I’ve managed to save between 50-90% of my salary by following these 10 tips.
So can you.
#1. Stop buying things you don’t need
I may be stating the obvious here, but you’d be surprised how much junk people hoard on a regular basis.
Do you really need another pair of shoes? Or a new iPhone every two years? Is that Netflix subscription really worth it?
If the answer to these questions is no, there’s hope for you yet.
Make a list of all the things that are swallowing up your savings and you’ll be amazed at how much money you can put away for that trip you’ve always wanted to take.
#2. Eat at home
Eating in restaurants can get really expensive.
A good way to save money is to buy food in the supermarket and cook it.
I personally have no kitchen skills whatsoever. I’ve managed to mess up a Betty Crocker pizza crust where the only directions were “add water.” I’ve burnt pasta and soup! Trust me, I make Bridget Jones look like Jamie Oliver.
And if I can do this, so can you.
You don’t have to live on pasta and frozen green beans every night, but as a rule, the same meal you ordered at a restaurant for $20 can be cooked at home for a fraction of the cost.
If you’re too busy to cook every night, you can elect to cook once or twice a week instead and refrigerate or freeze the meals for later on. To make things simple, buy containers and label them using the days of the week. That way, you only have to peak inside the fridge/freezer, grab the one that says “Tuesday,” throw it in the microwave for a couple of minutes (although the stove is probably better), and dinner is served.
If you’re a restaurant enthusiast like I am, you can limit this habit to one splurge per week in order to ease the transition. I find that instead of going to my mediocre “regulars” a couple of times a week, eating at home most nights and then going out to someplace new (reasonably priced of course) allows me to feel like I’m not depriving myself of my comfort food.
You’ll still be saving a lot more than you used to.
#3. Take a packed lunch to work
You probably haven’t done the lunchbox routine since kindergarten.
Relax, I’m not going to make you carry around a Power Rangers thermos. But here’s what you can do to save some dough on those pricey take-out lunches.
At the beginning of the week, create a meal plan. The first time you sit down to do this you’ll be totally lost. I didn’t either know what I’d be in the mood for on Thursday for lunch. The trick is to come up with a list of meals you like and eat regularly. When you get to 5 or 6, you can start meal planning.
Make sure you choose packed lunches that are filling or you’ll be spending double the amount on take-out later on.
If you don’t have time in the morning, pack your lunch the night before. You can also cook enough dinner to enable you to pack the leftovers for work the next day, killing two birds with one stone.
Even if your take-out lunches only used to cost $5 per day, that’s still a saving of $25 per week, over $100 per month, and over $1,200 per year. You can blow your savings on a round trip ticket to Paris and still have some money left over for lunch at the Eiffel Tower restaurant. Bon voyage.
#4. Skip the Starbucks
Here’s why:
Cost of the cheapest beverage at Starbucks: $1.50 (or more in the UK)
Cost of making coffee at home: < 10¢
And let’s face it, you’re not going to Starbucks for the Pike Place Roast…you’re getting the Caramel Macchiato, which costs a hell of lot more than $1.50.
If you’re a coffee addict like I am, this will sting (I literally have baristas who know my name on 3 different continents).
Maxwell House and Tasters Choice just don’t stack up to the real stuff.
Assuming that you do actually get the Pike Place Roast (without the syrups – no cheating!), and assuming that you only frequent Starbucks on weekdays…drinking coffee at home will save you at least $7 per week, at least $30 per month, and at least $360 per year. If you spend more than $2 on coffee per weekday (which you probably do), you can save over $10 per week, over $40 per month, and almost $500 per year.
You can then put that money towards a nice trip to Rome where you’ll have “real” cappuccino by the Coliseum.
Still want that Pike Place Roast? I didn’t think so.
#5. Minimize “going out” nights
Unless you’re a Mormon, a night out can cost upwards of $50 on a good day.
And you probably won’t remember it the next morning, let alone a week or two down the road.
As a general rule, “going out” should be limited to once a week (maximum), and if you’re already doing that, minimize it even further (once every two weeks). Skip the ritzy places (you’re not Leonardo DiCaprio) and take advantage of Happy Hours.
You will thank me all the way from Patong Beach.
#6. Ditch the car and learn to love the train
If you live in an area where public transportation is readily available, learn to use it.
The US used to have some of the cheapest gas prices in the developed world. It still does but those prices quadrupled in the last decade.
The cost of maintaining a car now is exponentially higher than when I first started driving (I swear, my driving had nothing to do with it, although this can be debated). Aside from the car itself, you will need to purchase car insurance, fill it with gas every week, pay for inspections, and other general maintenance expenses. If you live in an area where parking is a problem, you will need to pay for that as well. And all this is before you factor in parking tickets, speeding tickets, and fender benders, which, even if you’re careful, can happen at any time and cost you a month’s salary.
By the time you finish paying off your car expenses for the month, you could have adopted a Cambodian child.
To put it bluntly, unless you’re making six-figures-a-year (you wouldn’t be reading my blog if you were), there is absolutely no reason for you to own a car in a place that has a reliable public transportation network. For the 2 or 3 times a year that you go visit your family in Cleveland, you can rent a car. Even the most expensive last minute Thanksgiving weekend car rentals are cheaper than what you’re paying now. Zip Car is another great option for inner city driving.
