7 Best Ways To Save More Money When You Can’t (or Don’t Want To) Increase Your Income
GOBankingRates surveyed 1,039 Americans adults from across the country in November 2023, asking them to describe their top financial goal for 2024. Surprisingly, while 25% wanted to save more, only 18% wished to make more money.
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If you’re one of the many who can’t — or don’t want to — increase your income, explore the following methods to beef up your savings without putting in overtime.
Audit Your Expenses and Identify Areas To Cut Back
“Review your expenses over the past few months — from obvious bills to discretionary latte purchases. See where you might be able to scale back without major lifestyle sacrifice, even if just by 10 to 15%,” advised Scott Neu, AIF, financial advisor at Reinke Gray Wealth Management. Once you’ve audited your expenses and identified areas to cut back, transfer those savings automatically to a separate account before you’re tempted to spend it.
Some of the best places to store your savings include high-yield savings accounts, money market accounts, and certificates of deposits. Depending on the account type you choose and the financial institution you open an account with, you may be able to earn 5% APY or higher on your savings — much higher than the national average savings rate of 0.46% APY as of November 2023. By lowering your monthly expenses and storing those extra savings in an interest-bearing account, you’re saving more without lifting a finger.
Pay Off High-Interest Debt
The longer you’re in debt, the more you’ll pay in interest over the lifetime of the loan. For example, if you have $6,000 in debt on a 15% interest, that’s $900 a year in interest payments without even swiping the card.
So, another way to increase your cash flow without boosting your income is by paying off high-interest debt. “If you’re carrying credit card balances or personal loans above 5 to 7% interest, prioritize directing any extra cash flow towards paying those down faster,” Neu suggested. While it may initially seem counterintuitive to allocate funds toward debt repayment, you’re saving money on future interest payments by paying your debt off early.
If you’re drowning in high-interest debt, consider taking out a debt consolidation loan or applying for a balance transfer card to lower your interest payments. You can also try the debt avalanche and debt snowball methods to focus your attention on one debt at a time. The debt avalanche method recommends paying off the loan with the highest interest rate first, and the debt snowball method involves paying off the smallest balance first and working your way up.
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Negotiate Your Recurring Bills
“You’d be surprised how much wiggle room you have on monthly bills for things like cable packages, phone plans, gym memberships, and more,” said Neu.
If you haven’t already, research current market rates and promotions for the services you’re subscribed to. Then, call customer service and mention the competing offers or discounts you’ve discovered and see if they can offer you any promotions or loyalty discounts to bring costs down.
Be polite but firm when negotiating, but also remember that your service providers are not obligated to offer you a lower rate, so be open to compromise as well.
Get a Roommate or Move In With Family
According to a GOBankingRates survey in August 2023, around 32% of Americans pay rent in the range of $501 to $1,000 every month. In expensive states like California, rent can be even higher. As of May 2023, the average rent for a one-bedroom apartment in California is $1625.60.
If you’re looking for a straightforward way to save hundreds of dollars monthly without working extra hours, consider getting a roommate or moving in with family. While you may have to sacrifice your quality of life and give up some freedom in the short term, you could use those savings to invest in your future and boost your financial stability.
Take Advantage of Tax-Deferred Retirement Accounts
With tax-deferred accounts, your contributions are typically tax deductible now, and you’ll only get a tax bill once you withdraw in retirement. So, by taking advantage of tax-deferred accounts, you can reduce the money you owe in taxes and have more funds available to deposit into your savings accounts.
Isabel Fliss, financial advisor at McKague Financial, suggests increasing contributions to tax-deferred retirement accounts like 401(k)s, 457s, 403(b)s, and similar plans to decrease your income tax. “Some employers may even match workplace benefits contributions, which means leveling up your personal contributions can lead to additional employer contributions and increase savings without having to work additional hours,” she said.
Plan Meals and Cook at Home
Eating out and ordering food from delivery apps like Uber Eats can quickly drain your bank account if you’re not mindful of your spending. A recent US Foods survey of a thousand Americans found that the average person spends around $166 monthly, almost $2,000 annually, dining out.
If you can’t — or don’t want to — increase your income, one of the simplest ways to put more money back into your bank account is by reducing the amount you spend on food. Despite the convenience of eating out or ordering in, the reality is that, in most cases, you can re-create those meals at home for a fraction of the cost. If you need inspiration for affordable home-cooked meals, check out our list of the best budget-friendly recipes.
Quit Expensive and Unhealthy Habits
Whether it’s impulsive shopping, gambling, drinking, smoking packs of cigarettes each day, or spending thousands of dollars on video games, expensive and unhealthy habits can put a dent in your wallet over time. However, if you can quit these behaviors, you could immediately free up space in your budget to redirect toward more meaningful financial goals.
Quitting any type of addiction or unhealthy habit cold turkey can be challenging and even result in withdrawal symptoms. Consider working with a counselor or therapist who can help you navigate the transition and provide support throughout the process.
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This article originally appeared on GOBankingRates.com: 7 Best Ways To Save More Money When You Can’t (or Don’t Want To) Increase Your Income
