Tips for Saving Money in 2024: Achieving Financial Freedom in an Era of High Inflation

With inflation hitting 40-year highs in 2022, many Americans are feeling the strain on their budgets heading into 2023. However, with some planning, discipline, and smart money-saving techniques, you can find opportunities to reduce expenses and still reach your financial goals this year.

Carefully Build a Comprehensive Budget

The critical first step is taking time to build a detailed budget tracking all income and spending.

Track Every Dollar Coming In and Out

• Gather bank, credit card, loan, and other statements to categorize and tally up expenses for at least the last 3-6 months. Account for every dollar.
• Include all predictable expenses like housing, groceries, utilities, subscriptions, gas.
• Also track variable spending like dining out, entertainment, clothing, gifts.
• Note monthly income after taxes. Include predictable income like salary as well as variable sources like bonuses or side income.
• Use a spreadsheet, budgeting app, or written ledger to capture it all.

“Budgeting for us isn’t about depriving ourselves. It simply means planning ahead so we can afford what is most important to us.” – Marie K., savvy budgeter

Identify Spending Habits and Leakage

• Analyze the data to spot trends and habits:
  • Where does most of your money go each month?
  • Are you consistently overspending in certain categories?
  • What are your highest variable costs?
• Common problem areas:
  • Dining out
  • Groceries
  • Shopping/impulse purchases
  • Subscription services
  • Transportation

Set Goals and Targets

• With your full financial picture in view, set specific targets:
  • Emergency fund goal – Recommended 3-6 months’ worth of living expenses
  • Retirement savings goal – 15% of income is commonly recommended
  • Target to reduce food spending by $200 per month
  • Goal to save $7,000 for a vacation this year
• Be as detailed as possible. Knowing exactly what you want to save helps realization.

“We identified that we spent nearly $500 a month on takeout using our budget. Our new goal is max $100 per month on dining out.” – Jeff & Monica S., California

Use Tools to Automate and Track Spending

• Apps like Mint, You Need A Budget (YNAB), EveryDollar can help manage:
  • Linking accounts
  • Setting budgets
  • Auto-categorizing spending
  • Tracking progress
• Good old spreadsheets work too. Or go simple with a written ledger.
• The key is consistency in tracking against your plans. Studies show those who adhere to a budget save 30% more than non-budgeters.

Having a clear grasp on your full financial situation allows you to strategically identify opportunities for savings.

Trim Discretionary Spending

Trimming spending on non-essential purchases is an effective way to boost savings.

Distinguish True Needs From Wants

• Reduce or cut spending on products and services that are “nice to have” but not critical. These include:
  • Premium cable packages
  • Regular salon services like manicures
  • Fancy coffee drinks
  • The latest smartphone
  • Designer clothes
• Stick to necessities for shelter, utilities, basic clothing, and groceries.

Severely Limit Dining Out

• With the average restaurant meal costing $13-$15, dining out less makes a big impact.
• Aim to reduce restaurant meals to 2-3 times per month as a treat.
• Cooking basic healthy meals at home should make up the majority of food spending.

“We realized we were spending around $400 a month on takeout. Now we allow ourselves one restaurant meal per week as a treat. This simple change saves us $200 easily.” – Sabrina T., Chicago

Find Low- or No-Cost Entertainment

• Instead of paying for things like concerts, plays, or movies out, look for free or very low cost local options:
  • Free days at museums
  • Free outdoor festivals and concerts
  • Parks with hiking trails
  • Public libraries – books, movies, programs
  • Group meetups for shared interests like board games or sports
• Get creative and you can find plenty of ways to stay entertained on a budget.

Americans spend over $2,400 per month on non-essential items. Trimming this discretionary spending just 10% generates significant savings.

Lower Monthly Bills

In addition to reducing variable spending, you can also save by lowering fixed monthly bills.

