Start Saving Money Today with These 4 Simple Tips

 

Hey you! Yeah, you over there! Do you feel like you are always trying to play “catch-up” with your finances? Are you tired of never having enough funds lying around to pay for emergencies? Do you want to learn how to save but don’t know how? You’re in luck! Saving money isn’t rocket science. All it takes is to shift your focus a little bit, and you can start saving today.

News flash: Saving money really isn’t that difficult.  However, it does take a little bit of time and patience. This tends to scare some people off, while others use it to procrastinate saving until another day. If you’ve never been a saver, it can be somewhat of a daunting task. It is easy to feel as though your actions aren’t getting you any further ahead. However, the trick is not to jump in full force. Just like starting a diet, beginning an exercise program, or any other major life change, it is easy to get discouraged if you try to do too much at once. Instead, try to ease yourself into your new way of life using these simple tips.

 

Saving Money Tip #1: Eliminate Your “Latte Factor”

Saving Money by eliminating the latte factor

Could this be costing you thousands of dollars every year?

It is easy to discover large expenses that may be eating up much of your income. It is hard to miss that $1,700 rent or mortgage payment that you have to make each month. However, you may not even notice some smaller expenses that could be doing just as much damage to your savings goals.  In his book The Automatic Millionaire, David Bach describes these sorts of expenses as a “latte factor.” Do you buy a cup of coffee at Starbucks each morning? Are you guilty of eating out for lunch every day? Maybe you enjoy a couple of pastries from Dunkin’ Donuts for breakfast each morning. These things all fall into the category of a latte factor.

A latte factor is a product that you spend a small amount of  unnecessary money on several times a week or month. Unfortunately, these latte factors could be costing you hundreds, or even thousands of dollars a year. For instance, take the idea of a buying a premium cup of coffee from a place like Starbucks. One of these cups of “premium” coffee costs about $5.  If you spend $5 on coffee 5 days a week, you are spending approximately $100 a month on Starbucks coffee. That translates to about $1,200 a year for your daily cup of Starbucks coffee.  To put it in perspective, you could buy your own coffee and spend about $3 a month by making it at home. That is a savings of $1,164 a year.

As you can see, that latte factor may be slowly but surely draining your bank account. So, what is your latte factor? Do you have more than one? What is something small that you can cut out of your daily routine that may save you hundreds of dollars each year? Finding your latte factor and eliminating it is one of the quickest ways to start saving money today.

 

Saving Money Tip #2: Automatically Deduct Retirement Savings From Your Paycheck

Deducting savings, particularly retirement savings, from your paycheck is one of the easiest ways to save money. It also happens to be another of the ways to save that David Bach recommends in The Automatic Millionaire. What makes saving via payroll deduction so easy is that you never even realize the money was there in the first place. While you may think you have the discipline to put money away for retirement every month, the truth is that most people are kidding themselves. Once the money is in your hand, it is simply too easy to find other things to spend it on.

The best part about these company sponsored plans is that many companies offer some sort of company match should you choose to participate. In other words, your boss will match your savings by giving you more money. That is straight cash homey, and it is FREE! HOLLA! Do your future self a favor and start contributing to a work sponsored 401k or IRA today!

 

Saving Money Tip #3: Try Online Banking

When I was younger, I sucked at balancing my checkbook. I tended to forget to write down my ATM transactions, which caused me to lose a truckload of money in overdraft fees. That’s not good, especially when you are living paycheck to paycheck. How did a moron like me fix this situation? Well, I finally wised up and married my wife – and she watches our money like a hawk! If you are not lucky enough to be married to somebody like Holly, you might want to try to use online banking.

Online banking is great because it gives you an “up to the minute” picture of what your account balance looks like. It makes it very easy to track your money because it gives you instant feedback. Furthermore, you can save money by not having to write checks for every bill you pay. While the initial setup takes a bit of time,  you will save yourself hours of check writing once it is done. If you haven’t already moved to online banking, you should definitely check it out.

Although it may not be considered traditional online banking, there are several rad apps out there that you can use to track your savings and spending as well. The most popular app is called Mint.com. In order to get started, simply create an account through Mint.com. You’ll be asked to connect your bank accounts to the program.  From there, you are ready to save! Mint.com provides all kinds of neat charts and graphs that will help you to track your income, spending, and savings. It is a pretty groovy way to keep track of your money! Plus, while your friends might think you’re a tool for budgeting, they might cut you some slack for doing it in a high-tech way. Bonus!

