If you’re looking to get started on saving, here are some easy ways to build your wealth every day. Be sure to check out our other resources to help you build your way towards your financial goals.
|Save $.50 a day in loose change||$15||$180|
|Cut soda/pop consumption by 1 liter a week||$6||$72|
|At work, substitute 1 coffee for 1 cappuccino||$40||$480|
|Bring lunch to work (saving estimated $5/day)||$100||$1200|
|Eat out 2 fewer times a month||$30||$360|
|Borrow, rather than buying, one book a month||$15||$180|
|Comparison shop for gas (save est. $.25/gallon)||$4||$48|
|Maintain checking account minimum to avoid fees||$7||$84|
|Bounce one less check a month||$30||$360|
|Pay credit card bill on time to avoid late fee||$25||$300|
|Pay off $1000 of credit card debt, reducing interest||$15||$180|
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- Save your loose change. Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.
- Keep track of your spending. At least once a month, use credit card, checking, and other records to review what you've purchased. Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account.
- Never purchase expensive items on impulse. Think over each expensive purchase for at least 24 hours. Acting on this principle will mean you have far fewer regrets about impulse purchases, and far more money for emergency savings.
- Use debit and credit cards prudently. To minimize interest charges, try to limit credit card purchases to those you can pay off in full at the end of the month. If you use a debit card, don't rely on an overdraft feature to spend money you don't have. With either approach, you'll have more money available for emergency savings.
- Are you looking for an effective way to establish a budget? Beginning on the first day of a new month, get a receipt for everything you purchase. Stack and review receipts at the end of the month, and you will clearly be able to see where your money is going.
- It pays to practice preventative dental care, since a good cleaning routine helps prevent fillings, root canals, and dental crowns, which are expensive and no fun.
- Most people don’t track what they spend and may not realize when expenses add up to more than their budget can handle. To keep track of what you spend, trying putting away what you think you will spend for the month on transportation, food, entertainment, etc., into envelopes. This may help you avoid buying things you don’t need necessarily need, and what’s left over put automatically into saving.
- Take advantage of military discounts, always ask, all they can do is say they don't offer a discount. Plan out trips in advance and check with your local installation Information, Travel and Tickets office to see if they offer discount tickets. And don’t forget the best deal of all – investing in your Thrift Savings Plan. Find more information for retirement savings for your spouse or family member: Save for Retirement.
- One way to establish a savings discipline is to “save” an amount equal to whatever is spent on nonessential indulgences. Put a matching amount in a cookie jar for expenditures for beer, wine, cigarettes, designer coffee, etc. If you can’t afford to save the matching amount, you can’t afford the $4 super almond low-fat latte.
- Take the amount the item costs and divide it into your hourly wage. If it’s a $50 pair of shoes and you make about $10 an hour, ask yourself, are those shoes really worth five long hours of work? It helps keep things in perspective.
- Aim for short-term savings goals, such as setting aside $20 a week or month rather than long term savings goals, such as $200 over a year. People save more successfully when they keep the short-term goal in sight.
- Save money by utilizing the Commissary and Exchange. The overall yearly savings of shopping at the Commissary on discounted items and tax-free at the Exchange can really add up!
- Substitute coffee for expensive coffee drinks.The $2 a day you could well save by buying a coffee rather than a cappuccino or latte would allow you, over the course of a year, to completely fund a $500 emergency fund.
- Bring lunch to work. If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.
- Eat out one fewer time each month. If it costs you $25 to eat out, but only $5 to eat in, then the $20 you save each month allows you to almost completely fund a $500 emergency savings account.
- Shop for food with a list and stick to it. People who do food shopping with a list, and buy little else, spend much less money than those who decide what to buy when they get to the food market.The annual savings could easily be hundreds of dollars.
- Avoid overdrawing your checking account- ever! Overdraft fees can send you into a spiral of debt each month. The $20-30 you could save with each purchase that overdraws your account each month would save you enough money to nearly fully fund a $500 emergency savings account.
- Reduce credit card debt by $1,000. That $1,000 debt reduction will probably save you $150-200 a year, and much more if you're paying penalty rates of 20-30%.
