Personal finance guru Dave Ramsey has spent decades advising people on managing their finances and eliminating debt. Ramsey, the founder and CEO of Ramsey Solutions, has written several books and also has a radio show.
Ramsey advocates for saving money, and one of the methods he recommends is to live frugally. This doesn’t mean living like a monk, but it does involve cutting unnecessary expenses when possible. Following his advice is the start of your savings journey.
1. Live Within Your Means
This sounds like an obvious one, but it can’t be overstated enough. As much as you may want to live like a celebrity, if you’re not pulling in celebrity money, then you need to live within your means to avoid a financial disaster.
Having a budget that lists what money you have coming in and what expenses you have going out will give you a good indicator of what you have to work with. Having extra money left over after your expenses should be divided between savings and money for your use.
2. Cancel Subscriptions
It’s common to have multiple subscriptions for music and video streaming, but not all of them are necessary. Take a count of all your subscription services; if you’re unsure which ones you have, apps like Rocket Money will identify them for you.
If there are paid subscription services you hardly ever or never use, cancel them immediately. Keep only the ones that you use the most often, and even then, look into downsizing from a premium package to a less expensive one.
3. Buy a Modest Home
Buying a home is a cornerstone of the American dream, but for some people, owning a McMansion is their goal. While there’s nothing wrong with buying a bigger home, it’s important to remember that those homes come with higher costs.
Larger homes generally have substantial mortgages, increased utility bills, and higher repair costs, which are burdens on your budget. Consider purchasing a more modest home that fits your family’s needs and is more reasonably priced.
4. Change Cell Phone Plans
Post-paid cell phone services, which are the ones you receive a monthly bill for, frequently offer tiered plans. The plan with the most features, such as unlimited data, mobile hotspots, and phone upgrades, tends to cost the most.
These extra features are nice to have but aren’t always necessary. Check with your existing carrier to see if they have less expensive plans, and check with their competitors. Choose the plan that suits you and costs less money.
5. Automatic Payroll Savings
Despite all of your good intentions, it’s difficult to set aside money in savings after you’ve already been paid. Something comes up and you use that extra money to pay for it. There’s an easier way to save money.
When you have your paycheck directly deposited, instead of having all of the funds go into your checking account, set up a split deposit. Have the bulk of your pay deposited into your checking and the rest into your savings account.
6. Arrange a Carpool
No one will argue with you when you say gas prices are too high, especially if you commute to work several days a week. On top of that, your car sustains wear and tear from being driven so much. Starting a carpool can alleviate some of the commuting headaches.
Find coworkers who live in your general area and have a similar schedule to yours. Each week, another person in the carpool takes turns driving, making the arrangement fair to everyone. Not only is it cost-efficient, it’s environmentally friendly.
7. Reduce Your Energy Costs
Getting a monthly invoice from a utility company isn’t exactly fun, especially if your bills are higher than you’re comfortable with. Utilities like water, electricity, and gas are needed unless you plan to live totally off the grid.
Lowering your energy costs can be done in ways that you’ll hardly notice, except in the savings on your utility bills. Turn off lights when they’re not being used, set your thermostat a few degrees higher in the summer, and take shorter showers.
8. Use Gas Rewards
Besides carpooling, another way to reduce the pain at the pump is to use gas rewards when you can. Some grocery stores will give you cents off each gallon when you reach certain spending benchmarks, like offering ten cents off a gallon of gas for every $100 spent.
If you shop at the same store regularly, you could potentially save a considerable amount of money when filling up. Credit card companies may also offer gas rewards for using their cards, but make sure you pay your balance off quickly.
9. Fix It Yourself When Possible
When minor repairs need to be done around the house, instead of hiring a handyperson to do the job, try to fix them yourself. There are a ton of online how-to videos showing how to repair anything from plumbing issues to lamp rewiring.
Don’t feel the need to take on more complicated projects unless you feel comfortable tackling them. The last thing you want to do is make an existing problem even worse. If you feel a repair is above your skill set, then call a professional.
10. Use Cash-Back Apps and Coupons
Clipping coupons might be old school, but that doesn’t mean they don’t have any value in this digital age. They’re still an excellent way to save money, as long as you’re willing to spend the time searching through them.
In addition to paper coupons, e-coupons are available through several reputable sites. For online shopping, apps like Rakuten and Capital One Shopping automatically search for discounts, saving you a lot of effort.
11. Use Debit Cards or Cash
Credit cards are easy to use – buy now and pay later. But they come at a cost. If they’re not paid in full each month, the balances accrue interest that only adds up over time. You end up paying more for your purchases than you would if you had paid in cash or with a debit card.
Using cash or debit cards saves you money by avoiding credit card interest charges, annual fees, and late charges if you don’t pay them on time. They also keep you from spending more than you have available.
12. Change Tax Withholding
To receive a larger tax refund, change your tax withholding to increase the amount deducted from your paycheck towards federal taxes. It’s tempting to use the lowest withholding to bring home the most money each pay, but you can do more with a big refund.
You can use your tax refund to boost your savings account, pay off credit cards, or pay down other debts. Be sure to adjust your monthly budget to account for the difference in your incoming monies. It’ll pay off when you receive your tax refund.
13. Go to the Library
Avid readers who enjoy the feel of paperback and hardcover books spend quite a bit of money buying books, especially when they’re newly released. Paperbacks are a less expensive option after the hardcover editions have been out for a while.
A better option for reading both hardcover and paperback books is to visit your local library. As long as you return them on time and don’t incur any late fees, you can check out library books for free. If you have a library card, the Libby app gives you free access to ebooks and audiobooks.
14. Packing Your Lunch
If you work away from home, it’s convenient to buy your lunch from your favorite local restaurant. Going out several times a week adds up faster than you may expect. The money spent on lunches could be put to good use elsewhere.
Leftovers are an inexpensive lunch option and it minimizes food waste. If your pre-work morning routine doesn’t give you enough time to prepare a lunch, then pack it the night before. All you have to do is grab it and go the next day.
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