Could you save $10,000 in a year? Sounds good right about now, doesn't it. Many households could. And they could become millionaires as a result.
The average four-person American household spends more than $66,000 a year, according to the federal government's most recent Consumer Expenditure Survey. Cutting $10,000 would mean scaling back a mere 15 percent. Or expressed another way, find ways to cut a buck from every $6 or $7 you
spend.
And the great news? Your efforts to save $10,000 mean you're $10,000 richer. That's as opposed to earning an extra $10,000, of which you keep maybe $7,000 after taxes and Social Security take their bites.
How do you save such huge sums of money?
Spending smart.
First, let me tell you what spending smart is NOT: It is not about being a cheapskate. It's not some "live cheap, die loaded plan" or some exercise in financial anorexia. I don't tell you how to make sweater vests from dryer lint or separate two-ply toilet paper into two rolls.
No, spending smart is about spending on purpose, rather than by accident and habit. It's about plugging the leaks of wasteful spending and redirecting that money to things you truly care about. In that way, it's not about deprivation. It's about liberation. It's about how to spend smarter on stuff you're buying already anyway. The goal is to reallocate spending so you satisfy all your needs and a whole lot of your wants too.
So how do you save $10,000 in one year?
Many personal finance writers who dole out such advice get their biggest savings from suggesting you refinance your home mortgage from a high rate to a low rate. I'm not going to do that. I'll assume you've already refinanced if it was in your best interest. After all, we've had low interest rates for quite a few years now. If you haven't refinanced, rates are revisiting all-time lows, so it might be worthwhile.
Instead, let's look at your regular spending. It might reveal easy, painless cuts you might not even be aware of. Below are just a few examples of spending areas that, combined, reap a cool $10,725. These ideas may not all apply to your household, but they will give you some ideas.
Food
Food spending has two main categories: eating in and eating out. You can save big money on both.
Spending on eating in requires grocery shopping, of course. The idea while grocery shopping is you shouldn't go to the store each week to buy what you need. Instead, you should buy what's on sale and stockpile it. Think about that for a minute: You buy the exact same products and brands, you just buy them at ideal times. You compound your savings when you buy multiple items at the sales price. You further compound savings on those sale items by using coupons — both the Sunday newspaper kind and those you print off the Internet. Printable coupons are available at such websites as CouponMom.com, SmartSource.com, and Coupons.com.
To save money on eating out, the big idea is to do it less often. Dine out on special occasions and because you want to, not because you're a poor meal planner. We've all done it. You come home tired and frazzled, and haven't given dinner a thought. It's just easier to head to a restaurant.
The solution is freezer meals. What are freezer meals? Whenever you cook, make double and triple batches. If you're making meatloaf, make three and freeze two. Then on those rushed evenings, you're only microwave minutes away from a healthy and inexpensive dinner.
And of course, you could bring your lunch to work. It doesn't take much time. You could pack a lunch during television commercial breaks of
American Idol or
Lost.
You can easily save 20 percent on your grocery bill by matching coupons with store sales and stockpiling what you buy. Expert shoppers say they save 50 percent or more. For eating out, could you get by with $150 per month if you planned more home-cooked meals? Here's the annual accounting, using figures from the U.S. Consumer Expenditure Survey:
- Food at home: $4,967 reduced to $3,974. Savings $993.
- Food out: $3,704 reduced to $1,800. Savings $1,904.
- Total savings: $2,897
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