EFFECTIVE Ways to Save Money: The Ultimate Guide in 2020

A dollar saved is a dollar earned.

How to save thousands of dollars a year?

An average US household spends about $78,635 a year on things like:

  • food
  • health care
  • transportation
  • leisure
  • home expenses

There are many ways to save money!

If you landed on this article looking for ways to save money, you’re already on the right track. It takes some effort, sure, but it works.

With a little planning and some changes in habits, you can cut substantial chunks of your personal budget.

Don’t believe me?

Practical Ways to Save Money

  • Appealing your property tax could save you $1000 a year.   
  • Quitting smoking can add $2000 a year in your wallet.
  • Using public transportation will save you up to $2000 for parking fees.
  • Not carrying a credit card can save you 12-18% in expenses.
  • Carpooling can save you more than $40 a trip.
  • You can cut water wastage in the toilet by 19% by installing low-flush toilets.
  • You can save between $100 and $200 a month by giving up cable TV.

Still not ready to do some budgeting?

Let’s break down the cost of living in the US. It will convince you that you might need some money-saving tips.

Leash your Housing Expenses

Housing expenses represent more than 25% of a US household’s budget. Cutting down those costs could save you a substantial amount of money.

1. Appeal your property tax.

As a homeowner, the government periodically assesses your property, and the value determines the size of your property tax.

You can appeal the assessed value: thus lowering it and striking a lower property tax.

This is one of the simple ways to save money. It may or may not work. Here’s why it’s worth trying:

Assessors overvalue about 60% of properties, according to National Taxpayers Union. And yet only 2% of homeowners appeal their assessments. Many times it’s because they don’t even know they can lower taxes this way.

So let’s say you’re paying around 2% tax on a property that’s assessed at $500,000. You appeal the assessment because you think your property’s value is actually $450,000.

If your appeal is successful, it will lower your tax by almost $1000. That’s enough to cover the average personal care budget of a US household for an entire year!

While we’re at it, check our awesome map of income needed to buy a house across the US.

2. Money-saving advice: refinance your mortgage

Paying off the mortgage is one of the biggest expenses in a US household’s budget.

Refinancing your mortgage means replacing the existing loan with a new one that has lower interest rates and monthly payments.

But because it leads to additional expenses, refinancing is not always a good idea. You need to calculate if the benefits are enough to cover the extra costs. It is generally accepted that refinancing makes sense if it reduces the interest rate by at least 2%.

It’s a good trick to save money though it’s not a golden rule. For example, you have a 30-year mortgage with an interest rate of 4.5%. You can refinance it with a new 20-year loan with a 3.75% interest. This will decrease your monthly payment by around $130, or $1560 a year.

3. Easy with the water.

Lower water usage is a frequently neglected way to spare a few extra bucks. Here are some easy ways to save money from water expenses:

Use a smart shower head

A smart shower head cuts down on the water you need to take a shower. Some models claim to be able to save up to 50% of the water you use under the shower.

Considering the time you spend under the shower every day, that’s one of the small ways to save money.

Install low-flush toilets

A low-flush toilet uses 1.3 gallons of water per flush. In contrast, a normal toilet uses 1.6 gallons.

So with every flush, you decrease water wastage by about 19%.

Use a dishwasher

If you have a lot of dirty dishes left in your sink, I’ll give you another reason to finally buy a dishwasher. It’s also one of the effortless methods of saving money.

If you wash your dishes in the sink for 3 minutes, you waste 6 gallons of water. This is the amount you need for a dishwasher cycle.

But you probably spend much more than 3 minutes.

So it’s better to use a dishwasher. Over time, water savings add up.

Money-Saving Ideas: Eat up your food expenses

Annual food costs go as high as $7923 per household. You and your family cannot survive without food. However, you can cut down on the money you spend in the grocery store.

It doesn’t have to be complicated. You can follow some simple yet effective tips.

4. How to save money on groceries with a list.

This is much more important than you think. When you have a grocery list ready, you keep your expenses on a leash.

All you have to do is stick to the list. That way, it is much less likely to scan the shelves and buy stuff you don’t really need.

Sometimes, following grocery lists can go to extremes. Take for example Sean Potter, better known as My Money Wizard. He and his girlfriend can cut their grocery bill down to $150 a month!

That’s $1800 a year or $6123 less than a household’s food budget.

A yummy saving for sure! And it’s just one of the many ways to save money on food.

5. Shop at discount stores.

This one seems pretty obvious. Alas, lots of people stay away from discount stores as they feel products sold there are of low quality.

That’s not necessarily true. Discount stores have their ways of keeping prices low without selling crap. You can buy large quantities of food and move on to tip #7.

It’s one of the easiest ways to save money.

But don’t fall into the discount store’s trap of overspending!

This is a well known psychological trick. Low prices can make consumers buy much more than what they initially had planned. Including products they don’t need.

If you give in to this urge, your bill can bubble up substantially.

6. More tips for saving money: leave your credit card at home.

Pay with cash instead.

A 2014 Dun & Bradstreet research found that people using credit cards spend between 12% and 18% more than people paying with cash.

Psychology is to blame for this. Card owners put more emphasis on the things they’re going to buy. People who pay with cash better realize they are about to give away their money.

To sum it up: paying with cash is one of the ways to save money on a tight budget.

Even though card payments are becoming prevalent, most grocery stores still accept cash. Not carrying a credit card decreases the chance of you becoming a card fraud victim, which is an additional benefit.

7. Buy large portions of food instead of small packages.

Buying large portions of any food (as opposed to small packages) is one of the simple yet effective saving money tips.

You get more for every dollar you spend. You can always freeze the food you don’t plan on cooking immediately so you can use it later.