 

Saving Money Tip #4: Make a Budget

If you really want to get a hold of your finances and start saving money immediately, the best thing that you can do is to make a budget. Using a budget gives your money a purpose. Dave Ramsey likes to say that a budget makes your money behave. By creating a budget, you are consciously telling your money what it should be doing that month.

Making a budget can seem difficult, but it really doesn’t have to be elaborate. All it takes is a piece of paper and a pencil. Don’t have paper or pencil? Label some different envelopes using different expense categories and then stuff them with cash each month. Is using envelopes against your religion? Try using a zero-sum budget – which happens to be our favorite style and the type we think is most effective. There are several different types of budgets that you could use. Just pick one that you like, and make your money go to work. You’ll be amazed at how much extra money you’ll “find” each month!

 

While saving money may not come natural to you, anybody can learn to do it. Simply, adopt a mindset that saving is important to you, and stick with it. So, what are you waiting for? There is no better time to start saving money than TODAY!

 

About Greg

Greg Johnson is a proud husband, father, and debt crusader who believes in living life now while saving for the future. He is the co-founder of the personal finance website Club Thrifty, where he brings the awesome sauce each and every day.

Comments

  1. The automatic retirement deduction from my pay check is what worked best for my wife and me. That way ther’es no thinking about it, it’s not money we can maybe do something else with. It’s just “gone”. Out of sight, out of mind!

  2. Deducting your 401k contributions directly is huge. It’s so weird how you just get used to living without that money. However, if that money gets deposited into your checking account and you fun a Roth IRA on your own, then it feels like you’re sacrificing something and almost paying a bill.

    • Yeah man, we just went through this decision. I’m going to be writing about our Roth IRA/Pay off the House decision in the near future:)

  3. I know in the states that when you put $ into a qualified retirement account, you don’t pay taxes on that money. So this is a totally fake example using made up number and percentages that are way off, but if you put $200/paycheck in there, you wouldn’t have to pay taxes on that so you’re actually only losing $180. You just made $20 long term by putting $$ into your retirement account.

    • Yeah, that is somewhat true. If you put money into a retirement account pretax, you pay taxes on the growth of the money when you cash it out. If you put it into an account with after tax money – like in a Roth IRA – then you pay no tax on it. Our tax laws are all crazy and subject to change at any time, however:)

  4. Great post! You’re right, saving money isn’t difficult. I think many can make it out to be more difficult than it really is. It requires discipline & commitment. The hardest part, I think, is taking the first step to do it. Once you start, then it just becomes natural.

    • Getting started was easily the hardest part for us. Really, it takes a small lifestyle change. As you say, once you make the change, it becomes second nature to you.

  5. All great tips. I don’t drink coffee, but I do have a hard time conquering my addiction to flash sales :( Womp womp. haha Thanks for stopping by!

  6. Budgeting was what worked out so well for me. I would think I had no money to save but really? I was just spending it without thinking about it. Now I have some savings going on and I sometimes think back and think of how silly I was being! The first step was the hardest–I just kept thinking of what I wanted to buy but now? I keep thinking of what that savings is going to buy for me later!

    • Right on! The budget was what got us going as well! We blew so much money without even thinking about it. Now, we wonder where all that money went. BTW – You are doing great! I love following your story:)

  7. The Automatic Millionaire was the book that got me hooked on personal finance. Probably the best college graduation gift I received. Great tips! Now I need to make a budget so that I’m following them all.

    • It is a wonderful book. It was the first personal finance book that I ever read and I loved it. Although we didn’t follow the advice immediately, it provided a great foundation for the way that we operate our finances now. Also, it gave us the courage and the motivation to buy our income properties a few years ago. I highly recommend that book!

  8. “That is straight cash homey, and it is FREE! HOLLA!” Did you laugh when you wrote this? Awesome. I just imagine you cracking up typing that into the piece….

    It also sounds like your budget point could really be: Marry Someone Like Holly Who Is Good At Watching The Checkbook. Was that point #5 that didn’t quite make the piece?

    Good, time honored tips, my friend! Fun piece.

    • I did giggle a little bit when I wrote that line:) I’m glad you enjoyed it! I bummed everbody out yesterday with my life insurance post, so I thought I’d better lighten it up a bit today.

      Holly is awesome at watching our finances. In all seriousness, she has taught me a lot about money since we’ve been together. Now, we work at creating and sticking to our budget each month as a team. I really am lucky to have her.

      (That ought to earn me some bonus points!)

