One of my favorite personal finance tactics is to find “incremental savings” in my life and do what it takes to implement them.
So what exactly does “incremental savings” mean? Incremental savings simply refers to the reduction or elimination of the cost of a recurring expense. Typically, incremental savings require only a one-time action up front or a substitution of one action for another so that there’s no change in your time investment. If you find a way to trim your energy bill, then that’s incremental savings. If you find a way to trim your grocery bill that’s repeatable, then that’s incremental savings.
The benefits of incremental savings are obvious. It means smaller bills, so that means you’re going to have more money left behind for other things in life. That usually means lower stress in life and far fewer money worries. More importantly, because they cost very little time – it’s just one up-front task that doesn’t have to be repeated or a substitution of tasks that doesn’t add any additional time – they have very little opportunity cost associated with them. You’re not going to miss out on other things because you’re devoting time to these projects, because they’re either one-shot things you can do in your downtime or substitutions for the things you already do.
Here are 20 of my favorite incremental savings strategies. Hopefully, you’re already doing most of these things. If not, you have a great avenue for easy savings.
Trim your energy bill by replacing light bulbs with LEDs.
Many American homes are still lit by incandescent bulbs and CFLs, each of which have their own problems. Incandescent bulbs are very cheap up front, but they have a pretty short lifespan and they gobble energy like there’s no tomorrow. CFLs are better in terms of energy use and have a longer lifespan, but they take a while to warm up and are more expensive than incandescents.
LEDs, on the other hand, light up instantly, have an incredibly long lifespan, use less energy than even CFLs do, and the newer ones offer full spectrum lighting that’s indistinguishable from a normal incandescent. The only drawback is the up front cost, but that’s recouped by the fact that you won’t have to replace one for many years.
The solution is easy: As the bulbs in your home burn out, start replacing them with LED bulbs, one at a time. You’ll find that, before long, light bulbs become a pretty rare purchase and your energy bill will slowly decline, too.
Trim your energy bill by air sealing your home.
Air sealing your home simply means looking for places where air freely flows in and out of your home when you don’t want it to happen, such as through window edges, under doors, and through the attic. Doing some basic air sealing can cut down on that air transfer, meaning you keep cool air inside in the summer and warm air inside during the winter. That means that your air conditioning runs less in the summer and your furnace runs less in the winter, which means lower energy bills for you.
Air sealing your home really isn’t that hard, either. It’s mostly just a bunch of very small home improvement projects, such as applying caulk to windows, installing a weather strip on the bottoms of doors, and adding insulation where needed (especially in the attic).
You can find a great free guide for air sealing your home at the Department of Energy’s air sealing website.
Trim your energy bill by opening windows instead of using climate control.
During the hottest days of summer and coldest nights of winter, you’re going to want to close your windows tight and turn on the air conditioning or the furnace, depending on the season. However, the reality is that most days and most seasons don’t reach those extremes. Often, the temperature outside isn’t incredibly different than it is inside.
During the nicer winter and summer days and most spring and fall days, consider turning off your heating or cooling system and just opening the windows. You might not have the exact temperature that you want in your home if you do this – the temperature can vary a lot when the windows are open – but it will be in a range where you’ll still be comfortable and, best of all, you won’t be paying the energy bills for heating and cooling.
It’s easy enough. Whenever the temperature outside is within 20 degrees of what you ideally want inside, turn off your air conditioner or furnace and open up some windows. You’ll find that your energy bill goes down and your home still feels wonderful.
Trim your energy bill by running ceiling fans correctly based on the season.
A ceiling fan in a room can go a long way toward making it comfortable by encouraging air flow, circulating the air throughout the room. During the summer, you simply want air motion to create the cooling effect that you feel on your skin. In the winter, you’re more interested in having the warm air that collects near the ceiling move toward the middle of the room and the floor where people can feel it. If a ceiling fan is doing its job, it enables you to turn off your furnace or air conditioning at a wider variety of temperatures, saving on your energy bill.