Audit Subscriptions

• Comb through bank and credit card statements to identify all subscriptions.
• This includes:
  • Video streaming services
  • Music services
  • Meal kit deliveries
  • Clothing subscriptions, boxes
  • Software applications
  • Gym memberships
  • Online storage
• Cancel any unused subscriptions. Pare down to 1-2 must have services in each category.

Negotiate Better Rates

You can often get discounts on recurring services by simply asking.

• Call cell phone, internet, cable TV, and insurance companies and politely ask about any specials they can offer loyal customers.
• Research competitors’ rates first so you can cite options.
• Be willing to cancel or switch providers if you aren’t offered a better rate.

“I saved $50 a month by negotiating a lower rate with my internet provider. Just one 10 minute call added up to $600 yearly savings.” – Kara P., Virginia

Actively Grow Income Streams

While cutting expenses is critical, aggressively boosting income is equally important to get ahead of inflation:

Seek Pay Increases from Employers

• Ask for an inflation-adjusted raise if not given one recently. Provide data showing your experience and value.
• Weigh changing employers if significant pay growth is unavailable in your current role long term.

Start a Side Hustle

• Consider opportunities to earn extra income utilizing your specialized skills and knowledge like:

  • Tutoring / Music lessons
  • Freelance consulting
  • Handyman services

Launch a Small Business

• Start a low-cost online or local business. Some ideas:

  • eCommerce selling crafts/products
  • YouTube channel with monetized videos
  • Food delivery meals for time-strapped families

Maximize Tax Savings

• Contribute maximum pre-tax dollars to retirement accounts like 401ks and IRAs to lower taxable income.
• Use Health Savings Accounts and Flexible Spending Accounts for medical expenses.

Actively seeking ways to earn extra money provides the fuel to get ahead financially despite inflationary headwinds. Additional income streams also create stability if one flow is disrupted.

Build Multiple Active and Passive Income Sources

Having diverse income streams creates resilience and optionality:

Investing Portfolios

• Invest money into assets generating continual returns like:

  • Stocks paying dividends
  • Real estate
  • High yield bonds

• Reinvest dividends and interest to compound returns.

Inflation-Resistant Assets

• Allocate some investing portfolio to assets with inflation-hedging properties like:

  • Treasury Inflation-Protected Securities (TIPS)
  • Precious metals such as gold and silver
  • Commodities

Generate Rental Income

• If possible, purchase rental real estate for ongoing monthly rental income. Can be out of state if using a property manager.

Create Residual Income Streams

• Develop avenues providing continuous passive revenue flows like:

  • Royalties from books, courses, or licensing intellectual property
  • Software as a service business with recurring subscriptions
  • YouTube channel or blog earning ad revenue share

Blend active earned income with passive residual income streams to build inflation resilience and optionality.

Ruthlessly Reduce Costly Debts

Inflation drives up interest costs on debts, stealing purchasing power. Eliminating debt improves cash flow.

List Debts by Interest Rate

• Order debts from highest interest rate to lowest.

Pay Minimums on All But Worst Debt

• Pay minimum payments on all debts except the highest interest rate one.
• Throw all extra money at eliminating that most costly debt first.

Shift Debt to Lower Rates

• Transfer high interest credit card balances to lower interest cards using a 0% balance transfer offer. But pay off in full before rate jumps back up.
• Refinance student loans, mortgages, and other long-term debt to lock in lower fixed rates, reducing monthly costs.

Cascade Payments to Next Highest Debt

• Once highest rate debt paid off, roll that payment amount to the next highest debt.

Consolidate If Beneficial

• Consider debt consolidation services if interest savings exceed fees.

Shedding debts means more cashflow stays in your pocket instead of creditors’ coffers.

Build Robust Emergency Savings

Emergency cash reserves prevent forced debt reliance when surprise expenses hit:

Save 3-6 Months’ Worth of Expenses

• Gradually build at least 3-6 months’ worth of living expenses in accessible savings to help weather crises like job losses.