- Make your monthly credit card payment on time. The $30-35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings
- Use only the ATMs of your bank or credit union. Using the ATM of another financial institution once a week could well cost you $3 a withdrawal, or more than $150 over the course of a year.
- Shop around for auto and homeowners' insurance: Before renewing your existing policies each year, check out the rates of competing companies (see the website of your state insurance department). Their annual premiums may well be several hundred dollars lower.
- Raise the deductibles on auto and homeowners' insurance: Being willing to pay $500-1,000 on a claim, rather than only $100-250, can reduce annual premiums by as much as several hundred dollars. (Just make sure your emergency can fully cover these deductibles, plus other possible occurrences surrounding an insurance claim)
- Assess your need for life insurance coverage. If your children are now on their own, or if your spouse works, you may not need as much life insurance protection. The annual premiums on a term life policy would typically fully fund an emergency savings account.
- Consider dropping credit insurance coverage on installment loans. Many consumers don't need credit insurance because they have sufficient assets to protect themselves in the event of death, disability, or unemployment. Terminating this coverage often reduces financing costs by three percentage points, a savings of about $1,000 on a four-year $20,000 installment loan.
- Keep your car engine tuned and its tires inflated to their proper pressure. Doing both can save you up to $100 a year in gas.
- Shop around for gas. Comparing prices at different stations and using the lowest-octane (recommended by the car owner's manual) can save you hundreds of dollars a year.
- When driving, avoid fast start-ups and stops. Over time, you will save hundreds of dollars on lower gas and maintenance costs.
- Take fewer cab rides. Using public transit instead of cabs can save you $5-10 per trip or more. If you're a frequent cab user, the savings could completely fund your emergency savings account.
- Check all airlines for cheap fares. Since no website lists all discount carriers, also check out the websites of discount carriers like Southwest and Jet Blue, possibly saving you hundreds of dollars.
- Don't pay for space you don't need. Americans have relatively large houses and apartments. Think about more efficiently using space so you can purchase or rent less square footage.
- Live relatively near your workplace. While this isn't always possible, driving 5,000 miles less a year can lower transportation costs by more than $1,000.
- Refinance your mortgage to lower interest charges. Consider refinancing your mortgage to lower the rate and/or term. On a 15-year fixed-rate mortgage, for about every $100,000 you finance, lowering your interest rate by 1% or more can save you more than $9,000 in interest charges over the life of the loan. On a 30-year fixed rate mortgage, for every $100,000 financed, the savings is even bigger with a 1% drop in your interest rate you could save over $21,000 over the term of your loan. Changing your term alone with a $100,000 30-year mortgage to a 15-year will save you over $50,000 in interest charges. And, you will accumulate home equity more rapidly, thus increasing your ability to cover large emergency expenditures.
- Choose home repair contractors wisely. Favor contractors who have successfully performed work for people you know. Insist on a written, fixed-price bid. Don't make full payment until satisfactory completion of the work.
- Ask your local electric or gas utility for a free or low-cost home energy audit. The audit may reveal inexpensive ways to reduce home heating and cooling costs by hundreds of dollars a year. Keep in mind that a payback period of less than three years, or even five years, usually will save you lots of money in the long-term.
- Weatherproof your home. Caulk holes and cracks that let warm air escape in the winter and cold air escape in the summer. Your local hardware store has materials, and quite possibly useful advice, about inexpensively stopping unwanted heat or cooling loss.
- Use window coverings to block or let in sunshine. In summer, use these coverings to block sunlight, keeping your house cool. In winter, open the coverings to let sunshine warm the house. You could easily save more than $100 annually while being more comfortable.
- Look for sales at discount outlets. There are huge price differences between clothing on sale at discount stores and that sold regularly at many department and specialty stores, though keep in mind that prices at the latter are often deeply discounted.
- Consider purchasing previously-used clothes from Good Will, second-hand stores, or school or church thrift sales. With a little effort, you can find low-priced, high-quality used clothing items that can be worn for many years.
- Assess clothing in terms of quality as well as price. An inexpensive shirt or coat is a poor bargain if it wears out in less than a year. Consider fabric, stitching, washability, and other quality related factors in your selection of clothes.
