Here are five ways to save money fast, because many articles explain how to save money that adds up over the years. Slowly. Sure, not buying a cup of coffee every day will add up… but that doesn’t help you put aside money over the next couple months in order to handle an unexpected expense.
Here are the two things you need to do to reset your financial life quickly followed by the five fastest things you can do in order to save money in a hurry.
Figure Out How Much Needs to Be Saved
The first step is to create a goal. A specific and actual amount. Just vaguely saying that ‘money needs to be saved’ is not enough. A goal has to be set. It isn’t enough to know how much to cut out of a budget, or what actions to take, until there is a specific figure to work toward. In fact, the sacrifices people often need to make to save money are hard because there is no specific reason each month tied to the pain of that saving.
No, this isn’t a budget, but this is a clear analysis of the amount of money coming in versus going out. If money isn’t being saved then it needs to be tracked to figure out where it’s going. That which can be tracked can be improved. Where is the money coming from and where is it going. It can be software or apps, or just a ledger, but there is a reason accountants track finances for a company.
Read more in our guide to expense tracking apps
Once finances are being tracked, then they can be cut or tweaked in order to start saving money. Start looking at the biggest places money is spent. Can those big bills be cut in any way?
5 Biggest Ways to Save Money Fast
Advice on saving money often comes with a laundry list of things that are suggested in order to save money, as well as a list of things that take the better part of a year to save money on. Forget the nickle and dime approach and focus on some bigger ticket items that start paying off the moment they’re done to save big money fast:
1. Pay Cash and Cut up Credit Cards to Save Money Fast Now
Studies show that people who use cash instead of credit cards spend less. It makes sense. Many financial advisers point out that using cash for expenses creates an automatic budget. If you don’t have the cash, you don’t spend it. Pyschologists note that it’s hard-wired into human beings to not want to spend cash unless they know they need to. We automatically save money and stick within our budgets easier when using cash. Some people even mention their extreme reluctance to break up larger bills by spending them.
Within 30 days people who switch from credit cards to cash-only can see the effect. It’s one of the most powerful behavioral changes to save money fast. It provides fast feedback, encourages the right habits and it is often a major component in courses and budgeting systems that encourage families to put cash in envelopes labeled with the budget area that money needs to be spent on. Switching to cash has changed many financial lives and it works the very first day someone starts to do it as it creates a instant physical feedback loop between someone and their money.
2. Sell a Second Car, Rideshare or Use Public Transportation to Save Money
To save money fast, the next thing that needs looked at are the biggest ticket expenses. Outside of owning a home, the average American’s next biggest expense is transportation. A car is a $2,000-$5,000 yearly commitment for the average American. Most Americans own a second car. Selling a second car and driving extra distances to share one car, if at all possible, will save big money fast.
Even more drastic ways of saving money can include selling a primary car and switching to public transportation, carpooling or walking to work. Many Americans don’t live close enough to walk or ride, but carpooling and public transportation can save money fast if someone can give up their car. Yes, it is a drastic move, but saving big money fast requires big changes.
3. Refinance Your Home Loan to Save Money Quickly
Credit Sesame, a credit rating reporting app and website, recently released an analysis of mortgage payments that showed some 6 million Americans were overpaying their home mortgage payments by $500 a month. Even if a home owner is not in that group of 6 million and refinancing won’t bring that much of a savings, the process of going through the program often means the refinancer gets to skip a month’s payment as the old loan is being paid off and the new loan is coming online. Between the monthly savings and the skipped payment, it might be the breathing room a home owner needs to save some money fast.
4. Stop Going Out
On average, Americans spend $2,600 a year on food outside the house. They spend $1,200 a year on bottled water and soda. Hundreds of dollars a year on big theatre tickets, entertainment and more. To save money, habits have to be changed. Lunches have to be prepared at home. These changes alone will net hundreds of dollars a month for the average American if they’re leaving the house with friends. Sure, they’ll be less exciting, but they won’t be broke.
4. Renegotiate Debt with a Certified Non-Profit Credit Counselor to Save Money
Anyone with decent credit can call their credit card company and ask for a lower APR. It never hurts to ask. The call is simple, it takes only a few minutes, and the worse that can happen is that they refuse.
If you have bad credit, or are struggling to pay off credit card debt, there’s a lot of advice about how to handle debt negotiation. Do not pay attention to offers to settle debt by advertisers. Instead, reach out to a certified non-profit credit counselor registered with the National Foundation for Credit Counselors (NFCC). Professional non-profit credit counselors are not going to try to squeeze even more money out of you.
For more, read: Debt Settlement: How It Works and Why It Will Cost You More