Friday , June 21 2024
Americans are Saving Hundreds Each Month Using These 5 Methods

Five Ways Americans are Saving Hundreds Each Month

American culture has plenty of positive attributes, but if you were to list some of the unflattering ones, words like “excess” and “waste” would hold prominent positions near the top. This is certainly true when it comes to spending, where most American households don’t have a clue how high their monthly expenses truly are.

Five Ways to Lower Your Monthly Bills

Would it surprise you to learn that 78 percent of full-time American workers live paycheck to paycheck? In fact, most Americans spend more than they make each month, which leads them deeper and deeper into debt.

If you’re tired of living paycheck to paycheck and seeing your debts increase year by year, it’s time to gain control of your finances. And while there’s nothing wrong with increasing your income, your primary focus – for the time being – should be on lowering your monthly expenses.

Here are some ways you can do just that:

1. Develop an Accurate Budget

According to data gathered by GuideVine, just 66 percent of households have a documented budget. And of these families, seven out of 10 struggle to stick to their budgets. If your family lacks a budget, you probably don’t know how much you’re spending on a monthly basis. You simply hope that everything works out and there’s money left at the end of the month.

Before doing anything else, take the time to create a written budget with itemized expenses. This is your starting point. From here, you can focus on whittling down these expenses and saving money.

2. Negotiate Better Utility Rates

Most families spend a good portion of their monthly income on utilities – electricity, gas, water, cable, internet, etc. And while there are certain utilities that leave you with very little room for negotiation, others – such as cable – can be negotiated and shopped around.

Check your most recent cable bill and see how much you’re spending. Next, compile a list of all the cable TV providers in your area. In addition to reviewing the prices on their websites, make some phone calls and see what offers you can get. It’s not unheard of to find savings of $50 or $60 per month from one provider to the next.

Or consider joining the many Americans who have cut out cable entirely in favor of monthly-fee streaming services offered by companies like Netflix, Hulu, and Amazon that add up to a good deal less than a cable bill.

3. Refinance Your Mortgage

Interest rates have bottomed out recently. And while they’ve been rising over the past year, they’re still at historically low rates. If you’ve put off refinancing and still have an interest rate that’s above five or six percent, you could potentially save hundreds of dollars per month by refinancing to a fixed-rate mortgage below 4.5 percent.

It may also be worth making aggressive premium payments on your mortgage to get your equity up above 20 percent of the loan amount. In doing so, you can get rid of private mortgage insurance (PMI), which may be costing you hundreds per month.

4. Be Smart With Food

The average family of four spends up to $1,284 a month on food at home – or roughly $321 per week. This figure doesn’t include eating out, which often accounts for another $500 or $600. Thus, when it’s all said and done, you may be spending close to $2,000 of your monthly take-home pay on food.

Food is certainly a necessary expense, but there’s no reason why you can’t cut this by 25 to 50 percent. Through smart shopping – which includes using coupons, buying bulk, and packing your own lunches for school and work – it’s more realistic than you think.

5. Re-Shop Auto Insurance

Auto insurance is one of those things you don’t spend a lot of time thinking about. You likely have the bill set up on auto-pay and you forget about it. But according to the J.D. Power 2016 U.S. Insurance Shopping Study, consumers who shop for better rates and switch insurers save an average of $356 on their annual premiums.

Save and Invest the Difference

It doesn’t hurt to have a high income, but a bit salary isn’t the only factor that goes into wealth building. If you look at a list of everyday millionaires, there are plenty of people who reach a seven-figure net worth in spite of making an average five-figure salary. For example, a 25-year-old with a monthly income of $3,284 can become a millionaire by the age of 63 simply by putting away $442 per month – or 13.47 percent of his monthly income.

The key to wealth building is to live on less than you make. Using these ideas, you should be able to reduce your monthly expenses by a few hundred dollars. Instead of blowing this money on pointless purchases and shopping sprees, save and invest it. When you look up in three to five years, you’ll have thousands of dollars set aside.

For those who earn a moderate salary, delaying gratification is the surest path to financial success. Do you have what it takes?

About Jenna Cyprus

Jenna is a freelance writer who loves the outdoors; especially camping while relaxing with her family.

Check Also

The 401(k): the Best and Easiest Way to Save for Retirement

Run, don't walk to sign up for your 401(k). Because of the exponential growth of compound interest, the best time to start saving for retirement is yesterday.