Utilize High Yield Savings

• Keep emergency funds in accounts earning higher interest but still easily accessible like high-yield online savings accounts and short-term CDs.
• I-Bonds are an excellent option currently yielding 9.62% interest.

Automate Contributions

• Set up automatic weekly or monthly transfers into your emergency savings account so it builds consistently.

Only Tap for True Emergencies

• Avoid temptation to dip into emergency savings for non-essential purposes. Reserve for job loss, healthcare crises, etc.

Sizeable emergency savings prevent reliance on ballooning-rate credit cards or personal loans to manage surprise expenses.

Own vs Rent Housing

Owning locks in housing costs amid rising rents and inflated property prices from scarce supply.

Buy Rather Than Rent If Possible

• Purchasing a home using a fixed-rate mortgage avoids being subjected to whoever your landlord decides to raise rent.
• Build equity that you keep instead of paying your landlord’s mortgage.

Lock In Rates if Still Renting

• If buying is not yet feasible, sign longer 12+ month leases at current rates to delay rent hikes.
• Negotiate clauses limiting future rent increases to smaller caps like 3-5% rather than 10-15%.

Relocate Strategically

• Consider moving to more affordable areas to buy a first home or find cheaper rentals.
• Remote work broadens location options without changing jobs.

Shift Investments to Inflation Hedges

• Limit bond holdings vulnerable to inflation erosion. Shift more portfolio holdings to equities, commodities, real estate, and Treasury Inflation-Protected Securities (TIPS) for inflation resistance.

Negotiate Higher Pay

• Cite high inflation as justification to negotiate larger merit raises and cost of living adjustments that at minimum keep pace with inflation.

Getting educated on selectively benefiting from inflation’s financial impacts allows you to use them strategically rather than being passive.

Outsmart Inflation Psychology

Be vigilant against falling prey to self-defeating psychological responses to inflation:

Avoid Panic Hoarding

• Resist tendencies to panic buy or stockpile goods you don’t actually need. This worsens shortages for everyone else.

Don’t Cave to Price Gouging

• Walk away from sellers outrageously raising prices on everyday items well above inflation. Don’t enable this behavior.

Identify Inflation Scams

• Beware of grifters pushing scams, preying on inflation fears regarding government payouts, gold investing, debt relief. If it sounds too good…

Refinance Loans

• With interest rates still relatively low, it may be possible to refinance your mortgage, auto loans, student loans, or personal loans at a lower rate.
• Ask your lender(s) to review your accounts to check for refi options that reduce monthly payments.

Use Online Comparison Sites

• Websites like Progressive, Nerdwallet, and EnergyStar allow you to compare insurance rates, electricity plans, cell phone plans quickly to find cheaper options.
• Switching providers entirely or choosing a new plan with the same provider can yield savings.

Downsize Housing

For major monthly bill savings, consider:

• Downsizing to a smaller apartment
• Taking on a roommate to cut housing costs
• Renegotiating your rent/mortgage if possible

Since housing costs account for 1/3 of most budgets, reductions here really impact your bottom line.

Leverage Promotions and Cash-Back

Taking advantage of rewards programs, loyalty schemes, discounts, rebates and cash-back offers provides easy savings across categories.

Use Coupons and Cash-Back Apps

• Check coupon sites like Groupon, DealNews, Coupon Cabin and Rakuten before any online purchase. Install browser extensions that automatically apply valid coupons too.
• Sign up for Rakuten, Ibotta, Dosh and other cash-back apps. Upload photos of receipts to earn cash back on purchases at hundreds of retailers.

Loyalty and Rewards Programs

• Sign up for rewards programs at grocery stores, pharmacies, gas stations, retailers. Earn points, discounts, and special offers.
• Airline and hotel loyalty programs allow you to earn free flights, room nights, and upgrades.

Buy Discounted Gift Cards

• Purchase gift cards at a discount on sites like GiftCardGranny, before shopping at retailers you frequent. This stacks savings on top of coupons and cash-back.