How do you achieve that? Ceiling fans have a little switch on them that changes the direction of the blades. Stand directly underneath the fan with the fan running. If you feel air blowing down on you, then the blades are moving in the right direction for the summer months. Otherwise, if you barely feel air moving at all, the blades are moving in the right direction for the winter months.
If the blades are moving in the wrong direction for the season, turn off the fan and flip the switch that controls the direction of the blades and you’re good to go for the next six months or so.
We tend to leave the ceiling fans in our house running most of the time with the blades in the correct seasonal direction. This enables us to rarely turn on our central air or furnace, which cuts down on our energy bill overall since the fans use very little energy.
Trim your cable bill by eliminating premium channels that you don’t watch.
Take a look at your most recent cable or satellite bill. What packages are you subscribed to? Do you have a channel package that’s much larger than the “basic” package that’s offered? Do you have any premium channel packages added onto that, like HBO or Starz?
Now, ask yourself how often you actually watch those channels. Do you really watch anything on there with any frequency? Maybe you subscribe to HBO just to watch Game of Thrones, in which case you’re paying somewhere around $180 a year just to watch one television program. Maybe you have a big extended package, but you really only watch two channels 99% of the time and they’re in the most basic package.
The key here is to remember that it’s only worth paying for channels you actually watch. It is never worth paying for channels that you rarely or never watch. Watching a channel for one or two hours a month does not justify an additional $10 or $15 on your cable bill. Focus on keeping the 20% of channels that make up 80% of your viewing and drop the rest.
Trim your cable bill by shopping around for a better cable or satellite service.
If you’re not under any sort of contract for your cable or satellite service, you’re a free agent. It’s time to start shopping around for a better offer.
My recommendation is to do as suggested in the previous tip and figure out which channels make up 80% of your television viewing, then start examining packages from various companies which will provide those channels at the lowest possible price. Make sure that you’re factoring in the “teaser” prices that companies offer, as many companies will give you a great rate for the first year of a cable contract, but the prices inflate during the second year. Average the “teaser” and regular prices in that situation.
For starters, the satellite providers (Dish Network and DirecTV) are available almost everywhere in the United States. Many towns also have a cable provider or two (Mediacom, Comcast, Time Warner or someone else) and some towns have their own local provider as well. Do your homework and compare all the options, then switch to the one that will save you a bundle each month.
Trim your cable bill by cutting the cord.
Another option for cutting your cable bill down to size is simply eliminating that bill and using over-the-air free television signals along with your internet plan and the streaming video services that the internet provides to provide all of the television viewing options you need.
Getting over-the-air, high-definition television signals is easy and extremely cheap if you live within 50 miles or so of a city. Just buy a digital antenna at your local electronics store or on Amazon and install it by mounting it on a wall and attaching it to your television. The internal tuner in your television will take care of the rest.
For additional programming, services like Netflix, Hulu, and Amazon Instant Video add a ton of additional programming to your television for $10 a month (or less) via your internet connection. Combine that with sports services like MLB.tv and you can easily replace most of what you enjoy from cable for a much lower price.
Trim your credit card bills by negotiating lower interest rates.
If you carry a balance on your credit card and face a minimum monthly payment each month, you’ll quickly realize that much of that monthly payment is made up of interest. Rather than repaying what you borrow, a lot of that check you send in just goes to the company, with only a small fraction actually going to reduce your debt.
If you want to lower your monthly payment, the most effective thing you can do (besides paying it off, of course) is to negotiate a lower rate. Simply call up your credit card company and tell them that you’re struggling to cover the bills and may not be able to do so in the future. Ask for a reduction in interest rate and, if the person you’re talking to can’t do that, ask to speak to that person’s supervisor and ask that person for a lower rate. Remain calm and positive throughout the call.
It’s worth noting here that sometimes credit card issuers will close your account (leaving you still with a bill) or reduce your credit limit if you do this, so be aware that this is a potential outcome. Don’t negotiate your rate on a card that you need.
Trim your credit card bills by using balance transfers.
