The American public is in the midst of a savings crisis. More than one in three Americans have zero dollars in savings. Nearly 70 percent have less than $10,000. The savings crisis is so severe that most families cannot survive a financial crisis. One in four have no emergency funds and cannot manage a temporary loss of income.
The retirement savings situation is even worse. Nearly half of the country does not have any retirement savings at all. Now is the time to start building up your savings. Read on for tips on how to create a personal savings plan. Explore 8 out of the box ideas for how to save money.
1. Switch to a Homemade Latte
The amount of money that Americans spend on coffee is unbelievable. In fact, one in three spends more on coffee than they do on stocks, bonds, and other investments.
Think about your daily trip to Starbucks. Purchasing a latte or two per day adds up to hundreds per month. Instead of buying a $5 coffee every morning, brew a homemade pot or use a K-cup. These alternatives are pennies on the dollar compared to Starbucks. You can redirect your coffee budget into savings and investments.
2. Round It Up
Many people dismiss their spare change. Some drop it into charity buckets while others throw it into a piggy bank. While these are noble options, they do not realize the full potential of your spare change. For this reason, there are various apps that wisely use your spare change. If you purchase an item for $2.50, the app rounds up the total expenditure to $3. The extra 50 cents is redirected into an investment or savings account. The original round-up app is called Acorns and was launched in 2014. Since then, several apps have become available that offer different features.
3. Invest in Real Estate
When people think about investing in real estate, their thoughts turn to purchasing a rental property or flipping a fixer-upper. Given the current savings crisis, however, who has the capital for that? But, what if you could invest in real estate without a huge bank account? There are now real estate investment apps that allow your money to leverage off of buildings and private loans. These accounts offer a seamless investing experience for all types of investors. Money is deposited either automatically or when you want to.
However, real estate may produce greater returns than a low-yield savings account. At the same time, it might be safer than investing in high-risk stocks or cryptocurrencies.
4. Cut the Cord
One way that consumers are reducing expenses is by cutting the cord. Cable television is expensive and can add more than $100 to your monthly budget. In an effort to cut back, consumers are switching to streaming services instead. There are many options out there such as Netflix or Disney+. Each streaming service costs between $5 to $15 per month.
Cord-cutting is so prominent that millions are making this change every year. In 2018, nearly 2.9 million people eliminated their cable TV bill. This was up significantly from the year prior, which saw 1.5 million people cut the cord.
One word of caution for those who are cutting the cord to reduce monthly bills; costs quickly pile up if you subscribe to multiple streaming services. Do not add any unnecessary subscriptions if your goal is to boost savings.
5. Automatically Save
Many people wait until the end of the month to make a savings deposit. They see if there is any money left over and whatever is left goes towards savings. However, this approach often ends with underwhelming results.
First off, having excess money in your checking account or wallet enables bad habits. Perhaps you spend an extra $50 on something frivolous just because you have it. Building a robust savings account is all about discipline and ignoring these impulses. Instead, set it up so that a portion of your salary is automatically deposited into savings. This action will take the decision out of your hands and limit bad spending decisions.
6. Doubling the Recipe
You can still eat like a king or queen while on a budget. One way to do that is by doubling the recipe. The purpose of this tactic is to optimize the use of ingredients. You can save money on ingredients in the long run by doubling the batch. Another benefit is that you can store the leftovers. Now, you can save money on lunch or dinner the next day. Redirect all cost savings to your bank account or favorite investment.
7. Reduce Energy and Fuel Costs
Energy and fuel are two of the most significant monthly bills in the American household. A sound personal savings plan should include an effort to reduce expenses in both areas.
First, let’s start off with the energy bill. You can save money by making a concentrated effort to control the temperature. Open the windows instead of using the air conditioner when possible. Before the frigid winter months, take action to seal drafty windows and doors. Replace light bulbs in your home with high-efficiency LED ones.
Another way to reduce energy costs is by turning down the temperature on your hot water heater. On a larger scale, converting to solar power can substantially reduce energy costs. From a gas perspective, consider switching to a smaller, fuel-efficient vehicle. By doing so, you can double your vehicle’s fuel efficiency and save hundreds on gasoline.
8. Minimalistic Lifestyle
For many Americans, their junk is another person’s treasure. Consider holding a garage sale to sell unnecessary items. This includes clothing and other materialistic products. Choosing to be minimalistic is a lifestyle choice. However, it will certainly save you money on purchases in the long run that can be added to savings.
A Recap of Building up Your Personal Savings Plan
Choosing to save overspend is a lifestyle decision that requires commitment. There are many basic steps you can take to save. Cutting out that morning coffee and redirecting to real estate investments might be a good starting place. If you want to learn more about building up your personal savings plan with real estate investments, contact us today to learn more.