6 Ways to Stop Squandering Your Cash

If you’re already cash-strapped, the idea of trying to save money each month to sock away for an emergency fund might seem like a daunting task. But no matter how tight your budget, if you have regular income, chances are, you can find some ways to pinch enough pennies that will add up to some serious savings.

To find the ways you might be squandering your cash each month, start with the basics. “The No. 1 tip I give people is to start tracking their spending,” said Matt Becker, a financial adviser who focuses on parental finances on his site Mom and Dad Money. “That creates an awareness of where your money is going which almost always leads to easy opportunities to cut back.”

In other words, you need a budget. That means accounting for everything, including incidentals as small as gum, so you can understand how much you’re spending on items you might not actually need. It’s the kind of analysis that can help you get your spending under control and help ensure you have a safety net if you ever have a financial emergency.

Here are six basics that can get you started on the road to savings.

1. Comparison Shop

For necessary purchases — such as food and transportation and insurance — comparison shop to find the lowest prices. At the grocery store, look for sale items and coupons that can help you reduce your food budget. Also, take a list with you to the grocery store and stick to it. This will keep you from buying items you don’t need.

2. Review Fees & Subscriptions

Do you have a credit card with an annual fee? If this fee isn’t paying for itself through rewards or cash back, you might want to consider a credit card with no annual fee. Have magazines you pay for but don’t read? That $20 could go into a savings account. So could the monthly cost of cable service upgrades or extra data service for your cellphone. If you aren’t using it, or using it infrequently, consider life without it — at least until you have an emergency fund saved up.

3. Stop Dining Out So Often

If you eat at restaurants or get take out regularly, consider this: Spending just $7 a day during the work week on lunch adds up to more than $1,700 a year (taking into account a two-week vacation). That $3.50 coffee each morning tacks on another $875. And dinner out, even just three nights a week? At a reasonable $20 for dinner and a drink, that’s more than $3,000 a year that could be going toward savings.

4. Limit Holiday & Birthday Spending

A few well chosen gifts are likely to be more appreciated than a big pile that you didn’t really think about. Spending too much on gifts, particularly around the holidays, can not only wreak havoc on your credit, it can also strain your sanity. Avoid the buyers’ remorse and be thrifty with your gift-giving.

5. Gym Memberships

Even if you are going to the gym regularly, you might want to consider if you need to pay that monthly gym fee just to stay fit. Your fiscal fitness could potentially benefit more by cutting it out. Consider free alternatives like running, walking and calisthenics, especially for the months that the weather doesn’t limit your ability to exercise outdoors.

6. Improve Your Credit Score

A bad credit score can be expensive — potentially tens of thousands of dollars over the course of a lifetime. (We even made a calculator so you can see just how much you’re losing to bad credit.) Plenty of people struggle to improve their credit scores and there are a lot of things you can do to build good credit — and reap the rewards that come along with a good credit score.

If you need to improve it, you can monitor your progress by viewing your two free credit scores each month on Credit.com. You can even get tips on what your problem areas may be.