Another approach for reducing your credit card bills is to transfer high-interest balances to other credit cards that offer a lower interest rate. Many credit cards offer an introductory 0% interest rate on balance transfers, which means every dollar you send in directly pays off the balance.
Many credit cards offer reduced interest balance transfer offers, particularly cards that offer this as a bonus for signing up. They essentially issue a payment on your behalf to your other credit card and then add that payment amount to your new card, where that amount earns zero interest for an extended period of time.
While this doesn’t mean that you can just ignore that transferred amount, as it will eventually have an interest rate again, you often can get away with a reduced payment here for the time being. You can also take advantage of that 0% interest rate and make larger payments to get rid of that debt completely before the interest rate comes back. In either case, you’re going to wind up with lower bills, whether now or later.
Trim your credit card bills by switching to another card for primary usage.
Different cards have different features. For people who carry a balance, interest rates are a very important part of the equation. For others, the bonus rewards program associated with the card can make a big difference, too, and can save you money in other ways.
First of all, let’s look at the situation where you carry a balance from month to month. In those situations, you should shop around for a card with a lower interest rate and, ideally, one with an introductory balance transfer program so you can move the balance from your higher interest card.
If you don’t carry a balance, you may want to look at a credit card that has a better bonus that comes along with using the card. Cards offer rewards up to as high as 5% cash back or a 5% discount at specific retailers, so if you get a MasterCard or Visa associated with the retailer you shop at most frequently, that can be a sweet deal.
If you’re looking for a better card, you can start looking at Money360’s list of the best credit card offers we’ve found.
Trim your student loans by consolidating them.
Student loans can be a real burden for anyone who’s freshly graduated from an institution of higher learning.
In general, there’s not much benefit to consolidating federal student loans acquired after 2006, as they have a fixed interest rate. If you do consolidate them to get a longer repayment term, you’ll lower your bills for the moment but you’ll be in repayment for much longer, and that will cost you more money in the long run.
The real savings comes from consolidating private loans, which allows you to easily shop around among lenders to find the best deal for consolidating your private student loans. You can drastically reduce both your monthly payment and your interest rate by doing this.
Money360 has a great guide for student loan consolidation if this is an option that’s useful for you.
Trim your grocery bill by switching to the most cost-effective grocery store in your area.
Most people get into a routine of shopping at the same grocery store or two all of the time and don’t even consider changing it. However, it’s very likely that the store you use regularly isn’t actually the best store for your dollar.
I recommend trying to shop at a bunch of different stores over the course of a month or two, buying many of the staples that you usually buy at each different store – buy milk, cheese, bread, vegetables, and so on according to what you normally buy.
Keep track of the receipts and then compare them when you’re done checking out a lot of stores. The store you should be shopping at is the one that offers the best prices on the items you buy regularly. If you do this, your grocery bill will naturally shrink from here forward.
Trim your grocery bill by buying more store brand items and fewer name brand items.
Many people gravitate toward name brands due to familiarity and, to a smaller extent, attractive packaging. Yet, when you do this, you’re paying extra for advertising and for a pretty picture on the box. It has virtually no impact on what’s inside the box.
My recommendation for anyone is to try out some generic or store brand versions of the items that normally fill up your grocery list. Try out things like store brand bread, store brand cereal, store brand dish soap, store brand canned tomatoes, store brand frozen vegetables, and so on.
What you’ll find is that most of the time you’ll not even notice a difference between the two except that the store brand costs less, which means that you have more money left in your pocket. Try out store brands, stick with the ones that click for you, and enjoy a lower average grocery bill.
Trim your medication bill by trying generic versions of the medications that you use.
If you’re a regular user of prescription medications and your medical insurance isn’t top notch, it’s very likely that there’s a significant price difference for you between the regular version and the generic version of the medication. If the generic version can save you a bundle, it’s worth considering.
Your first step is to talk to your doctor about it. Will the generic medication take care of your problem? Many generics are identical to the name brand medication, but in some cases, they’re not. Your doctor will know whether a generic version is right for you.
If your doctor approves and writes a prescription, go to your pharmacy and give it a try! If it works exactly the same, your prescription expenses will drop through the floor, which can make an enormous difference in your monthly expenses.