- Clean clothes inexpensively. Wash and iron clothes yourself. If you use a cleaner, compare prices at different establishments. A 50 cent difference in cleaning a shirt, for example, can add up to $100 a year.
- Assess your communications costs. As Internet and wireless use grows, many consumers are overpaying for unneeded communications capacity. For example, if you have a cell phone and two phone lines -- one for your computer -- consider receiving personal calls on your cell phone so you can give up one of the phone lines.
- Communicate by e-mail rather than by phone. If you're on-line, e-mail communications are virtually free.
- Be aware of your cell phone costs and how to reduce them. Cell phone use has dramatically increased communications expenditures in many households. Understand peak calling periods, area coverage, roaming, and termination charges. Make sure your calling plan matches the pattern of calls you typically make.
- Research free or inexpensive entertainment in your community. Use local newspapers and websites to learn about free or low-cost parks, museums, film showings, sports events, and other places which you and your family would enjoy.
- Give up premium cable channels or better yet, cable all together. It's a lot cheaper to rent one film a week than watch one on premium cable channels that may cost more than $500 a year.
- Borrow books rather than purchasing them. Borrowing books and reading magazines at your local library, rather than purchasing reading material, can save you hundreds of dollars a year.
- Attend high school rather than college or pro sports events. High school sports events rarely cost more than $5 and are often free, with hot dogs and sodas typically costing $1-2. College and pro football and basketball games rarely cost less than $20, and their concessions are usually several times more expensive.
- Plan gift-giving well in advance. That will give you time to decide on the most thoughtful gifts, which usually are not the most expensive ones. And if these gifts are products that must be purchased, you will have the opportunity to look for sales.
- In families, discuss limits on spending for gifts. These limits not only tend to reduce expenditures; they also be greatly appreciated by the least affluent family members.
- Socialize at pot-luck meals rather than at restaurants. Because one wants to be generous to friends and family, there may be huge cost savings here.
- Consider writing letters instead of making frequent phone calls. Thoughtful letters are usually far more highly valued than phone conversations, and they are often saved by recipients for future reading.
Building an emergency savings fund is one of the top goals of Military Savers.
Why Build an Emergency Fund
This is a sound choice. Having an emergency savings fund may be the most important difference between those who manage to stay afloat and those who are sinking financially. That’s because maintaining emergency savings of $500 to $1,000 allows you to easily meet unexpected financial challenges such as:
• repairing the brakes on your car;
• buying your child a new pair of needed shoes;
• replacing a broken window in your house;
• paying for a parking ticket; or
• flying to visit a sick parent.
The emergency fund not only allows you to cover these expenses, it also gives you the “peace of mind” that you can afford these types of financial emergencies. Not having an emergency savings fund is an important reason that many individuals borrow too much money at high interest rates. For example, with emergency savings, Americans most likely would not have to take out $2 billion a year in payday loans at interest rates that average 300 to 500 percent. If you are an active-duty military member there are restrictions for the use of payday lending in the Military lending Act. Click here for more information.
Where to Keep Emergency Savings
It’s usually best to keep emergency savings in a bank or credit union savings account. These types of accounts offer easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds.
But not too easy. Keeping your money in a savings account makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses. That’s why it is usually a mistake to keep your emergency fund in a checking account.
You may well need at least $100 to open the savings account and a $200 minimum balance to avoid monthly fees. On most military installations, however, the financial institutions on-base will offer lower minimums or no minimums. Also, during Military Saves Month each April, many of the on-base military banks and credit unions will offer specialized savings products for Military Savers. For more information about who is participating in Military Saves Month click here. To join the Military Saver Community: Take the Military Saves Pledge.
How to Find Money to Save
There are many places to find money to save. Start with the loose change that many people accumulate. Americans typically save more than $100 in loose change each year. Use this change to open and grow a savings account. If you receive a tax refund or Earned Income Tax Credit, use a portion of this money to begin or increase savings. Since the Tax Credits average nearly $2,000, you may be able to open a savings account and still have plenty of money to pay off debts or cover other expenses. Click here for more ideas of where to find money to save.
