Savings Tips

General

• Save your loose change. Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.
• Keep track of your spending. At least once a month, use credit card, checking, and other records to review what you've purchased. Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account.
• Never purchase expensive items on impulse. Think over each expensive purchase for at least 24 hours. Acting on this principle will mean you have far fewer regrets about impulse purchases, and far more money for emergency savings.
• Use debit and credit cards prudently. To minimize interest charges, try to limit credit card purchases to those you can pay off in full at the end of the month. If you use a debit card, don't rely on an overdraft feature to spend money you don't have. With either approach, you'll have more money available for emergency savings.

Banking

• Reduce credit card debt by $1,000. That $1,000 debt reduction will probably save you $150-$200 a year, and much more if you're paying penalty rates of 20-30%.
• Make your monthly credit card payment on time. The $30-$35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings.
• Use only the ATMs of your bank or credit union. Using the ATM of another financial institution once a week could well cost you $3 a withdrawal or more than $150 over the course of a year.

Insurance

• Shop around for auto and homeowners' insurance: Before renewing your existing policies each year, check out the rates of competing companies (see the web site of your state insurance department). Their annual premiums may well be several hundred dollars lower.
• Raise the deductibles on auto and homeowners' insurance: Being willing to pay $500-$1,000 on a claim, rather than only $100-$250, can reduce annual premiums by as much as several hundred dollars.
• Assess your need for life insurance coverage. If your children are now on their own or if your spouse works, you may not need as much life insurance protection. The annual premiums on a term life policy would typically fully fund an emergency savings account.

Transportation

• Keep your car engine tuned and its tires inflated to their proper pressure. Doing both can save you up to $100 a year in gas.
• Shop around for gas. Comparing prices at different stations and using the lowest-octane (recommended by the car owner's manual) can save you hundreds of dollars a year.
• When driving, avoid fast start-ups and stops. Over time, you will save hundreds of dollars on lower gas and maintenance costs.

Housing

• Don't pay for space you don't need. Americans have relatively large houses and apartments. Think about more efficiently using space so you can purchase or rent less square footage. Live relatively near your workplace. While this isn't always possible, driving 5,000 miles less a year can lower transportation costs by more than $1,000.
• Refinance your mortgage to lower interest charges. Consider refinancing your mortgage to lower the rate and term. On a 15-year $100,000 fixed-rate mortgage, lowering the rate from 7% to 6.5% can save you more than $5,000 in interest charges over the life of the loan. For each $100,000 you borrow at a 7% rate, you will pay over $75,000 less in interest on a 15-year than a 30-year fixed rate mortgage. And, you will accumulate home equity more rapidly, thus increasing your ability to cover large emergency expenditures.
• Choose home repair contractors wisely. Favor contractors who have successfully performed work for people you know. Insist on a written, fixed-price bid. Don't make full payment until satisfactory completion of the work.

Home Heating and Cooling

• Ask your local electric or gas utility for a free or low-cost home energy audit. The audit may reveal inexpensive ways to reduce home heating and cooling costs by hundreds of dollars a year. Keep in mind that a payback period of less than three years, or even five years, usually will save you lots of money in the long-term.
• Weatherproof your home. Caulk holes and cracks that let warm air escape in the winter and cold air escape in the summer. Your local hardware store has materials, and quite possibly useful advice, about inexpensively stopping unwanted heat or cooling loss.
• Use window coverings to block or let in sunshine. In summer, use these coverings to block sunlight, keeping your house cool. In winter, open the coverings to let sunshine warm the house. You could easily save more than $100 annually while being more comfortable.

Communications

• Assess your communications costs. As Internet and wireless use grows, many consumers are overpaying for unneeded communications capacity. For example, if you have a cell phone and two phone lines -- one for your computer -- consider receiving personal calls on your cell phone so you can give up one of the phone lines.

• Communicate by e-mail rather than by phone. If you're online, e-mail communications are virtually free. Even for subscribers, landline and wireless calls often carry per-minute charges.
• Be aware of your cell phone costs and how to reduce them. Cell phone use has dramatically increased communications expenditures in many households. Understand peak calling periods, area coverage, roaming, and termination charges. Make sure your calling plan matches the pattern of calls you typically make.