“Reliable” public transportation is obviously in the eye of the beholder. I spent 3 years complaining about New York’s subway system…and then I went to LA. Suddenly the C train didn’t seem so bad. If you think the Green Line in Boston sucks, lose the attitude and leave your house a few minutes earlier. Keep that image of Machu Picchu in the forefront of your mind and you will prevail.
If your commute is seriously driving you crazy, download a few books on your eReader and see how many works of classic literature you can finish in a month. It’s better than sitting in traffic and you’ll have much more interesting conversations as a result.
If you live in a place that genuinely has unreliable public transportation, like LA, the only thing I can suggest is… move. San Francisco is a wonderful city and it’s only a few hours up the coast. You can even get there by train.
Speaking of moving…
#7. Move back in with your parents
If you’re part of the Millennial Generation, you’re probably already doing this.
As awkward as it sounds, putting up with the folks for a couple of months can mean at least $1,000 in savings on rent, electricity, etc. In most cases, it’s even more than that. If this is too painful for you to even consider, consider this: you could be in Phuket right now.
Just think of your happy place and all will be well.
If you’re 45, live far away, and/or living with your parents is not a viable option…
#8. Share your apartment
I have to confess, I’ve never had my own place.
Before you jump into a comparison of introverts vs. extroverts, you should know that I am a closeted introvert and I value my privacy immensely.
And I still never felt deprived.
Just find a couple of people who are laid back and aren’t party animals (unless you are) and you’ll be fine. My current place has four studio-sized bedrooms and each one can be locked from the outside. Aside from the kitchen, living area, and bathroom, my roommates and I each have complete privacy.
Having 3 other apartment/flatmates is about average for me but if that’s too much for you, 1 or 2 can also save you a substantial amount on rent.
I currently spend about $400 on rent and about $25 on electricity (another $15 for internet). I live in a nice area in an expensive city, and I can walk to the Mediterranean in less than 5 minutes. If I had my own bachelorette pad, I would be paying upwards of $2,000 total. The difference in price means 6 weeks in Southeast Asia or a round trip ticket to Australia…Every month.
Plus, it’s more fun than coming home to an empty apartment…and a cat (there’s always a cat).
Sharing is caring.
#9. Create an expenses spreadsheet on Excel
You don’t need to be technical to do this. Just disciplined.
Open up Excel and name the new file “Expenses.”
The first column should have the date, the second column should have the price, the third column should have the item and the fourth column should have notes.
For example:
Nov 1 – $400 – rent – check
Nov 2 – $42.36 – Verizon – cc (Visa)
Nov 2 – $5 – Mexican food – cash
Nov 3 – $1,300 – Thai Airways – cc (AmEx)
Another way to do this is to divide your expenses into “necessities” and “luxuries” and keep them in separate columns.
Spend 5-10 minutes every night going over your spreadsheet and updating it with the day’s expenses. Don’t cheat – make sure to include everything, even if it’s only a couple of dollars.
Doing this makes you extremely conscious of where your money is going and at what rate.
It’s kind of like a diet where you need to write down everything you ate that day and how many calories you’ve consumed. Suddenly, you’ll stop eating so much as you become more and more aware of how much you’re actually eating.
I started doing this a couple of months ago (obsessively, I might add) and I find that I now need to justify every purchase I make, and as a result, I’m spending much less than I used to.
#10. Set a budget and stick to it
If you’re really disciplined at #9, you can start being proactive with cutting costs.
You can add a fifth column to the “necessities” half of the spreasheet and call it “budget.” Set yourself a budget for the month (let’s say $1,000 not including rent). Divide your monthly budget by the amount of days there are in the month (there are 30 days in November so your daily budget for this month is $33.33). Chose a round number to make things simpler (either $30 or $35 – I always go with the lower number).
The goal is to keep the budget column at 0. For every day that you go over $30, you have to add the difference to your budget column. For every day that you go under $30, you can subtract the difference in your budget column.
For example:
Nov 1 – $38 – Walmart – cc (Visa) – +8
Nov 2 – $5 – Mexican food – cash – -25 or (25) in Excel format
[In Excel, you will need to use brackets around the 25 to make it a negative number, otherwise it will turn into a formula]
Total budget savings so far: $17
Good job.
This may sound a bit obsessive but it really motivates you to spend less money. If you’re anything like me, you’ll find yourself caught in a “race to the bottom” where every month you’ll try to beat your previous record and, in the process, lower your monthly budget by more than you could have ever thought possible. My current daily budget is about $6 per day, but this is a bit extreme and I live in a country where this is doable. When I lived in Scotland, I actually got it down to £1 per day (about $1.60), but I worked in a hostel so accommodations weren’t costing me anything and free food was ubiquitous. Figure out how much money you need to live on and don’t spend any more. Simple.
The point is, it can be done and you can do it.
Staying focused on your end goal and being organized is the key here. I’ve managed to save between 50-90% of my salary this way and I genuinely don’t feel like I’m missing out on anything. You’ll feel a lot better about your frugal lifestyle when you get to travel the world and see the places you’ve always dreamed about.
The Idiot’s Guide to Thrift Tripping 