Getting rich and staying that way consists of two parts: Increasing cashflow in, and reducing cashflow out. This post is about the top methods people use to reduce cashflow out.
Cut down on entertainment
You should cut entertainment costs first. Entertainment are the luxuries you pay for when you have more time and money than you know what to do with. Give up premium cable channels or better yet, cut cable television all together. Watching less television also saves electricity and cuts opportunity costs from wasting time. Cut the gym membership and work out at home. Cancel all unused memberships and subscriptions. Reduce the number of times you go out to eat, watch movies, or go on vacation, at least until you have your finances straightened out. Quit or cut down on vices such as alcohol, smoking, and gambling.
Save your money
Pay cash wherever you go and put the change in the change jar. Budget 10-15% of your income to go to savings. Save an amount equal to whatever is spent on nonessential indulgences like lattes and movies. Automatically have money taken from your paycheck and put into to your savings account. Pack your lunches so you don’t have to buy them at restaurants. Keep your receipts and track your spending. Save leftover food and make other meals with it. Live in an area with a lower cost of living if possible.
Smart grocery shopping
Always bring a shopping list to the grocery store and stick to it. Don’t go to the supermarket hungry. Plan around the grocery store’s flyer. Use coupons when possible. Shop at the grocery stores with cheaper prices. Ethnic or international supermarkets tend to have lower prices. Know how much things are supposed to cost. Buy foods you can bring to work or trips.
Buying in bulk
Buy necessities in bulk. Buying items online may be cheaper. Some companies offer free shipping on large orders. Look for clearance items on non-perishable groceries and diapers. Get a deep freezer. Buy food in bulk and freeze it. Stock up when things go on sale. Plan meals around your stockpile of food.
Dress for less
Look for sales on clothing at discount outlets. Always buy clothes at discount. Consider repairing damaged clothing instead of throwing it out. Swap clothes with friends. Consider purchasing previously-used clothes from Good Will, second-hand stores, school or church thrift sales, or yard sales. Assess clothing in terms of quality as well as price. It’s okay to spend more on clothing if it lasts longer. Go through your every piece of clothing you own. Chances are, you will come across some forgotten clothing that you can wear again. Dry your clothes on a clothesline. Learn to dress minimally.
Smart shopping
Always be on the lookout for sales. Always buy things at discount. Holidays tend to have the biggest sales. Don’t buy just because it’s on sale. Buy only if you would buy it if it was full price. Consider purchasing used items. Consider reliability, not just price, especially for appliances and cars. Never purchase expensive items on impulse. Think over each expensive purchase for at least 24 hours. Even better, keep a “thirty day list” where you write down expensive items you want, then reconsider whether or not to buy it after 30 days. For inexpensive purchases, whenever you pick up an item at the store, pause 10 seconds and consider if you really need it before putting it in your cart. Buy generic items. At the store, more cost effective (lower margin for the store) items tend to be stocked on the bottom shelves.
Saving on transportation
Use public transit whenever possible. Walk, bike, or carpool to work. Try to live as close to your workplace as possible. Compare gas prices at different stations using apps like Gas Buddy.
Automotive savings
Buy used cars instead of new cars, because they depreciate the most in the first few years. Drive your car gently and avoid short trips of 10 minutes or less, because short trips cause excessive wear and tear on your car. When driving, avoid fast start-ups and stops. Keep your car engine tuned and tires inflated to their proper pressure. Consider filling tires with nitrogen for less variation between hot and cold (increases tread life). Keep your car’s air filter clean. Empty your car trunk to reduce weight.
Household energy
Get a programmable thermostat. If you already have a thermostat, lower it by one degree in the winter and raise it by one degree in the summer. Weatherproof your home. Caulk holes and cracks that let warm air escape in the winter and cold air escape in the summer. Insulate your home. Remember to turn off items and lights when not in use.
Saving on drugs
Ask your physician to prescribe generic drugs when possible. Find the lowest-cost place to purchase prescription drugs. Make sure to check out not only your local pharmacist but also local supermarkets, area discount centers, and mail-order pharmacies.
Prevention
Take care of your belongings, cars, and health. Maintain your car. Practice preventative dental care like brushing and flossing to avoid expensive problems in the future. Get regular exercise, eat your veggies, take your meds. Get a checkup to find potential health problems before they develop into big problems. Do a “maintenance run” on your appliances to clean them. Keep your hands clean to prevent contagious illnesses. Invest in quality and buy dependable products that will last a long time. Drink more water.
Using free services
Your taxes go towards a lot of free community services. Borrow books from your local library rather than purchasing new books. Many libraries also have free services like story times for kids or public internet access. Your community may also host free or inexpensive entertainment like movie nights or local bands. Use local newspapers and websites to learn about free or low-cost parks, museums, film showings, sports events, and other places you can bring your family. Don’t go to stores or shopping centers for entertainment. See what your town’s parks and recreation board has to offer.
Do It Yourself
YouTube is a great resource for learning how to do things yourself. Instead of hiring someone to repair your appliances or replace your kitchen sink, you can watch videos on how to do it yourself for less than half the cost. You might be surprised how easy some seemingly difficult tasks actually are. You can also learn to create your own crafts or food items that you can give as gifts instead of buying gifts.
Maximize Benefits
Check with your employer or any organizations that you are part of to see if they offer any discounts, subsidies, or free services that you could use.
You Don’t Get What You Don’t Ask For
Whenever you are charged a fee, ask if it can be waived. Often, simply calling and asking for lower fees or rates can get you discounts. Employees are often authorized to give 10-20% discounts at their discretion, and you will never know if you can get a discount unless you ask.
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