Easy Saving Tips

We as a society don’t save enough for retirement. As Dan Ariely explains in Predictably Irrational, “research in behavioral economics points to many possible reasons” for this. For example, “[p]eople procrastinate. People have a hard time understanding the real cost of not saving as well as the benefits of saving….It is easy to create consumption habits and hard to give them up. And there are many, many more reasons.”

Part of the problem is that we generally associate saving money with sacrifice. But as James Clear notes in Atomic Habits, “you can associate it with freedom rather than limitation if you realize one simple truth: living below your current means increases your future means. The money you save this month increases your purchasing power next month.”

The amount of money you save, of course, is a function of both how much you make and how much you spend.

Often when you first start budgeting, there will be some low-hanging fruit to reduce spending. Becoming overly focused on reducing spending, however, taken to extremes, can lead to a scarcity mindset and be counterproductive to happiness. Search costs for the best deal can also eat up valuable time that you could deploy more productively elsewhere.

To avoid scarcity thinking while maintaining a handle on spending, I’ve found it helpful to reframe thinking about spending as investment in what I’m purchasing. This helps me think through whether I need, will enjoy, or value what I’m looking to buy enough to offset the time and energy required to earn what it costs.

Strategy 1: Make It Simple

You’re far more likely to do something if you set it as a default as opposed to relying on willpower and manual effort to do it. For that reason, I love setting up savings and investments that happen automatically.

• Automate contributions. It’s helpful to separate money you’ve saved from your day-to-day funds. Automatic contributions to retirement, Health Savings Accounts, 529 accounts, and other savings vehicles can prevent you from repurposing the funds.

  Dedicating these funds to a specific purpose also harnesses our natural tendency to mentally account for funds to our benefit – you probably (hopefully) won’t be tempted to raid you children’s college fund once the funds are so earmarked.

  If your employer allows you to split direct deposits between accounts, you can divert money to different accounts for different purposes. If not, you can set up automatic transfers to accomplish the same thing.

• Acorns. I like Acorns, which rounds up your purchases and transfers them to an investment account. I also automatically transfer a small amount that I won’t miss weekly to Acorns. This works for my budget, given that I tend to keep a decent buffer in my main account.

  This won’t be ideal for everyone. For example, it would not work if you budget down to the dollar, as the amount of the round ups drawn from your account can vary month to month. The monthly $3 fee also may not be worth it for some if you don’t intend to invest more than round-ups. I like it, though, as an automatic way of saving small amounts I don’t miss.

• Cash back browser extensions.* There are many options for browser extensions that offer cash back on purchases from various websites. These also automatically locate and try coupons available for different sites. It saves me from scouring the internet trying to figure out if I'm getting the best deal on an item. These aren't 100% automated in that they do require clicking a button, but they're easy.

  This can be particularly helpful around holiday shopping. I started out using primarily Rakuten. Another popular option is Top Cash Back, which offers a greater percentage cash back on some sites and also more flexibility for redemption.

Strategy 2: Look for Savings that Align with Your Values

I’m a proponent of both saving and spending that aligns with your values. To the extent environmental concerns move you, there are a number of earth-friendly ways to reduce spending:

• Limit single-use items. I’m a big fan of spending choices aligning with personal values, and limiting the use of reusable products is a way to both save money and help the earth.

  For example, I cannot get my spouse to eliminate paper towel use, but having reusable cloth rags handy does both save money and reduce waste, a double win. You can do something as simple as cutting up old clothes you don’t need or order fancier reusable paper towels.

• Consider buying used. Purchasing used items is both budget- and environmentally friendly. We recently furnished an entire house, including couches, a table from a high-end brand, and three top-quality bedrooms sets for under $5000. My husband is also well-known in our house for picking up free furniture our neighbors are giving away. When my kids were little, I routinely bought and sold things through our community Facebook group at a fraction of the retail price.

  This can take some time to piece together if you go through websites, and of course be careful dealing with people you don’t know. If you aren’t comfortable with private party transactions, there are websites like kaiyo.com that offer high-quality secondhand furniture for much more affordable prices.

• Use the library. I spent a small fortune on books in my 20s. Rather than buying new physical or ebooks, consider setting up an account with your public library. Libraries typically have a solid collection of ebooks if you prefer to read online.

• Buy less stuff. This is perhaps the least helpful but most potentially impactful action item on this list. I am guilty of buying a string of Amazon purchases that seem essential in the moment but go unused in my house. All of this stuff not only results in clutter and carrying costs (hello, 10x20 storage unit) but also has serious repercussions for the earth.

  I’m not saying don’t buy anything new – that would be unrealistic for most – but consider inserting some friction between you and new purchases. Strategies include not saving a credit card on your favorite website(s) or self-imposing a waiting period before you buy anything in your online cart. You may be surprised by what you don't miss.

Strategy 3: Budget Line-Item Savings

There are also a few easy places to look for savings within budget line items.

One of the biggest areas of potential savings is subscriptions. There are so many different streaming services available, it’s easy to lose track of them. While a few $10+ per month services may not seem like much, they can add up! If you use the service all the time, great, keep it. When you analyze your budget, though, you may find a number of subscriptions that you forgot you signed up for, forgot to cancel after a free trial period, or don’t use enough to justify the cost.

You also might consider if you can cut down a service that you do need, like replacing a more expensive cell phone carrier with a mobile virtual network operator running on the same network or replacing cable with a more affordable streaming service that offers the content you watch.

Shopping for insurance is not fun, but it’s worth doing periodically. Luckily, there are websites now that do the comparison shopping for you, like thezebra.com. The last time we shopped insurance, painful as it was, it saved us several hundred dollars annually.

For your entertainment budget, consider ways to replace pricey activities with free ones (such as going for a hike or to the park with friends instead of eating out). I’m not suggesting you never enjoy a night out, but if you’re on a tight budget there are a lot of ways to spend time with friends that don’t require huge financial outlays as long as you’re thoughtful about it.

For more general savings, I have used sites like Raise.com to purchase gift cards at a discount. I typically only buy gift cards I know I need for an intended upcoming purchase, and I only take the time to do this if the discount merits a few extra minutes to do so.

*I am not a cybersecurity expert – please do your own research before installing any extension or using any product. The links to Acorns, Rakuten, Top Cash Back, and Raise.com are referrals, which offer a bonus to both of us.

Disclaimer: I am not certified in financial planning, nor am I familiar with your personal financial situation. These are my thoughts grounded in my experience, which will differ from yours. Please run any of these ideas by someone familiar with your situation!