Trim your banking bill by switching to a bank without fees for the services that you use.
If you use a bank that charges you for having a checking account or constantly dings you with ATM fees, you need a new bank. Those are expenses you really don’t need in your life, especially since there are many banks that don’t charge such fees and competition is heavier than ever in the banking space.
You should look at the multitude of banks and credit unions in your area to see what they offer in terms of interest rates and fees for the services that you use. You should also compare those offerings with what’s available in terms of online only banks, such as Ally Bank and SmartyPig.
If you switch to a bank that eliminates your banking fees and earns you a little more interest, you’ll see your expenses drop naturally and also see a bit more earnings as well without any real effort from you.
Trim your life insurance bill by switching to a term policy (with a few caveats).
If you have a fairly recently established universal or whole life insurance policy (within the last year or two), it’s probably going to make short term and long term financial sense to cancel that policy and replace it with a term policy.
The reality is that the “investment” portion of many life insurance policies isn’t that good until you’ve dumped money in it for years and years. If you’ve reached the five-year mark or so on such a policy, it actually can become a fairly solid investment, but in the early years, it’s really not very good and you never really fully earn back those years.
If you don’t have a life insurance policy and have any dependents, you should strongly consider getting one, and I recommend a term policy for the biggest benefit you can afford.
- Related: Term Life Insurance: The Basics
Trim your cell phone bill by shopping around for a better plan.
Much as with your cable bill, if you’re in a situation where you’re not tied to a cell contract, it makes a ton of financial sense for you to shop around and look at other providers because they often offer great deals for new customers who switch to them (and sometimes you can get the “new customer” deals from your current provider if you mention that you’re considering switching).
Check out the wide array of cell phone providers in your area, including both the big ones like Verizon and Sprint and smaller ones like US Cellular. Figure out which company offers the best deal for you as a new customer on the services that you actually use and then make the big switch.
For the most part, switching cell companies is pretty painless. You keep your same number and the only real difference is that you’re paying a much lower bill to a different provider.
Trim your cell phone bill by considering pay-as-you-go providers, especially if you’re a relatively low intensity user.
Many pay-as-you-go companies (like my personal favorite, Ting) actually offer a very good deal for people who aren’t heavy users of cell phones.
Usually, such pay-as-you-go companies offer a la carte offerings where you can pick and choose which services you want. Do you want unlimited texting for a certain dollar amount each month? Or what about a capped number of texts for a lower amount? Unlimited voice, or a certain number of minutes? How much data each month?
Take a hard look at what you actually use. You’ll probably find that you use far less than you’re actually paying for with your provider. If you’re already using a low-end plan, take a hard look at what pay-as-you-go companies can give you. You can save a lot of money each month.
Trim your membership bills by downgrading or eliminating services that you rarely use.
Do you really use Netflix all that often? What about your gym membership? What about any other online services that you subscribe to, whether it’s a software subscription or anything else?
My rule of thumb is this: If I’m not using a subscription service enough to drop the price down to a dollar or two per hour of usage, it’s not worth my money. Anything that costs me more than that per hour better be giving me a lot of benefit.
Walk through your credit card and bank statements and figure out what services you’re paying for each month. If those services aren’t providing significant value for you, cancel them! Those savings can really add up!
Trim your entertainment bills by renting entertainment first instead of buying it.
This one’s real easy.
If you buy a lot of books, start going to the library first instead of the bookstore. If you buy a lot of movies, start going to the library first and, if that doesn’t work, check out Redbox or other video rental kiosks and, if that doesn’t work, rent them online from sites like Amazon.
The truth is that most books we buy never get read multiple times, and most movies we buy never get watched more than once. Don’t buy either until you’re sure it’s going to see multiple viewings.
If you take a serious approach to trimming your spending, incremental savings can help a ton in terms of lowering your expenses without adding even more time commitments to your life. If you can take action on even five of these twenty tips, you’re going to be saving real money on all of your regular expenses from here on out.