans and credit cards do you have in your name? You could be paying much higher interest rates than necessary, and when you add them all together it adds up fast. Look into refinancing your auto loan at a lower rate. You can get great deals because financial institutions want your business. Many credit unions even waive any type of fee that comes with refinancing, making it easier than ever to lower interest rates and knock dollars off of your monthly loan payment.
If you just graduated from college, consolidating your student loans will help make repayment much more manageable and can help you lock in a lower interest rate. Instead of paying five different private or public loan providers each month, you will be paying one company at a discounted rate.
Have you been letting a large purchase sit on your credit card for a while? Every month you look the other way the interest will accumulate and your balance will grow. Banks and credit unions are always running balance transfer offers on credit cards, and the rate is sometimes 0% for a specific period of time! Make a plan to transfer balances from high interest credit cards and actually make a plan to pay off the balance within the promotional time period.
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Shop around for Insurance
If it’s been over a year since you’ve gotten quotes for home, renter’s or car insurance, it’s time to shop around. Overall rates may have gone down or your situation may have changed and you could be eligible for greater discounts. It doesn’t cost a thing to get a quote from these companies, and often they are able to beat your current rate for the same coverage.
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Create Energy Saving Habits
No one enjoys opening up their electric bill to a nasty surprise after a summer heat wave. But the truth is that you are probably eating up unnecessary energy even when the weather is beautiful.
Have you replaced your lightbulbs with LEDs? Have you installed a programmable thermostat? Do you use power strips or unplug appliances to combat phantom charges? Have you insulated your hot water heater or pipes? Do you turn the faucet off while brushing your teeth? If you haven’t tried any of these changes to your energy habits, then you’re missing out. The cost of LEDs, programmable thermostats, and insulation will pay for themselves, and once they do you’ll be left with significant cost savings on your utility bills each month.
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Know when to Save and when to Splurge
If your daily coffee makes you happy, then don’t get rid of it! You could easily buy Starbucks coffee in bulk online and then make it at home every day. The trick to saving money is not to deprive yourself of the experiences in life that make you truly happy. Research proves that people are happier when they spend money of experiences rather than things. Everything in moderation, otherwise your new spending habits will not last and you’ll go back to your old ways or end up bringing on unnecessary purchases.
If you love food, cook at home and/or buy generic brands. If you love working out, cancel the gym membership and do you work out at home or outside. If you love watching tv, cancel your cable but keep streaming services like Netflix or Hulu. There is always a way to keep every day luxuries in your life without spending more than you need to.
If you’re a shopoholic, learn to avoid temptation. Cancel your email subscriptions to retailers. If you don’t see that they are having a sale, then you won’t be tempted to buy something you don’t need. And don’t visit the mall or shop online when you’re bored!
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Downsize your Home
This is the most difficult tip on the list, and could be considered an extravagant compromise, but it will reap the most reward. Many people are living in homes that are larger than they truly need. If you’re up for downsizing your living area and becoming more minimalistic, then selling your home could be your best option. Cut out that extra bedroom or that extra 500-1,000 square feet, and not only will you be saving on your monthly mortgage payments, but also your monthly utility bills. You can sell excess furniture and the bonus is that you have less to clean!
Creating more room in your monthly budget for your savings goals is definitely attainable without depriving yourself of the things in life that make you happy. It’s all about knowing where your money goes each month and being able to cut back on the largest expenses like debt. If you follow these five tips, then you can free up space in your budget to save the recommended amount or above. That means more money for unexpected expenses, retirement, college, or even that vacation you’ve always been dreaming of.
If you think that refinancing your auto loan may be one of the best options for you to save money, learn how White Rose Credit Union helps our members save money while refinancing. Get a quote for your auto loan refinance today!
