How To Save More Money Without Decreasing Your Spending

Posted by Chris on June 25, 2014

Most people like to save money. They like saving on everything: clothes, cars, homes, food and gas.

It doesn't matter what it is, chances are you want to get the best deal possible.

The big question is: Are all money saving strategies created equal? Short answer, no. When considering a strategy to save more money it's good to look at the time invested to implement the strategy versus the actual money you'll save.

Yes, you could spend an hour searching for coupons for everything you want to buy at the grocery store and save a little money. But if you only saved $5 I don't think you're getting the best return on investment of time.

I like big impact savings strategies. Things that save you hundreds of dollars a month or even thousands!

On this blog we talk about saving money on your home loan or saving money by improving your credit. These are the types of money saving strategies nobody talks about.

The beauty of these money saving strategies is that they usually don't require you to actually change your budget. You don't have to force yourself to save more money out of every paycheck.

Does refinancing your home loan require you to save an extra $100 per paycheck? No! In most cases refinancing will actually add $100 to your monthly discretionary income.

how to save more money

Here's how to save more money even if you think you can't.

1. Bump up your 401k contribution and increase your withholdings (allowances) on your paycheck.

You're probably thinking that I pulled one over on you. I just told you that you can save money without taking more out of your paycheck and now I'm saying contribute more to your 401K.

What I've learned from working with hundreds of clients is that you can contribute more to your 401K and in some cases increase your net paycheck.

How? I'm glad you asked.

Most people contribute to their 401Ks on a pre-tax basis. That is the money is not taxed until you retire and pull the money out of the 401K.

This means that any money you contribute to your 401K lowers your pre-tax gross income. This means you're paying less taxes.

Here's a simple example:

My gross paycheck is $1,000. I contribute 5% to my 401K every paycheck or $50. That means my taxable income is now $950. I will pay taxes on $950.

Yet, if I increase my 401K contribution to 10% or $100 my taxable income is $900. I'm paying taxes on less income decreasing my tax obligation.

The second piece of this strategy is to increase the number of allowances on your paycheck. This will decrease the amount you pay in taxes on a per paycheck basis increasing your after tax income.

You're looking for the point where you are able to increase your 401K contribution the max amount and keep your income the same. In some cases you might be able to increase your take home income.

This won't work for everyone but I've seen it work for a lot of people who thought they couldn't save any more money.

Make sure to talk to your accountant before making adjustments to your paycheck withholdings (allowances). But if you're like most people who get around $3,000 back every year in the form of a tax refund then you should look into this strategy.

In some cases you might be able to really increase the amount you're saving for retirement and not impact the monthly budget to do so.

2. Review all insurance deductibles and coverages.

I recently moved and took the opportunity to review my car insurance coverage.

What I found shocked me. I was overpaying for insurance to the tune of $1,000 per year.

What!? How?

Simple. I have two vehicles one of which is an older model that is fully paid for but I had comprehensive coverage on it.

The other culprit costing me big was super low deductibles. I increased my deductibles and dropped the comprehensive coverage on the older car saving myself a ton of money.

If you have some emergency savings you can probably increase your deductible to $500 or more and not worry about it. The funny thing is that I increased my liability coverage across all my vehicles but I still saved a ton of money.

3. Refinance your home loan.

Refinancing your home loan to a lower rate can save you some big money. Imagine decreasing your mortgage payment by $150 a month. That's $1,800 per year. Thats money you can invest into the college or retirement fund.

If you want see how much you could be saving every month use our free rate quote tool to get a custom refinance quote. You might be surprise by how much money you can save by getting a lower interest rate on your home loan.

All of these strategies require some work on your end. It could take you more time than searching for coupons but your return on investment of time could be huge. Instead of getting a return of $5 per hour you could possibly get a return of $500, $1000 or more per hour!

Topics: Saving Money