GMR 136: How to Save More Money

Saving money is one of the most important parts of managing money well. Unfortunately, Americans still don’t save nearly enough. In this episode of GMR, we discuss what it takes to make saving money a priority, and give you some specific ways to start saving today!

Show Notes

Saving Statistics for Americans

  • The number of Americans who have no cash in the bank to fall back on is staggering. 

    • Approximately 28% of adults have no savings set aside for emergencies, 

    • while another 36% have yet to start socking away money for retirement.

  • Adults aged 55 and older have a positive personal savings rate of about 13%. They must know something!

  • Millennials, on the other hand, meaning adults who are 35 and under, have a personal savings rate of negative 2%. Between high student loan debt and stagnating wages, saving anything at all proves to be impossible for many of them.

  • Almost half (40%) of Americans would not be able to cover an unexpected expense of $500 or less. Almost a quarter would not be able to cover even $100.

  • 36% of adults haven't gotten around to saving for retirement. 

  • More than a quarter of adults aged 50 to 64 aren't saving anything for their golden years.

Rules of Thumb to Increase Savings

  • Delayed Gratification

    • 24hr Wait Period

    • 30 Day Wait Period on large purchases

      • Deposit the money into your savings account and earmark it for the big purchase, but then wait 30 days.

  • Do not watch ads or read the junk mail you get.

    • All marketing has an effect on our brain

    • You might think, “well I didn’t buy that one thing I saw on TV, so it’s ok if I buy this other thing I just saw online” … ads wear you down. Your emotional capacity to say “no” shrinks the more you get hit with advertising.

  • Do a 30-day challenge to eat at home only, to not go out and spend money.

    • No-spend November

      • Helps break bad habits.

      • Stops impulse purchases.

      • Causes you to use up what you have, clean out the freezer & pantry finally, might actually help you feel more emotional margin in your life to use up and clean out some things. Definitely recommend cleaning your home in this process too.

      • Will help you start your emergency fund.

      • May force you to be a little healthier … food options and taking more walks etc. Since you can’t go spend money, you end up visiting more parks or going on more walks with your spouse or friends. Maybe even play a game at the park with friends, get some exercise.

    • You have to write down your vision

      • No spending on anything but necessities from Nov. 1 - Nov. 30.

      • Track the spending you would’ve done to see how much you saved.

      • Identify anything specific you know you’ll be cutting out.

  • Triple Batch Your Favorite Recipes

    • Shop at a cheaper grocery store (Aldi’s | Winco)

How to Save More Money

  • Sell your car with a car payment and/or end your car lease

    • Not having to pay the average car payment, which is $550 new, $393 used, and $452 leased, for 3 to 6 years will free up enough money to begin saving.

    • $250 per month saved and invested at a 6% return will get you $244,000 in 30 years. That’s more than double the current median retirement account balance of 55-64-year-olds, which is at $104,000.

    • This one choice, buying cars for cash instead of borrowing, can be the difference between having a retirement account or not having one.

  • Stop using credit cards

    • This is the opposite of savings (it’s like digging a financial hole for yourself.)

      • Typically spend 12-18% more using a credit card.

      • Stick to cash, you will spend less.

    • The interest you pay is your future income. The amount of money you’re spending on interest is eroding any chance of saving.

    • Don’t fall into the rewards trap. Credit card companies would not offer a rewards program unless it was massively profitable for them.

      • You may be earning 1-5% but that that will do you no good if you’re paying 18% or more interest on the balance that carries over every month.

  • Sell Your House

    • Biggest expense when you add all the costs associated with owning a home.

      • Mortgage payment (taxes, insurance, and loan payment)

      • Utilities (higher than renting).

      • Maintenance - can be very expensive, especially if you have to borrow to fix things.

      • Updating - big temptation to make the house you “dream home.” This is almost always done through borrowing (equity line of credit, loans, credit cards).

Resources


Debt tools and other free resources - https://leosabo.com/resources
Online Budget Course - https://courses.leosabo.com/
David’s website - www.stewardshippastors.com