You probably ended up here because you’re looking for ways to save money without reading through a bunch of basic advice like “stop drinking lattes”.
For big-daddys (thats you), stockpiling the green is all about making a few habit shifts that have a big impact.
Using that money to invest, build your skills, increase your earning potential, or start your own business is what it’s all about.
I’ve spent 20+ hours researching this, so again, don’t expect to see anything like “stop going out to dinner”.
The list is ranked according to potential savings and scalability.
21. Automate your savings
One of the most common habits of wealthy, successful people is automation. When it comes to saving money, they almost unanimously say that their bill payments and transfers to savings are automated. (1)
Set up automatic payments for everything first, your credit card bills, your electric, etc, ideally the day after you get paid. Then, set up automatic transfers of however much you want to save each month to your savings for a few days after you pay your bills. Don’t set it and forget it though. Another common habit of the rich and famous is to check their accounts regularly to make sure everything is in order.
20. Eat nutrient dense foods
Saving money on groceries is easy – just buy cheaper, right? Nope, flawed thinking.
You want to look at more than just the price tag: pay attention to the nutrition you’re getting for each dollar. Sure, the junk food and weird off-brand cola your friend’s mom used to bring to soccer practice is cheap, but it’s not really keeping you full or providing you with nutrition, so you end up spending more and buying more. Eggs, brown rice, beans, apples, and bananas are all foods that keep you full for a long time and are dirt cheap. (1)
19. Apply for a good cashback credit card
If you have a good credit score and aren’t taking advantage of credit card offers, you’re kind of wasting it. The Chase Freedom has no annual fee and gives you $150 just for signing up and using the card. On top of that, you get 5% cash back on rotating categories (could be gas spending one month, groceries the next), and 1% on all other purchases. (2)
The Citi Double Cash card is another good option. They give you 1% cash back on all purchases and another 1% back on all payments, so basically 2% cash back. This means if you put $2,000/month on the card, you get $480 back by the end of the year. If you travel a lot, a card like the Chase Sapphire Preferred could get you $1,000+ in savings each year. (3) (4)
Neither card has an annual fee either. For bonus points, put every purchase you make on the card. Websites like Rad Pad even let you pay your rent with a credit card. (5)
18. Negotiate your bills
Everything in life is negotiable if you have the right skills.
This includes your bills: cable, internet, cell phone, whatever. Call them up and tell them you’re thinking about shutting off your service to save money…chances are they’ll lower your bill.
17. Open a savings account with 1% interest
A comparison of savings account interest rates across popular banks showed that many sit at about .01%, including major banks like Bank of America and Wells Fargo. (6)
However, if you go with a less popular bank like Ally or Synchrony, you can score 1%. This might seem like a minuscule difference, but at the end of the year, if you’ve got $10,000 in your savings account, that’s $1 in interest from Wells Fargo or around $101 from Ally. After 10 years, you’ll have earned $1,052 just in interest on that initial savings. Plus, Ally lets you split up your savings into unlimited sub-accounts, so you can have one for travel, one for buying a car, and one for starting your business. Check other accounts at the AAA Credit Guide if Ally or Synchrony isn’t an option for you.
16. Use a price alerts extension
One way to curb your spending habits is, when you find something you really want, force yourself not to buy it until the price drops below a certain level. Camelcamelcamel is an extension that will let you set price alerts on Amazon items. (7) You can even use the extension to look at the price history on anything to avoid over-paying.
15. Do two no spend days/week
In The Psychology of Wealth, licensed psychotherapist Dr. Charles Richards talks about all the ways in which we buy things unconsciously, from not paying attention to the price, to buying things we never actually use, to finding things we don’t even remember purchasing. (8)
No spend challenges basically rewire your brain to think about how much unnecessary spending you do every day and be more conscious of every purchase you make. Some people will recommend no spend months for people who desperately need to save a lot of money fast, but if you’re just trying to build up new habits for saving and generating wealth, picking one or two days per week in which you don’t spend any money at all (not even on gas or groceries or toilet paper) can help you retrain the way you think about money.
14. Negotiate your rent using referrals
You can negotiate almost any bill except rent…unless you’re real sly.
It actually is possible to negotiate your rent, you just have to offer your landlord something in return. This can be an increased deposit or a longer lease period. One of the best ways to negotiate your rent without having to give up anything at all is to ask for discounts each time you refer someone to live there. This only works if you live in an apartment complex, but if you’ve got a friend who needs a place, it’s a win-win.
13. Pay off your debts
This probably seems a little ironic since it involves spending money instead of saving it, but paying off debt (especially high interest credit card debt) can save you more money than almost any other tactic.
If you’ve got $8,000 in credit card debt and a 17% APR (which is pretty average lately) (9), you’re paying over $1,000 in interest in that first year alone. At the end of it all, if you’re paying the bare minimum, you’re going to end up paying near $7k in interest fees alone. When paying it off faster means potentially saving yourself up to 7 Gs, it’s pretty damn good savings.
12. Use the long-term capital gains tax
Save money on your taxes by holding onto your investments just a little bit longer.
