7 Tips On How to Save Money & Live Better

Walmart’s slogan---“save money live better”---is popular and catchy, but is it really possible to actually save money and live better? 

Beyond just shopping at Walmart, we will show you why and how you can save more money and also live a better.

Saving money can be a source of happiness, not just security---because it will give you more money for other things you value. When you save money you also give yourself options. Options that can be a safety net or opportunities for investments in the future.

Let’s take another look at the benefits and strategies of how to save money and live better.

When financially challenging or uncertain times happen in our lives, these challenges present a good opportunity for us to save money and encourage us to look at creative ways to make more money. Saving money gives us options. If we lose a job or an important client, or face a major medical emergency, we will have hoped we were judicious in our spending. If we have a little savings we can be choosy about how we spend or invest that money.

According to CNBC, nearly 40% of people said they’re shopping online every week, during a pandemic. Retailers are also reporting record online sales. But what items were selling out during the pandemic? Check the list and see if some of these things should have even been bought during a pandemic.

Given this scenario, when people spend when they should be saving, is it even possible to save money and live comfortably?

The answer is a resounding YES. It may be pretty challenging, but if you set your mind to it, it’s going to be a rewarding experience.

☝🏽 back to top.

Saving Money Starts with a Budget

For you to start saving money, you must know how much you spend and what you spend your money on. Offhand, you can quickly identify what items you buy regularly on: major expenditures such as food, clothing, rent, etc.. 

But estimating general amounts does not provide adequate detail about your expenses to be helpful enough. To properly budget, you need to get an accurate picture of your expenses, and be more detailed. You need to know how much you spend on types of expenses.

☝🏽 back to top.

Record All Expenses for a Month

My father used to tell me to make a record of all the things I buy. Not only will I keep track of what I purchased, but I will be able to use that information when I start setting a budget for my future expenses.

For instance, I bought a pair of slacks in January for $30. Because I knew when I bought the clothes and how much I paid, I would know how much I will need if I need a new pair of slacks. Recording these expenses will help me plan my budget in the future.

So yes, you need to record all monthly expenses: utility bills, groceries, gas, medicine, books, clothes--even the smallest of items you buy from the grocery store like a stick of gum or a bar of chocolate. To make sure you don’t miss any item, you may want to check your credit card statement for your purchases too.

Pro tip: you also need to record these expenses during a month or period of time that represents your atypical month. Avoid additional expenses that occur only during special or unique times, like tuition fees during the start of school days  or gifts for your family during Christmas. Then you can add the typical amount generated during those normal periods across the more unique months to account for more outflow of money during specific times of the year.

☝🏽 back to top.

Categorize Purchases

It is best if you organize your purchases in a way where you can quickly identify them—for example, groceries, medicine, utilities, and so on.

Categorizing your purchases and expenses will help you correctly classify the items you bought and paid for. For instance, when you buy cereals, frozen dinners, or milk, you can put them under groceries. When you purchase a pain reliever, it goes under healthcare.  When you pay your cell phone plan or electric bill, you may classify them under utilities and so on.

☝🏽 back to top.

Prioritize Needs over Wants to Satisfy More Needs

Now that you have organized your monthly expenses, you need to classify the items in terms of Needs versus Wants. Needs are  essential for you to be able to live and work. They are likely to eat up a large chunk of your paycheck—think  mortgage payment, rent, or car insurance, etc

Here are some of the everyday expenses that fall under Needs: 

• Housing (rental or mortgage)
• Gas and transportation
• Insurance
• Utilities (cell phone plans and electricity)
• Food and Groceries
  
• Healthcare (medicine), etc.

On the other hand, Wants are expenses that help you live more comfortably. They refer you to things you buy for fun or leisure. They make you feel better, happier, and more fulfilled---but you don’t really need them to survive. For instance, when it comes to food, daily lunches are needs, but weekend dinners in a posh restaurant are a want.