Try to deposit money saved by cutting back on small, unnecessary expenditures. Click here for a list of more than 50 ideas for reducing spending. These ideas range from packing a lunch, to switching from daily lattes to daily coffees, to not using overdraft (which has high fees) or not bouncing checks.
Building an emergency fund may be easier if you involve your whole family in meeting this challenge. After you’ve explained the importance of emergency savings to your spouse or children, they may even help build the account. And, they will be more likely to understand why it’s more important for you to increase these savings than to pay for expensive gifts at birthdays or Christmas.
Another way to accumulate the $500 to $1,000 of emergency savings is to ask your bank or credit union to automatically transfer funds from checking to savings monthly or set up an allotment through myPay. Automatic savings is the easiest and most successful way to save. What you don’t ever see, you may never miss.
- Saving money, improving your financial life, building wealth. It all starts when you set a goal and make a plan to reach that goal. So what is your goal? Set up an emergency cash fund? Get out of debt? Make a down payment on a car or home? Sock away money for college or retirement?
- Those with a savings plan are twice as likely to save successfully. Cash in those dusty jars of pennies. Pack your lunch instead of buying it at work. There are lots of little things you can do to fund your savings. Just be creative.
- Real stories from savers just like you.
- Savings tools, links, and more.
- Everyone, young and old alike, can benefit from making savings a habit, and Young America Saves can help! Savers who pledge to save create their own savings plan by setting a monthly savings goal, as little as $5, and then try to save that amount each month.
Roughly one in six Savers has selected paying off consumer debts as their wealth-building goal. That does not come as a surprise since, along with modest incomes, large consumer debts are the most important financial reason that people have trouble saving and building wealth.
The good news is that there is hope. With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth.
Are you in trouble?
If you answer “yes” to any of the following questions, then you probably need to get your debts under better control:
1. Can you only afford to make minimum payments on your credit cards?
2. Do you worry about finding the money to make monthly car payments?
3. Do you borrow money to pay off old debts?
4. Have you used a home equity loan to refinance credit card debts, then run up new revolving balances on your cards?
Why too much debt is costly?
Borrowing more money than you can afford is costly in many ways. Americans spend well over $75 billion a year just on credit card interest and fees. That means that families who revolve credit card balances pay an average of $1,500 a year in interest and fees. If they saved that $1,500 in an account with a five percent yield, in 40 years they would have nearly $200,000! Taking on too much debt also lowers your credit score. That means you will end up paying higher interest rates on all your consumer and mortgage loans. A low credit score can also make it harder to rent an apartment, get utility services, and even get a job.
Too much debt isn’t just expensive. People with lots of debt often say they lack peace of mind. They worry constantly about paying off debts and making ends meet. The stress of these worries affects their family life, work performance, and other areas of their lives.
How to reduce your debts?
The first step in getting out of debt is to stop borrowing. To do that, you have to stop spending more than you earn. So, make a budget and cut out any expenses you can. It may help to cut up your credit cards or lock them away in a safe place.
While you are making a budget, figure out the most you can afford to pay each month to reduce your debts, then make those payments without fail. If you have debts on more than one credit card, either pay off the card with the highest interest rate first and work your way down to the card with the lowest rate, or pay off the smallest loan first and work your way up to the largest. Once you’ve paid off your debts, don’t give in to the temptation to start over-spending again. Instead, take the money you were paying each month on your debts and begin to save it. That will give you a financial cushion the next time an emergency strikes.
Where to get help?
If you are located at a military installation you can get assistance at the Family Readiness Center for free. Personal Financial Managers and Counselors are there to help and can be a great asset in getting a debt repayment plan in order. Another resource is MilitaryOneSource they also offer free financial counseling. Visit their website or call 1-800-342-9647 for more information.
In most communities, there are agencies that can help you manage your debts. The most helpful and most widely available are non-profit Consumer Credit Counseling Services (CCCS). CCCS counselors can work with you privately to help you develop a budget, figure out your options, and negotiate with creditors to repay your debts. Call 1-800-388-2227 to locate the office nearest you. There are also many Cooperative Extension offices in communities across the United States who offer workshops, home-study courses, and other services to help people manage their money, including their debts. Cooperative Extension offices are listed in the blue pages of the phone book under county government.
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