Investment winnings can incur two different kinds of taxes: short-term capital gains tax or long-term capital gains tax. Put simply, if you make money off a short-term investment and cash out early (usually within 6 months or a year), your tax rate is higher than if you wait it out and make money off a long-term investment. The difference between these two tax rates can be up to 20%, which is huge. (10)
11. Get an interest-free balance transfer card
This is one of the best personal finance hacks out there. You can actually pay off your debt without paying a penny in interest, and no this isn’t an automated scam message.
Plenty of legit credit cards out there have balance transfer offers that give you a 0% APR for an introductory period that can last anywhere from a few months to almost 2 years. Basically, you open the card, transfer your credit card debt to it, and as long as you can pay it off before the 0% promotional APR ends, you’ve just doubled down on your debt and paid it off for FREE.
The Citi Double Cash card that I mentioned above actually offers an 18 month 0% APR on balance transfers. Other favorites are the Chase Slate, which only gives you 15 months to pay off your debt but has no balance transfer fees (most cards charge a 3% fee), and the Citi Simplicity, which offers a 21-month period to pay off your debt. (11) (12)
10. Use the bolstering range tactic to get a raise
If you’re still working that flaccid 9-5, you need to read my rankings for the best work from home jobs this year. But also, ask for a raise.
Contrary to what you might think, you don’t want to ask for a specific number. A psychological study done by the Colombia Business School and published in the Wall Street Journal recently compared different approaches to asking for a raise. The most successful was the bolstering range tactic, which involves asking for a range that includes your own salary. (13) So if you make $60,000 and you want to get to $70,000, let your boss know that $60,000-$80,000 is a reasonable range for your position, and you’re really hoping for a salary that’s closer to the higher end.
9. Ditch the high fee money managers
Expensive financial advisers and money managers actually cost more than they save. Research shows that their fees end up cutting into your savings so much that you’re more likely to lose money. (14) Quit being lazy – drink that cup of coffee, and educate yourself on money management.
8. Control lifestyle inflation
We’ve all seen it happen before. Johnny and Susan next door get a huge raise, and instead of saving more, they go buy a new car, build an extension onto their house, and the next thing they know, they’re broke again. There’s a reason that a third of lottery winners end up in bankruptcy. (15)
Almost half of Americans who earn $100,000-$149,000 a year have less than $1,000 in their savings account, which is pretty nuts. (16) Don’t let lifestyle inflation happen to you.
7. Rent out your extra room
Thanks to the sharing economy, there are 1,001 ways to make side money by sharing your stuff nowadays. In a comparison of all the different ways, from Uber to Postmates, people who rent out a space on Airbnb make the most money by far, averaging $924/month. (17)
You don’t even have to have that much space. I know a guy who rented out his closet as luggage storage because he lived near a major airport. Another host makes over a grand every month renting out a tent in his backyard. Get creative.
6. Invest like Warren Buffett
Not that long ago, Warren Buffet divulged his top secret investment strategy, and it’s actually really simple. Basically, put 10% of your money into short-term government bonds and 90% into a low-cost S&P 500 index fund like Vanguard’s. He actually put his advice to the test with a high-profile investor, betting him that his strategy would net more after 10 years than the investor’s. It won out by a multiple of 7. (18)
5. Pick up a side gig
Picking up a lucrative side gig is one of the best ways to save extra money, and if it’s online, automated, and scalable…even better.
4. Passive investments
While big whigs fret over the best markets to invest in, it’s actually been shown that passive investments where you stick your money into an index fund and lay back and relax actually have better long-term returns. (19)
3. Find a work from home job
Having the flexibility to work from home can actually save you a lot of money. Not only are you cutting out transportation costs, and the costs of business clothes, eating out, etc, but you also have the flexibility to work from wherever. If you want to go work from some beautiful tropical island with a low cost of living for a few months, you can. In fact, a lot of people have paid off thousands of dollars in debt by traveling abroad and working somewhere with a low cost of living temporarily.
In fact, a couple published in Business Insider paid off $46,000 in debt while traveling abroad. (20)
2. Invest in yourself
Not trying to sound like a Hallmark card here, but the best investment you can make is in yourself. Spend a little extra money to teach yourself a (digital) skill that’s in-demand, and you’ll make that money back ten-fold. Some of the best skills to learn right now are SEO, web development, blogging, and facebook advertising.
1. Local lead generation
You could and should ask for a raise at your job, but let’s be real: the average raise is 3%. (21) Not exactly a big win IMO.
Better to ditch the 9-5 altogether for something that has no income ceiling: something digital, automatable, and scalable. I harp on this one a lot because it really works.
Seriously, what business is going to turn down leads? “Yeah, no thanks, we’ve reached our quota”…not. Local companies will pay good money for you to hand them new customers on a silver platter. And because you’re going local, the rough competition you’d usually have with internet ventures is basically cut down to zero.
CareerBuilder did a survey this year of 6,000 full-time workers, and they found that a whopping 78% of them were living paycheck to paycheck. (22)
There’s a pretty basic reason for this failure: personal finance columns and budget blogs are all focused on spending less money instead of generating more money.
There are two components to saving money, and while you can only cut spending so much, the amount of money you can generate is virtually limitless.
People who follow this advice aren’t really changing their lifestyles or the way they think about money, and all these obsessive budget cuts are only savings them a few dollars a month, if that.
Focus on building new streams of income, making extra money online, and automating and scaling your wealth. Anything else is chump change.
I’ll Paypal you $500 if you show me a better side money-making business than our method.