Here are some of the everyday expenses that fall under Wants: 

•         Travel
• Entertainment
• Designer clothing (over basic clothing)
• Memberships and subscriptions
• Coffeehouse drinks

Classifying your expenses under Needs or Wants will make it easy for you to identify which expenses are essential and which are not and thereby how much money you can possibly save.

For example, Utilities and Insurance go under Needs while Memberships and subscriptions (such as gym membership or premium subscription to a cable service) go under Wants.

Once you have properly classified your needs vs wants, hopefully you have identified some of your expenditures that could be reduced or eliminated, enabling you to save more instead of spending. The money you keep could be used to prepare for the future, pay debt, or bail you out of an emergency.

☝🏽 back to top.

Lifestyle Changes - Learn to Love Saving Money More than Spending Money

Consider your attitude and motive for earning more money. Do you want to accumulate money just to have a big fat bank account, or do you want to have more money to improve your lifestyle or help other people?

How we think influences our actions and energy. We've written about how creative thinking leads to making more money.

You might be focused on acquiring the next cool thing like a new computer, a new house, a new car, etc. But consider whether you could have a change of heart---and love saving money more than spending money and showing off flashy things to your colleagues.

Take a look at your two buckets of Needs and Wants. I bet you are surprised at how much you spend on your fast food lunches or your twice-a-day coffee-to-go from your favorite coffeehouse.

That said, identify which activities you need to cut down on expenses. You’re not being frugal or cheap. You’re being practical.

There is a  difference between being frugal and being cheap. Being cheap is not spending money at all even on things you need---it’s not practical. Being frugal is spending money on things you do need and things you value more than other things.

For instance, if you really want to buy a home instead of having your favorite frappuccino twice a day, why not have it just once a day? Your daily lunches purchased from a vendor can be cut to twice a week or maybe, even once a week. Taking your lunch with you from home can also be an easy way to save a few dollars each day toward a down payment or mortgage for a house..

You might want to review your premium subscriptions to cable or streaming services. If you are streaming two brands, maybe you need to subscribe to just one cable service and do away with the streaming service or vice versa. Many cable alternatives can give you more bang for your buck.

Understand that Needs are non-negotiable; it is essential to allocate a budget for needs. As for Wants, prioritize which activities should be trimmed or cut out totally; assess which Wants are also more cost-effective than others.You’ll be surprised at how much savings you will have over time as you spend less on Wants and keep more for Needs.

As you accumulate more money to spend on Needs and less money on Wants, you’ll soon see that you are in a financially safe or strong position. That should make you feel happy and live better.

This strategy will not deprive you. You can still get to eat at your favorite diner and enjoy a cup of frappuccino at a coffee shop you frequent. You still get to buy designer clothes, or the latest mobile phone or gadget. But yo will do so on a budget you have set aside for that purpose.

☝🏽 back to top.

Budgeting for Needs and Wants

After reviewing your list of Needs and Wants, you need to know how to budget for them.  One helpful way to do your budgeting is through the 50/30/20 Rule Budget.

The 50/30/20 rule calculates “how much money you can allocate to your needs, wants, and savings or debt.”

Assuming that you have a monthly income after-tax of $10,000 a month, you allocate $5,000 for Needs, $3,000 for Wants, and $2,000 for Savings or Debt Payment. Just imagine having a $3,000 budget for your Wants. You’d still get to have fun while on a budget! But this example is only possible if your Needs do not out pace your budget. Usually people’s Wants are out pacing their budget and nothing is left for savings.

While the 50/30/20 rule may be an excellent way for some, it will always be dependent on your current financial situation. Some might consider spending less on Wants so that they can have more savings. Some might even forego having a budget allocated for Wants because they want to save more for some future purchases.

You also need to consider your location when subscribing to the 50/30/20 Rule Budget. For instance, people who live in areas with a high cost of living may have to put a large part of their income toward housing, making it almost impossible for them to keep their needs under 50% of after-tax pay.