Or you can cook it all, then package the leftovers and freeze them. Feezer meals are recommended by people like radio show host and personal finance expert Dave Ramsey.

8. Learn to save money by… drinking tap water.

Drinking water is cheaper than drinking sodas. Not to mention it’s healthier.

But even if you’re not a big fan of soft drinks, simply replacing bottled water for tap water can be a huge money saver.

A gallon of bottled water can cost over $8, making it much more expensive than tap water.

Drinking tap water should be among your money saving strategies. Even if you’re not home, you can carry tap water in a refillable bottle.

And don’t worry, it’s safe to drink it!

9. Quit smoking.

I know, I know.

It’s easier said than done.

But maybe I can convince you this is one of the best ways to save money by throwing in some numbers.

The average price of a pack of cigarettes is $5.51. Let’s say you smoke one pack a day. That’s $165 a month or $2011 a year.

Don’t forget that prices range between six and eight dollars in most states. Some brands cost as much as $12.85.

Not only do you get an extra $2000 for every year of not smoking, but you also live a healthier life.

If you wonder how to start saving money, start with this.

Put a Break on Transportation Expenses

In 2018, households spent $9,761 on average on transportation. That’s more than the money spent on education and healthcare!

Tell me, does this sound familiar:

You hop on your car and drive to work. You call a cab when you go out on a Friday night.

Let me give you some tips for saving money from transportation:

10. Use public transport.

Public transportation can save you a lot of money. Whenever you get on a bus or ride the subway, you don’t have to spend money on gas, parking, or paying the taxi driver.

According to the American Public Transportation Association, you can save up to $847 a month that way.

Wait, what?

That’s more than $10,000 a year! This has to be one of the best budgeting tips of all time.

In reality, it is the highest transit savings recorded in 2018 by APTA. While it’s unlikely that you’ll beat that, using public transport can still benefit your wallet.

You can save up to $2000 a year just by skipping parking costs!

Not to mention all the savings you’ll pile up by not buying gas. The average price of gas is $2.55 a gallon as of December 2019. However, premium-grade gas costs more than $3 a gallon in many states across the US.

Need more tips on how to save money?

11. Increase your car insurance deductible.

The deductible is set in your car insurance policy. It is the amount of money you are ready to pay from your pocket if a car accident happens.

If your deductible is $300 and the damage is worth $1000, you have to cover $300 of it.

The general rule is the higher the deductible, the lower the premiums you pay. By increasing your deductible, you’ve found one of the creative ways to save money.

Bear in mind that this is a double-edged sword. In the event of an accident, you would have bigger costs. You have to juggle between the benefits of lower premiums and the risk of paying more in case of a car crash.

12. How to save money effectively: carpool.

Sharing a ride is sensible, not to mention fun.

Some people are afraid of carpooling with strangers. But you can also share a ride with a friend, a colleague or a neighbor who’s going in the same direction.

A 13.7 taxi trip will cost you around $51 with a cab, according to Rideshare. By carpooling, you would only have to pay $7.3. Оr nothing.

Enjoy Smart Entertainment

According to government data, households pay $3,226 a year for leisure activities like going to the movies, visiting events, etc. But you don’t need to pay that much to have fun.

Did that get your attention?

Let me elaborate on how to save money each month:

13. Cut the cable.

Here’s how to save money at home:

You probably have cable TV. Ask yourself: “Do I really need all those channels?”

About 44% of Americans pay a monthly cable TV fee of between $100 and $200. Another 6% spend over $200 a month.

Most people buy a cable TV plan and stick to it, even if they never use its full potential. Why do you need a plan with 300 channels if you’re only watching 20?

Here’s one of the smartest ways to save money: switch to a cheaper plan. Or cut the cord completely. Most video content is available for free online: may it be in news outlets or video sharing platforms like Youtube.

And why the hell do you need more than one streaming service: say, Netflix and HBO Now?

Ditch the one you don’t watch as frequently.

14. Spend less on physical copies of books, movies, and games.

We all know how stylish a home bookshelf is. But buying paper books is not the best way to save money. The same goes for DVDs and video games.

Refrain from buying physical copies. Instead, go for digital copies, renting, or swapping.

Ebooks are usually (though not always) cheaper than paper books. There you go, you’re saving money!

But you don’t need to buy a book to read it. You can sign up for a membership at the local library and get stocked on books from there. Or you can choose one of the many book lending services like Scribd (you can think of it as Netflix for books).

Want more tips on how to save more money?

Video streaming services are immensely popular, so if you still haven’t signed up for one go ahead and do it. It’s cheaper than buying DVDs and more convenient than renting them.

Apply the same logic to gaming. You can find tons of video games in popular streaming services like Steam. Why pay for physical copies?

15. Stay at home.

Do you want to know how to budget and save money by doing absolutely nothing?

Don’t go out as often.

Yes, you need to have fun.

No, you don’t need to be in a bar to have fun with your friends.

Bars, restaurants, cafes, clubs, etc are very good at selling overpriced… pretty much everything.

One of the ways to save money fast is to plan fewer nights out and replace them with stay-at-home dinners with friends (or by yourself).

Bonus tip: If you like events, look around for the ones that are free.

I found that the easiest way to do this is by searching on Facebook. You can search based on a date, location, and even type of event. You can find plenty of meetups, seminars, sports classes, and other events that are free of charge.

It’s a nice little hack you can use when you want to go out without spending a dime.

Wrap Up

Overspending is a thing. You should not underestimate any of these ways to save money.

You can think of your household as a company. To keep the company alive, you have to use budget restraints. Every single saving can help you improve your financial situation.

Even if it’s about a dollar or two it adds up.

Especially if it’s a recurring expense.

So spend smart and earn wisely!

See you around on SpendMeNot.com!

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