10 strategies to save more money
Wanting to save more is always a noble goal. But getting started is usually the most difficult part. Here are 10 ways to add more to your bottom line.
What goals have you reached in the last year? Where are you still behind? In challenging economic times like these, people look for new ways to save money and clean up their finances. While the biggest savings come from limiting your spending to the cash in your wallet, the trick is to set reasonable goals. A good approach is to start with a few things that are so easy to fix that you'll stick with the program. You may be surprised how quickly these small changes can add up to real money.
Home and auto insurers change their prices based on their claims experience. So the insurer who was your best bet two years ago may not be such a good value now. By spending half an hour researching whether you can get a better deal, you could save hundreds of dollars. Further, having the same carrier for home and auto insurance could result in a package discount of up to 15%. If your annual auto insurance premium is several thousand dollars, this could really pay off. Many companies also offer a "future effective discount" which save you even more money if you pay today for a policy starting next month.
Most Americans pay the bulk of their annual tax bills via payroll withholding. Through this process, a percentage of your earnings is taken out each pay period and sent to the Internal Revenue Service, where it is credited toward your final tax bill. In 2011, the average tax refund was $2,913, according to the IRS. That's $242 a month. IF you're getting a big tax return, it means that you've given Uncle Sam free use of your tax money -- without receiving any interest. The best course, tax experts say, is to adjust your withholding exemptions so your tax payments match your actual tax liability.
Since the late 1970s, studies have supported the notion that credit cards entice people to spend more than if they used cash. While it's hard to determine how much you might actually save, paying by cash guarantees that you won't pay interest charges on a revolving credit balance or overdraft fees on your debit card. And cash offers another way to save when you fill up your tank: Many stations offer discounts of as much as 10 cents a gallon off the credit card price.
Whether it's buying your daily cup of java or going out to dinner, habits such as these are costly -- and they can add up quickly. If you make your habit an occasional treat, you'll save money and you'll appreciate it a lot more.
For most taxpayers, investing in a 401k is the best way to lower taxes and build a retirement nest egg. If you're among the 51 million Americans who participate in a company 401k plan, you can contribute up to $17,000 in 2012, up $500 from 2011. If you are 50 or older, you can stash an extra $5,500 in catch-up contributions, for a total of $22,500.
If you pay 30% of your income in federal and state taxes, $100 contributed to your 401k costs you just $70. If your company matches your contributions at a rate of, say, 50 cents on the dollar, you end up with $150 in retirement savings for something that cost you only $70. If you are self-employed, you can stash even more in a solo 401k plan and a tax-deferred retirement account because you contribute as both an employee and an employer.
Roth IRAs are another great option for anyone interested in tax-free retirement income; they are particularly good for young workers who could benefit from decades of tax-free growth. Roth IRAs also make sense for anyone who expects to be in a higher tax bracket in retirement.
Try putting just $50 a month into your savings account at the beginning of each month. At the end of the year, you will have $600 in savings, not including the interest you accrue. You can always withdraw the money to handle emergencies.
While this may sound more like good physical than fiscal advice, an increasing number of company health plans are paying you to take care of yourself. If you quit smoking or promise to exercise at least once or twice a week, your insurer could give you a break of $50 to $500, depending on your company health plan
The deductibles on your current automobile insurance policy might be costing more than you think. One of the easiest and most recommended ways to save money on car insurance is to raise your comprehensive and collision deductibles. This is the predetermined amount of money you have to pay toward a loss before your insurance coverage starts. For example, if the total damage comes to $3,000 and your deductible is $250, you would pay $250 and the insurance company would pay the rest. Depending on your policy and whether you can afford to raise your deductible to $1,000, you could save as much as 25% on insurance payments. The higher your deductible, the more money you can save on your premiums.
Saving energy not only helps you save money on utility bills, but it also helps the environment by reducing greenhouse gas emissions. In 2007, Americans saved $1.5 billion by switching to compact fluorescent lights, or CFLs. Replacing one regular light bulb with an approved CFL bulb can save $30 in energy costs over the life of the bulb, and CFLs last up to 10 times longer than standard incandescent bulbs.
If every U.S. home replaced just one light bulb with a CFL bulb, we would save enough energy to light 3 million homes for a year and save about $600 million in annual energy costs.
When it comes to buying in bulk, savings can be hit or miss. Be aware: Research has shown that consumers who make a midweek "fill-in" trip to the store buy twice the number of items they had intended. Some nonperishable items you should buy in bulk include toilet paper, alcohol and vitamins.
Toilet paper: Buying in bulk can be up to 50% cheaper than buying just a few rolls at a time. So find a place to store some extra (try under your bed if you run out of space in the bathroom) and save yourself a few bucks.
Alcohol: Would you rather pay $8 for a six-pack of beer or $14 for 20-pack? Go with the 20-pack and you'll not only save money on beer, but you'll also save on gas because you will be making fewer trips to the store.
Vitamins: You can save about $1 per bottle by buying in bulk, but be wary of expiration dates.
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