Credit Card Rewards

• Use credit cards that offer 3-5% back in common spending categories like groceries, dining, travel.
• Sign-up bonuses can yield hundreds of dollars’ worth of points after meeting minimum spend requirements.

Get Birthday Freebies

• Sign up for rewards programs that offer birthday freebies like free meals, gifts, or credits. Restaurants, retailers, and gaming arcades are common participants.

Savvy couponing and deal hunting used to require clipping and organizing dozens of paper coupons. Now apps and websites make it easy to stack savings opportunities in minutes.

Save on Travel

With some savvy planning, you can still enjoy vacations and trips for less.

Use Credit Card Rewards

Paying for big travel purchases like flights and hotels with rewards points from credit card sign-up bonuses and ongoing spending yields huge savings:

• A family of four can fly roundtrip to Europe for just the taxes and fees saving thousands on airfare.
• There are even cards that allow you to “erase” travel purchases from your statement using points.

Book Flights Early

• Booking flights 1-3 months in advance saves 40% on airfare on average compared to booking last minute according to data from CheapAir.
• Sign up for price drop alerts from Google Flights or set fare alerts on airline sites.

Advance Purchase	Average Savings
> 21 days	35%
14-21 days	30%
7-14 days	15%
< 7 days	5%

Travel Shoulder Season

• Visiting destinations like Europe in the spring and fall means dramatically lower costs on airfare and hotels than peak summer seasons.
• With kids back in school, you’ll deal with fewer crowds as well.

Stay Local

Staycations can make for budget-friendly getaways:

• Plan a “tourist” visit to attractions in your own town that you don’t often enjoy.
• Book a night or two at a local hotel – often much cheaper than a comparable hotel in a destination.
• You save on costs of flights, gas, and dining out.

Cook Meals in Rentals

• Opt for vacation rental homes and condos with kitchens over hotels
• Grocery shop to prepare most meals “at home”
• Higher upfront costs of rentals can yield dramatic overall trip savings

Savvy use of points and flexibility on dates and destinations can allow you to continue exploring the world even when money is tighter.

Change Habits for Ongoing Savings

Adjusting daily habits and lifestyle over time contributes to big savings. Small changes add up through consistent practice.

Cook at Home

• Prepare simple meals at home using whole ingredients instead of relying on takeout, delivery, and restaurant meals
• Home cooked meals average just $4-$5
• Restaurant meals average $13-$15 person
• Savings: $200-$500+ monthly for average family

Brew Coffee at Home

• Make coffee yourself instead of visiting coffee shops daily
• Homebrewed is ~$.50/cup
• Shop coffee ~$3-$5 cup
• Savings: ~$100 monthly if you buy 1 coffee drink per work day

Pack Lunch

• Bring lunch from home rather than going out
• Lunch out averages $10-$15 per meal
• DIY lunches under $5 each
• Savings: $8-12 per day, so $200-$300 monthly

Use Public Transit

• Take the bus, train, or subway when possible over driving
• Saves on gas costs, parking fees, and vehicle wear-and-tear
• Walk or bike for shorter local trips

Move Energy Usage

• Run high energy appliances like dishwashers and laundry at night
• Enable energy provider to adjust smart thermostats during peak hours
• Unplug devices when not in use
• Switch to LED light bulbs

Conclusion: Final Thoughts

With inflation high amid economic uncertainty, getting strategic about saving is critical for Americans in 2023 and beyond.

The good news is there are plentiful ways to reduce spending and still maintain a great lifestyle by following the budgeting methods, spending habits, and savings techniques outlined above.

It requires both discipline and creativity in your approach. But consistency and dedication to your savings goals pays dividends over time.

The key is tracking your spending diligently, establishing targets, and sticking to a system that works for your lifestyle.

Small daily changes really do add up allowing you to painlessly bolster savings.

 

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