Like the rest of us, you work extremely hard for your money.
Also, like the rest of us, you have some pretty important financial goals you want to achieve, whether that’s increasing your savings rate, building an adequate emergency fund, buying your first home, or retiring by the age of 60.
This is why it’s important to find ways to keep as much of your hard-earned money in your hands as possible.
But knowing what to do next when it comes to finding ways to save money isn’t always as straightforward as it should be. Fortunately for you, we’ve compiled 15 effective and proven money hacks that you can start using almost immediately to help you save thousands of dollars.
1. Create a Plan for Your Money
First and foremost, before anything else, you’ll want to create a game plan and overall strategy for your money. Doing this is arguably, or maybe inarguably, one of the best things you can do right now to make sure you’re setting yourself up for a successful financial future.
In fact, few things can make a difference in your financial outcome more than having a financial plan.
Let’s consider it in the context of things most of us are familiar with. There’s a good chance you wouldn’t play a new board game without reading the instructions or even trying to solve a puzzle without seeing the picture on the front. There’s also a good chance that you wouldn’t travel to a completely new destination without a map or a basic set of instructions. And there’s an even better chance that you wouldn’t build a new house without having detailed blueprints.
Yet, most of us have continued to navigate our financial lives without even the most basic plan in place. That means for the most important financial decisions of our lives, including our path to retirement, we’re navigating them blindly.
The stark reality is that Americans struggle with their financial lives, including the decisions they’re making. Having a plan can and will change that.
Make a promise to yourself for 2021 to start taking control of your financial life by putting a game plan in place to help you set goals, provide motivation, and provide insight into all the major areas of your financial life.
2. Use Free Financial Tools and Calculators
With the sheer abundance of financial tools, apps, and calculators that exist, not having some basic financial understanding and insight into how you’re doing is no excuse.
You can literally find a financial tool and calculator for just about anything. What’s even better is that several of the best online resources and tools are either completely free to use or offer some free version you can get started with.
These tools can help you quickly and accurately assess your financial situation or certain parts of it so that you can gain insight into how you’re doing and where you should be focusing your attention.
For example, if you’re looking to determine the impact of compound interest on your retirement savings, you can quickly Google for the best of those calculators. If you’re looking to draft a monthly budget quickly, you’ll want to use a monthly budget calculator. If you’re looking for insight into your retirement outlook and current trajectory, consider using an online retirement calculator.
3. Find Yourself an Accountability Partner
An accountability partner can be the extra motivation you need to help keep you focused and stay the course.
If you’re unsure exactly what an accountability partner is, it’s exactly what it sounds like: someone who is there to help you stay accountable and on top of your financial progress.
This person can be a spouse or a partner you’re living with, or it can be a friend, colleague, or relative that you trust. The key here is that this person needs to be someone that you can trust, rely on, and have open conversations about money. Additionally, this person should be someone that can keep you accountable and vice versa.
I would highly recommend having regular “check-ins” and conversations about money the same way you would have a regular phone call with a friend or a scheduled one-on-one meeting with an employer.
4. Use a Cash-Only Budget
If you’re anything like me, you might find yourself being constantly tempted to overspend using your credit cards. Don’t feel bad about that, but rather take control of the situation and consider temporarily switching to a cash-only budget.
Sure, this might not be very convenient in certain situations, but this method is a great way to reduce a lot of impulse spending and prevent yourself from overspending. You’ll quickly learn how to consciously consider your purchasing choices and stay on track with your savings goals. The real winner here is that you’ll instantly gain a better understanding of how much you’re actually spending—opposed to the tap and go temptation with credit cards.
Alright, so it sounds like a good idea, but how exactly do you move forward with it and put it to practice? One of the simplest ways to implement this is to use what’s known as the envelope system. At the beginning of each period (typically monthly or bi-weekly), stash your budgeted amount of cash into envelopes with labels for each spending category. The amount for each category is the maximum amount you’re able to spend within that given time period. Once you’ve run out of cash for a specific envelope, you’ve spent your budgeted amount.
It’s certainly not easy, but it will definitely keep you accountable and more aware of how you’ve been spending your money.
5. Automate What You Can (Your Savings and Expenses)
Automating your monthly savings is still a hugely underrated mechanism that can help you save more while spending less. Not to mention that you’ll feel instant relief knowing that your money is being put to good use immediately.
What’s even better is that it’s straightforward to implement and use almost immediately. I’d recommend setting up an automatic transfer or split a direct deposit to correspond with every payday.
That way, each time you’re getting paid, you’re investing in yourself first the way it should be. Regardless of the amount, the real trick here is getting started — start with a small amount like $20 or $50 from every paycheck and then work your way up from there.
In addition to automating your savings, consider automating your monthly recurring expenses as well. Rather than leaving it up to email reminders and notifications, it’s in your best interest to make sure you’re paying your bills on time for several reasons.
First, late payments, especially on credit accounts, can put a dent in your credit score. Second, the interest from these expenses compounds, which means you’ll end up paying more than you should ever have to.
6. Challenge Your Friends to a no-Spend Challenge
One of the best ways to save money is by not spending it at all. This is where a no-spend challenge can be a serious game-changer.
If you’re unfamiliar with the concept, it’s exactly as it sounds. A dedicated period of time, usually one week or one month, where you challenge your friends or an accountability partner not to spend money on anything other than the necessities.
To improve your results, you’ll want to keep any cards or cash out of sight and out of reach. Deposit any cash you have lying around, and either hide or even freeze your credit cards right before the challenge. It sounds strange, but believe me, it works.
7. Put Additional Funds into Your Savings Account
Found an extra $5, $10, or even $20 in your jean pocket or on your car floor? At times that can feel like the jackpot when you least expect it.