☝🏽 back to top.

Invest Savings in “Tax-advantaged” Accounts

A $2,000 monthly savings is already a big start if you’re applying the 50/30/20 Rule Budget. If you invest as little as $50 a month, in just 54 years, you will have $1 million. But 54 years is a long time!

However, an investment of $2,000 a month can make you become a millionaire in 18 years, especially if you invest in “tax-advantaged” accounts.

What are “tax-advantaged” accounts? Wealthsimple.com defines it this way: “These [are] investment vehicles [that] either allow investments to grow within them tax-free or only become taxable when you withdraw money years down the line in retirement.”

Here are two of the best investment accounts worth looking into for your hard-earned savings:

1. 401(k) Plan. According to Investopedia, it is “a tax-advantaged, defined-contribution retirement account offered by many employers to their employees. Workers can make contributions to their 401(k) accounts through automatic payroll withholding, and their employers can match some or all of those contributions. The investment earnings in a traditional 401(k) plan are not taxed until the employee withdraws that money, typically after retirement.”

If you have a full-time job, consider contributing your monthly savings to a 401k to benefit from the tax breaks. That way, you can look forward to a comfortable retirement.

1. 529 Plan. U.S. Securities and Exchange Commission defines it as “a tax-advantaged savings plan designed to encourage saving for future education costs.” 529 Plans are sponsored by the states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

You can invest your $2k to fund your child’s education. Not only will your investment grow tax-free, but your state may also offer other tax breaks on contributions.

Of course, there’s always the stock market, bonds, real estate, exchange traded funds, or online investment platforms where you can invest your $2k. But take note that investments are speculative. Previous performance results should not be taken as predictors of how these investments will perform in the future.

But the point should be re-emphasized that you should invest your savings and get the best rate of return you can get, rather than just keeping the money in a bank account or low-interests bearing savings account.

☝🏽 back to top.

Switch to or Open a Credit Union Account

Credit unions are created, owned, and operated by their participants; they are classified as not-for-profit enterprises that enjoy tax-exempt status. Because of this status, plus the profits they make from the members, credit unions can afford to offer their members higher interest rates on savings accounts and lower interest rates on loans.

Just think of how your $2k savings will grow!

Credit unions are now open to the public. You become a member by opening a savings and/or checking account, apply for loans, and obtain credit cards. Some credit unions also offer investment programs, so you might want to check that out. 

Benefits Of a Credit Union Account 

When you open a credit union account, you get to enjoy the following benefits: 

• Higher interest rates on savings
• Lower fees
• Lower loan rates
• Personalized customer service
• Community focus
• Voting rights
• Numerous service offerings
• Insured deposits

Higher Interest Rates on Savings

Profits earned by credit unions are given back to their members in the form of higher interest rates on savings accounts. Your $2k will yield more interest than when deposited in a for-profit bank.

Lower Fees

Because credit unions do not have big operating expenses, they tend to have lower fees.

Lower Loan Rates

Again, because of low operating costs, profits are returned to members in the form of lower loan rates. Lower loan rates can save you money on paying interest or give you new sources of funding for running a business or making investments.

Personalized Customer Service

Members of credit unions go the extra mile in helping their members reach financial success. Some even provide financial counseling and training to help members understand complicated financial matters. Making poor financial decisions can make your life miserable and poor. Making better financial decisions can help you save money and have less stress in your life...and that will help you save money and live better.

Community Focus

While many credit unions are now open to the public, they tend to attract people with similar interests, living in the same region or area, working in the same organization. You might find a credit union where you can belong and enjoy being a part of an institution that serves the needs of people just like you. Serving your like-minded community can help you feel better about even how you bank.

Voting Rights

When you become a credit union member, you also become a co-owner of the credit union. You now have the right to vote on important decisions like selecting the board members, among others.

