Seven Solid Ways You Can Save $1,000 in a Year

By Features Bankrate.com

Save $1,000 With Minimal Pain

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Saving money is never easy, but having a specific, manageable goal will give you a better chance at succeeding. So, try setting your savings bar at $1,000 for a year.

Try out some of the tips offered to Bankrate by frugal living experts and financial planners to see which ones work best for your lifestyle.

To start, here's a piece of advice from Rich Arzaga, founder and CEO of Cornerstone Wealth Management in San Ramon, Calif.

"It's better to save something today and make progress rather than to wait until tomorrow to start," Arzaga says. "If you can't save $1,000 at the rate you hope, you can take refuge in the idea that the best way to eat a cow is one hamburger at a time."

Trim Your Smartphone Cost

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"Did you know that data plans for smartphones can cost a family of four like mine more than $1,400 a year?" says Leah Ingram, who writes the Suddenly Frugal blog. "Rather than paying for a smartphone, we keep our stupid phones for calls and use an iPod touch in conjunction with a (Wi-Fi hotspot). The iPod touch acts just like an iPhone, without the calling part."

Mobile Internet access costs the Ingram family $20 per month, or just $240 per year for up to five devices including an iPod touch, iPad and laptops. The devices must be in the proximity of the hotspot to access the Internet.

Depending on how you use your cellphone or smartphone, you also may be able to save by reducing your voice or data plan to match your usage.

Skip Your Daily Dose of Gourmet Coffee

Whether you are buying a Starbucks coffee or a smoothie from Jamba Juice for $5 per day, if you skip it and save that money, you'll easily bank more than $1,000 in one year.

"If you assume $5 per day, five days a week, you will save $1,000 in 40 weeks or (10) months," says Rich Arzaga, founder and CEO of Cornerstone Wealth Management in San Ramon, Calif. "Multiply this by saving on a second serving for a spouse or a child, and you cut this time in half."

Arzaga says whatever you buy on a daily basis is a luxury that provides no real benefit than a moment or two of pleasure.

"Turn this short-term goal of saving $1,000 in 40 weeks into a habit," Arzaga says. "Over a 20-year period, assuming a 6%, long-term growth rate, saving $5 per day on these pleasures for one drinker will generate over $54,000 in savings. Two drinkers would generate over $100,000 in savings, higher than most people have in their accounts to retire on."

Avoid Prepared Foods, and Cut Grocery Costs

Jeff Yeager, author of "The Cheapskate Next Door," says consumers waste money when buying prepared foods such as shredded cheese and prewashed, prepped vegetables.

"A study by Arizona State University showed that, when computed on an hourly basis, you're paying astronomical amounts for the convenience of processed foodstuff like shredded cheese ($80 per hour) and prechopped celery ($49 per hour) -- simple tasks you could do yourself," Yeager says.

In fact, Ingram compared cheese prices for her blog and found that she could buy 8 ounces of shredded mozzarella for $7 or a 16-ounce block of mozzarella for $4.

How much you can save depends on how much you spend now on prepared foods.

Dump Your Gym Membership and Save Money

If you are spending money on a gym membership and gas for your car, you're better off picking up a used bike at a thrift store for $100 or less, says Jeff Yeager, author of "The Cheapskate Next Door."

"Pedal your bike on over to your health club and cancel your gym membership (average savings: $400 per year)," Yeager says. "Then take a map and draw a circle 1 mile in radius around your house, and resolve to bicycle for all trips within that radius. More than 25% of all car trips made by the average American are within 1 mile of home, so you stand to save about $800 more per year on gas ... and stay in shape at the same time."

Put $50 Into Savings Every Two Weeks

Kimberly Foss, founder of Empyrion Wealth Management in Roseville, Calif., says consumers can learn to save more if they figure out how many hours of work are required for their purchases.

"When we work, we are simply exchanging our hours for little green pieces of paper," Foss says. "If you earn $25 per hour, a $50 expense is really exchanging two hours of your time for a material object that will most likely wear out or break in the next 25 years. But, if you choose to save that $50 (per month) over the next 35 years, your coffee (pot) would be brewing over with the rich aroma of $176,000 worth of little green pieces of paper."

If you can manage $50 every two weeks, you can reach your savings goal of $1,000 in 10 months. The easiest way to accomplish this is to have $50 automatically transferred from your paycheck into your savings account.

Cut Your Landline Phone and Save Money

If you have a landline phone, it may be time to cancel it.

"We used to have two landlines in our house," says Leah Ingram, who writes the Suddenly Frugal blog. "One was for personal use, and the other was for my business. But over time, I discovered I was using my cellphone for most calls. So why did I need a second landline in the house? Cutting that landline saved us $800 in one year."

After canceling the business line, Ingram bundled her home phone with cable TV and Internet service for the house, saving another $50 per month, or $600 per year.

Bundling doesn't always work, so make sure you comparison shop to see which way you'll save the most.

Reduce Investment Fees and Save Money

Guy Penn, principal of G.M. Penn Wealth Management in O'Fallon, Mo., says one of the quickest ways to save money is by reducing investment fees.

"If you have a 401(k) sitting idle at an old employer, it may be time to roll that over into a self-directed IRA," Penn says. "New laws being enacted in 2012 require 401(k) providers to now disclose the fees and expenses within their plans. Most employees might be surprised just how much they are paying in such fees."

Penn says by reducing investment fees by just 1% on a $100,000 balance, you can save $1,000 per year.

"That savings impact has much larger implications over time," Penn says.

 

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