Strapped for Cash? 18 Smart Ways You Can Save Money
Life + Money

Strapped for Cash? 18 Smart Ways You Can Save Money


If you are among the nearly 50 percent of Americans living paycheck to paycheck, you probably know that saving for retirement and unexpected expenses is critical, but you might not think you have the ability to do so, new research finds.

A study by Fifth Third Bank found that even though more than half of Americans know that an emergency fund should contain six months’ worth of living expenses, two-thirds don’t have that much set aside. In fact, a little under one third don’t have anything saved.

Related: Here’s Why Millennials Are Money-Saving Champs

And even though more than eight in 10 know how to plan for retirement, only 50 percent of them actually contribute to a retirement plan, like a 401(k) or IRA. In addition, just half of Americans know how much money they have saved for retirement — if they have any at all.

Jeff Witherspoon, executive director of the Consumer Credit Counseling Service, advises people to have an emergency fund that equates to at least three to four months in typical living expenses. “A lot of people say they can’t do that, but it’s like eating an elephant. You’ll get there over time.”

A credit counselor for American Financial Solutions, Donna Loitz, recommends avoiding the big picture when you’re just beginning to save so you won’t be   overwhelmed. “Look at what you have and take it from there. Focus on your current situation and then work towards your goal,” Loitz says. 

In terms of retirement, Witherspoon suggests coming up with a savings goal that’s based on your age, comfort level and how much you’ve currently got set aside. He says that online financial calculators, like ones from Bankrate or AARP, are useful if you can’t afford a financial planner.

Although it might not seem feasible for people who live paycheck to paycheck to set aside money, even the most cash-strapped households can cut expenses. Witherspoon and Loitz offer 18 ways to eke out savings:

Instead of buying a new car, try to purchase one with low mileage that’s about two or three years old. Cars today are typically made well and can last a really long time. But before actually buying the car, make sure to do your research and know the history of the vehicle, like whether it’s been a crash. The website is handy for that.

Try to go with the car insurance plan with highest deductible you can afford. A lot of times that will lower your premium. In addition, after taking into account your driving record, other factors, such as your credit score, influence your premium, so try to maintain the highest score possible.

Make sure to perform regular maintenance on your car, like checking your tire pressure and changing your oil. Not only will this allow you to keep your car longer but you’ll save money on future repairs and have a smoother ride.

Cell phones
Avoid purchasing the latest models of any phone. For example, the iPhone 6 costs around $500, but you can find a brand-new iPhone 4 for less on sites like Amazon. “If you’re willing to buy an older model, that’ll help save you a lot,” Witherspoon says.

Consider purchasing a refurbished cell phone if you want the latest model but don’t want to pay full price. 

Related: 7 Ways to Spring Clean Your Finances for Savings

Since data is the most expensive part of having a cell phone, get a plan without a data component. Even though it might be an inconvenience to use your phone for data when only Wi-Fi is available, you can save around $240 a year, depending on the plan you choose.

If you have children, think about how they will actually use their phone and purchase a plan accordingly. Since so many kids prefer texting over calling, it might be a good idea to get one that offers only a limited number of minutes but unlimited texting.

Do you actually watch 300 channels? Do you need to be paying for cable? Consider getting rid of cable if all you ever watch is Netflix and the occasional primetime show.

Consider getting a programmable thermostat instead of a manual one. The device, which adjusts temperatures at different times of the day, can save 10 to 15 percent on your utility bill.

Wash your clothes in cold water. One of the most expensive things you’re paying for when you’re doing laundry is hot water.

When you’re washing heavy items like towels or jeans, air dry them; they take the most time in the dryer.

Look at grocery ads, either in the newspaper or online, and try to plan your week’s menu around the sales being offered.

Limit trips to the supermarket to once a week. Grocery stores go to great expense to induce you to shell out 20 to 30 percent more than you were planning to spend, so the fewer visits, the fewer opportunities to overspend.

Buy non-perishables and other items, like toilet paper and laundry detergent, when you have a coupon or when they’re on sale, even if you have plenty at home.

Always purchase off-brand products unless you have coupons for name-brand items. They’re just as good and typically cheaper.

Purchase only in-season produce. There’s more of it to sell and markets push down prices so shoppers buy before it goes bad.  

Make a grocery list before you go to the store and stick to it. Also, avoid taking your kids to the grocery store with you. That will cut down on impulse buys — theirs, not yours.

When you go out with your kids, always make sure to prepare snacks ahead of time. This will prevent them from talking you into stopping at a store or a restaurant when they’re hungry.