Numerous Service Offerings

Credit unions’ service offerings are not as extensive as commercial banks. But they have consumer loans, mortgage loans, home loans, car loans, electronic banking, ATMs, business loans, credit cards, and many more.

Insured Deposits

The National Credit Union Administration, via the National Credit Union Share Insurance Fund, insures individual deposits of up to $250,000 in federal credit unions (and some state credit unions).

On the other hand, some credit unions (and many state-chartered ones) are insured privately. Before picking a credit union, you should identify how it’s insured.

☝🏽 back to top.

Open a Digital or Online-only Bank Account

Online banks are becoming popular. That’s because they offer higher interest rates (among other things!). I’m not talking about your brick-and-mortar retail banks but the digital or  online-only banks like American Express, Barclays, and Ally, to mention a few.

Like credit unions, online banks can afford higher interest rates because they don’t have a substantial operating cost. Like retail banks, online banks let you keep your money in a savings or checking account. You also have a selection of checks and debit cards  and, of course, online access.

Your $2k savings will earn much better in online banks just for the higher interest rates alone. But what are the other advantages of having an online-only bank account?

High Interest Rates

The most significant benefit is the interest you get from online banks. Because online banks do not have a physical structure and overhead costs, they can offer as much as 70% annual percentage yield (APY). 

Low Fees

Before, online banks did not charge fees for transfers, deposits, or account maintenance. They’re free. Now, they charge fees but still lower than the fees a retail bank may charge you for its services.

No Minimum Balance Requirements

You get to keep your money regardless of how much it is, without worrying that the bank will eat up the balance with their fees for account inactivity, account maintenance, and other matterst.

Funding is Easy

When you open an online bank account, you need to satisfy the initial deposit requirement. This can be done by transferring money from an existing account. Or, if the bank is 100% online, you can fund it with a check or a money order.

If your online bank has a local branch near you, you can visit it and deposit cash to fund your online bank account.

Online Check Deposit

Online banks like Ally eCheck Deposit and CIT Bank's mobile app offer this service through their apps. It’s increasing in popularity and many retail banks have followed suit with their apps.

Rewards Programs

Many online banks offer rewards programs not offered by retail banks outside of their credit cards. Some even allow customers to earn cash rewards on qualifying debit card transactions, while some provide special promo rates for accounts that meet a monthly purchase or balance requirements.

24-hour Customer Service Support

Online banks offer 24/7 support, so you may call them any time you need assistance.

Do not lose focus on your objective to save. The use of an online-only bank is to grow your savings that will yield higher interest rates. The idea here is you should keep the money you deposited.

But if you choose to treat an online-only bank like an ordinary bank, you won’t be able to save as much as you want to.

☝🏽 back to top.

The Virtue (or Power) of Saving

Saving is a virtue. A virtue is power. Virtue can also refer to an ethical, desirable trait that also results in advantages and benefits. Nobody ever said that spending was a virtue. Because once you spend money, that money is no longer available for power in other ways.

If you have financial savings, you can also be more creative in your business and entrepreneurship as in starting your own business.

Value/assets can change forms, such as transferring cash into an asset like property or equipment.

When you save, you have something to use when the time comes. You also learn how to manage your cash flow to address any financial instability that may come. It also reduces the effect of any financial crisis and helps us be more resilient.

When you save, you also learn patience. Another virtue that teaches us that all good things come to those who wait. Imagine waiting for 18 years to see that your $2k savings will become a million.

And if you’re wise enough to invest, it might even be greater than that amount. An amount that will allow you to enjoy life. An amount sufficient enough to sustain you through your golden years and live better.

So is the Walmart slogan “save money live better” even possible? The answer is a resounding YES.

☝🏽 back to top.

Saving Money Gives You Options

It is worth repeating.

When you spend money you are saying yes to that one thing. When you save money, you are saying no to something that might not help you in the long run---and you give yourself an option to say “yes” to another thing which can sustain you in the long-term.

☝🏽 back to top.