5 tips from a inancial advisor
Saving $50 isn’t going to fatten your retirement fund or prepare you for a financial emergency. But getting into the habit of setting aside $50 a week can have a major positive impact on your personal finances.
Matt Goren, an Athens, Georgia-based certified financial advisor and co-host of the personal finance-themed radio show Nothing Funny About Money, described the goal as “a very low bar,” as he told USA TODAY about a number of ways that amount of money can accrue to significant savings.
Goren warned people who are living paycheck-to-paycheck aren’t likely to benefit from the advice. But people struggling to find the willpower to cut back can follow some simple strategies that will allow them to easily save $50 in a week.
1. Do some planning
The first thing Goren advises: Do some budgeting.
“Let’s spend the time to do the boring process of seeing where the money is going,” he said. His clients often find an expense or two that are unnecessarily high.
The Bureau of Labor Statistics finds that the average American spends around $250 on going out to eat, and about $150 on clothes.
If you find yourself exceeding that level, consider reevaluating.
Tracking your expenses for a week, he suggests, will help you find areas to cut back.
There are apps that can help automate this task, like Mint or Clarity Money. Or, you can just do it the old-fashioned way and make a spreadsheet.
How you might save $50: Form a plan to cut $7 per day in unnecessary spending over the next week; examine recent purchases, especially clothes, that you regret and can still be returned for quick cash.
2. Get rid of old subscriptions
Checking in on your budget, Goren said, will likely reveal some subscriptions that you might have completely forgotten about.
West Monroe Partners finds that 84% of people underestimate how much they spend on subscription services, sometimes to the tune of hundreds of dollars.
“That might be a forgotten gym membership, some forgotten subscription to a website,” he said. Whatever it is, find them — and do some trimming.
A gym membership, on average, costs $40 to $50 per month, in addition to the costly annual fees that some gyms charge.
There might be some expenses that you might not need all year, such as a premium cable channel you use only for your favorite show.
This summer, that was the case for some of his clients in his home state of Georgia, many of whom own gas-powered furnaces. Even when they’re not in use, he said, the gas company still charged taxes and other fees for gas.
So, during the summer months, he said, they called to cancel that service. That saved them, on average, $35 a month.
How you might save $50: While canceling a monthly subscription might not save you $50 cash immediately, finding a forgotten gym membership or other subscription can easily save you $50 in coming weeks — and hundreds of dollars a year.
3. Buddy up for a family plan
For subscriptions that have the option, find a way to join — or make — a family plan. The members of your “family plan” don’t even need to be your own family.
Goren told USA TODAY that he has seven people on his family plan — most of whom he only knows through a mutual friend.
“The more people I add, the cheaper it gets for everyone else,” he said, adding that he only pays around $30 for his cell phone service on T-Mobile, compared with $85 for an individual plan.
The same thing applies to streaming services, such as Netflix — which allows up to four people to stream simultaneously, depending on how much you pay.
How you might save $50: Find some friends — or friends of friends — and make a family plan. If you get enough people on a family plan for cell phone service, for example, you may save $50 compared with a similar individual phone plan.
4. Negotiate your bills down
Some recurring expenses are unavoidable, like your internet provider or your insurance plan. Still, you may be able to negotiate a lower rate for a service you already use.
Many companies that offer an introductory rate to first-time customers may offer you the same rate if you ask or restart your service.
“Sometimes you can actually cancel because they have deals for new customers and not existing customers,” Goren said.
Every single year, Goren cancels his internet service and signs up again — this time, as a new customer.
“The ‘new customer’ service people are happy to sign you as a new customer; it looks good on their end,” he said.
Be prepared to threaten to cancel your service (even if you’re not). That should redirect you to the company’s customer retention specialists, NerdWallet writes, who can offer more than a general customer service agent.
It helps if you’ve been a long-time customer and regularly pay your bills on time, they add.
How you might save $50: Spend a couple of hours doing some research on how much your internet or insurance plan costs and how that compares to introductory offers. Then give your service providers a ring.
5. Cut back — don’t cut out — the finer things
Goren makes it a point to not entirely cut out the things in your life that bring joy.
So get a $5 latte once in a while, or splurge on a gym membership, if it’s just the thing that will make you happy.
“Really, what gets you up everyday? Does it bring you joy?” he asked.
But, as with everything else, do it in moderation.
“Some of the quick cuts are going to make someone unhappy,” he said. “You can make so many cuts without actually having to sacrifice anything.”
How you might save $50: Think twice about splurging on your daily habits. Make coffee at home or bring lunch to work, and treat yourself only occasionally. Those costs add up.