Could you generate similar savings by making a few small changes?
- Reducing monthly subscriptions or other fixed costs could save you a lot of time throughout the year.
- Having weeks without regular spending might sound scary, but we’ve loosened the restrictions to make it achievable.
- Bank charges can add up, especially if you live or work abroad.
The end of the year is always a good time to check your finances and make sure you’re on the right track. With inflation driving up the cost of living and a potential recession on the horizon, reducing your monthly expenses can make a big difference to your bank balance. I generated over $6,000 in savings for 2023 and it only took me a few hours. Here is what I did.
1. Cut subscriptions
It’s confession time: I’m a sucker for subscriptions, especially ones that give you a certain number of weeks free or give you a discount on the first six months. The problem is that they can really add up.
As a journalist, I do a lot of research, so I can justify some of these expenses. But when I checked, I discovered that I had subscribed to over 10 different news and investment sites. And that’s not all. There are also several streaming channels that I barely use, as well as a few of what I would call “aspirational” subscriptions for e-learning.
I’ve stripped it all down to the bare essentials and might re-subscribe to a few as 2023 progresses. But starting with a clean slate means I can stick to the sites I use a lot and avoid the others. Plus, the cancellation process can lead to big savings. Some companies offer huge discounts in an attempt to keep you as a customer – one said it would cut the monthly fee from $40 to $10. In total, I just spent an hour online and on the phone saving over $125 a month, or over $1500 for the year.
Your spending vice may not be subscriptions. But looking at your spending habits might reveal other areas where you’re spending unnecessary amounts of money. Use a budgeting app or just sit down with your recent bank statements — it could make a big difference to your bottom line next year.
2. Regular planned weeks without expenses
I did my first week without expenses earlier this year and saved over $200. My partner and I have decided to do our own version for the last week of every month in 2023. What does “our own version” mean? We’ll cut back on non-essential expenses, but if there’s a birthday party or other special occasion, we’ll still go. You might think that’s cheating, which is understandable.
When we talked about implementing a regular no-spend week, our biggest hurdle wasn’t socializing. We realized we wouldn’t stick to a strict monthly no-spend week if it meant dropping friends or missing important social commitments. Better to design an exception that makes it workable than not to make it at all. Total savings next year? I put it at a conservative $150 per month, for $1,800 over the year.
3. I changed my banking habits
I live abroad, which often complicates my banking situation. For example, I cannot qualify for most major credit cards that a US resident might be eligible for. If I’m not careful, I pay high international fees for regular transactions. For example, this year my bank changed their policies and I no longer get free foreign transactions (I now pay over 2% to use my card). I also pay 5% to receive certain payments from customers.
All of this means I could save at least $250 a month by cleaning up my banking habits. I have enough credit history to apply for a rewards credit card in Colombia, where I live. I’m switching to a current account for people living abroad. And I found ways to reduce the charges on the money I receive. All in all, that’s a huge additional savings of $3,000.
If you don’t live or work abroad, changing your banking habits could yield more modest savings. But even cutting your costs by $20 or $30 a month can add up. Look at what you pay in bank charges and see if you could save money by switching current accounts. Or maybe you could get higher returns with another savings account. A little investigation might reveal a credit card that suits your habits better. Or maybe you’ll find that you’re paying annual credit card fees that aren’t really justifiable anymore. Every little bit counts as we all grapple with runaway inflation.
4. Automated my investments
I’ve always been hesitant to set up an automatic transfer to my brokerage account because I’m self-employed and I’m never completely sure of my income. However, it is one of the best ways to build wealth, and all is well, I want to invest more next year.
I have set investment goals that I hope are realistic, based on my current income. Setting up automatic payments means I don’t have to think about making those regular contributions. Also, there’s no way I’m spending that money on anything else. And if my financial situation changes, I will change the amount transferred.
It is impossible to say how much I will save by automating my investments because it depends a lot on the performance of the stock market. In theory, the power of compound interest means that every dollar I invest next year could be worth a lot more in 10 or 20 years. This movement of money is more about prioritizing long-term wealth creation than short-term cost savings.
At the end of the line
Everyone’s financial situation is different, and some of us steer a tighter ship than others. At the end of the day, no one likes wasting money, whether it’s on unnecessary bank charges or on subscriptions you barely use. Take a few hours to review your spending habits and see how much you can save next year – you might be surprised.
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