  9. Great post. I need to check out the Automatic Millionaire, sounds like a lot of good stuff in there. I have a friend who gets Starbucks several times a week, regardless of people actually calculating out how much it costs her.

    • It is a great book. I haven’t read it for years, so some of the stuff may be a little bit dated – but the core message is great! I’d definitely recommend checking it out!

  10. I have to say we are 4 for 4 and can vouch for how well they work for saving money. Keeping track of things on paper or on computer also helps you see where your money is going and lets you make adjustments as needed. We are big fans of Quicken.

  11. I use an excel spreadsheet for my track my money. It works well for me. I know others like to use Quicken or Mint or other application. Do what works for you.

    Great post!

  12. Well I think I have done pretty good at eliminating my latte factor and I do have automatic transfers to my retirement savings. Plus I’ve been using online banking for a long time. So one of these days I’ll have to give in and try budgeting. I just find it is tough to get started when leading a very busy life.

    • MM! Get on that budget now! I expect more from you;)

      Seriously though, you will find all kinds of money you didn’t know that you had. I was amazed when we started doing it.

  13. All of these work really wonderfully! And you’re right – its just not that hard to save. Especially for Number 2 – it really helps to treat your retirement like another bill that you HAVE to pay without choice! Trust me – it will be the best bill you ever paid later on in your life!

  14. I have given Automatic Millionaire to a couple of young people after college or during. I wish someone had given me one. You don’t usually miss money you never see. Making it automatic makes saving so much easier.

    • What a great gift! We bought it when we first got married about 7 years ago. I think Holly saw him on Oprah, or something. It is such a great book. I can’t recommend it enough!

  15. I think we all have a “latte” we can give up. For some of us its coffee, for others its eating out for lunch, and for others its your favorite hobby.

    In order to help me save more, I have a “split-deposit” that splits my paycheck into 2 accounts. One is savings and the other is my living expenses that pays all my bills. Funny thing is that I usually don’t notice it.

    • Jason, that is a great idea! If you can make savings automatic, it certainly helps to build that account up. I’ve found that it is a lot tougher for me to take the money out of my account once it is labled as savings.

  16. Luckily, I don’t drink coffee…but Holly does. My latte factor was eating out for lunch every day. Once I got that under control, I noticed a considerable difference in my bank account.

  17. Great post! That latte looks yummy, but it’s much better to make your own at home, rather than spend $5 a day at Starbucks. I like that term “latte factor” because I feel like a lot of people purchase something small each day and they think it’s no big deal because its only $5 or so. But that $5 a day quickly adds up!

    • It really does add up fast! If you asked somebody if they were willing to pay $1,200 a year for coffee, they’d probably say no. Yet, that is what they are doing. They’ve just never thought of it in those terms before.

  18. Check, check, check! I’ve already kicked my latte factor ($2/pop bars that I used to eat at least once a day…silly, I know) and am doing the rest diligently!

  19. Done and done! I’ve never drank coffee regularly, have a 401k setup at work, use Mint.com religiously, and have a sweet budget in Excel.

    I would be curious to see the health cost savings with the latte factor as well. It has to be much better for you to kick the foamy latte or donuts and replace them with some fresh fruit or granola cereal or something…

    • I would think it would be healthier for you. I’m sure that there is a study on that somewhere. If not, I see a new post at Iheartbudgets!

      Look at you getting all techy with your savings! Nice work!

  20. I’ve been working on my latte factor lately. My break room is a convience store, so there is a LOT of temptation. Especially since the burritos that a local Mexican resteraunt sells there are so good! But for the week, I’ve bought a grand total of 2 coffees, which is about 3 coffees and 4 burritos short of where I usually am at by the end of Thursday.

  21. Well as you know I’m all for the budget but the latte factor is a huge one as well. I did a cost comparison of 2 co-workers, 1 who brought coffee and the other who bought coffee and lunch everyday. You can only imagine how shocking the numbers were. Bring your lunch and coffee to work folks and save the $$$. Cheers Mr.CBB

  22. Thanks for great advices! I will try some of this. Also, I eliminated my latte factor long ago :)

  23. Own some thing a little bit more distinctive? ;-) Let’s say, product reviews or possibly blog posts with reference to beginners photography course.

    Could I subscribe to the articles you write?!

Trackbacks

  1. […] Club Thrifty- Start Saving Money Today With These 4 Simple Tips […]

  2. […] Club Thrifty – Start Saving Money Today with These 4 Simple Tips […]

Speak Your Mind

*