5 Easy Steps to Saving $5,496 per Year

5 Easy Steps to Saving $5,496 per Year

What would you do with an extra $5,496 each year?

Would you use it to save for the future?

Would you use it make your everyday bills a little easier to handle?

Would you use it to do something fun, like plan a family trip?

$5,496 is a lot of money, especially if you’re able to save it every single year.

But it might not be that hard to find.

Here are 5 easy steps you can take to save $5,496 each year, without a significant change in your lifestyle.

1. Free yourself from cable

I cut the cord a few years ago and haven’t looked back.

Honestly, cutting cable feels a lot harder before you do it than it actually is once you’ve pulled the trigger.

I was worried about missing out on live sports, but that’s barely been an issue. Between an antenna that picks up local stations and the amount of TV you can stream these days, it’s hard to miss much.

Plus, the savings can be huge.

According to a recent survey, the average cable bill is now $99 per month. Though I’ve seen many that are a lot higher.

Now let’s say you free yourself from cable. You buy an antenna for local channels and a Roku player for streaming, both one-time costs.

Then you subscribe to Netflix (or Hulu Plus, or Amazon Prime) for a total monthly cost of $8.

That’s $91 per month in savings. Or $1,092 per year.

Just for getting your TV in a slightly different way.

2. Switch to a better cell phone plan

There’s really no need to go with one of the big, expensive cell phone companies anymore.

The average cell phone bill with one of the major companies is somewhere between $120 and $148 per month. That includes all types of family plans and people who are still on older contract plans.

But let’s say that you’re a smart consumer shopping the latest no-contract offerings. It’s you and one other person on a family plan, and you’re going to need about 2GB of data per person each month (a little below average).

Depending on the provider, that’s going to cost you between $90 and $120 per month with the major carriers. Let’s average that out to $105 per month.

Instead, you could simply go with Republic Wireless. Not only is it much cheaper but your phone will default to wi-fi for everything, meaning you’ll use much less data and therefore pay much less per month.

Assuming you can each live with 1GB of data per month (remember, most of your use will be on wi-fi, so you may not even need that much), your bill will be $50 per month. Total.

That’s $55 per month in savings, or $660 per year.

Total savings for far: $1,752.

3. Get smarter life insurance

I made a big mistake the first time I bought life insurance.

Instead of taking the time to do a little research on my own, I went straight to a life insurance agent.

He was a guy I had met a couple of times while volunteering, he had a nice personality, and it was an easy way to get out of doing some of the hard work myself.

The result? Both my wife and I ended up with WAY more life insurance than we needed and we paid more than we had to for the coverage because we went through the agent’s company instead of shopping around.

Eventually I smartened up. I realized what had happened, felt bad about myself for a little while, and then got to work.

Instead of relying on an agent, I created my own process for figuring out how much life insurance we actually needed (a process I still use with my clients today).

Then I shopped around to find the insurance company that could provide that coverage at the best rate. We got the new coverage and canceled our old policies.

All told, the switch is now saving us $1,200 per year. That’s a combination of finding a less expensive company and only getting the insurance we really needed.

Total savings for far: $2,952.

4. Bring lunch to work

Let’s say that the average lunch out is $10. And let’s say that you’re currently doing that 3 times per week. That’s an average of $120 per month per person. If there are two of you, it’s $240 per month.

Now let’s say that you take two of those days and bring your own lunch instead, which costs you about $3 per person per day.

That small change will save you $112 per month. Or $1,344 per year.

Total savings for far: $4,296.

5. Grocery shop with a list

A lot of people struggle with grocery spending, myself included.

And to be honest I still struggle with it, but my wife and I have take some steps that have gotten us in a much better spot and saved us a lot of money.

Here’s our process:

  1. We have a default grocery list. These are the things that we get on a regular basis. We use the app Remember the Milk to keep track of it.
  2. Throughout the week we write down things we need to buy that aren’t on our default list.
  3. We go grocery shopping once per week (usually). Before we go we run through our default list, cross off everything we don’t need, and add the other things we wrote down over the course of the week.
  4. When we shop, we (mostly) buy only what’s on the list and nothing else.

This process makes sure we get everything we need without having to go back to the store multiple times each week. And it limits us to only buying the things we really need, because that’s all that’s on our list. Impulse purchases are largely eliminated.

How much you save really depends on where you’re starting from and what your shopping needs are. But this process has saved us about $100 per month, which adds up to $1,200 per year.

Total savings for far: $5,496.

Bonus #1: Max out your 401(k)

So what are you going to do with all of that savings? How about using some of it to score yourself some more free money?

Most employers who offer a 401(k) plan also offer some type of employer match. That is, your employer will match your contribution up to a certain point.

That’s free money. It’s the best return on investment you’ll find anywhere. And you should definitely take advantage of it if you can.

Let’s say that you’re making $75,000 per year and your company auto-enrolled you in your 401(k) with a 3% contribution. But let’s also say that they will match your contribution up to 5% of your salary.

All you have to do is increase your contribution by 2%, which means you’ll be saving an extra $1,500 per year. Of course, that’s easy for you to do after all the moves you made above.

AND on top of your savings your employer will ALSO be contributing an extra $1,500 per year to your account because of the match.

That’s $1,500 in free money! Take it and run.

Quick note: all employers have different 401(k) matching policies, so make sure to check yours before making any decisions.

Bonus #2: Max out your IRA

What if you’re already maxing out your 401(k) employer match?

Well, that $5,496 you just saved is almost exactly the maximum amount you’re able to contribute to an IRA each year (the max is $5,500).

So if you can scrounge up an extra $4, you can max out your IRA and get yourself that much closer to financial independence.

How will you save?

Remember, it’s not ALL about cutting back. You’re allowed to spend money on things you enjoy, and in many cases you can make much quicker progress by focusing on earning more instead.

But if you’re looking for some quick and easy ways to free up some cash each month, these tips should do the trick.

Start building a better financial future with the resource I wish I had when I was starting my family. It’s free!

8 Comments... Read them below or add one of your own
  • Michelle December 1, 2015

    We cut cable earlier this year and also got rid of Netflix. Best decisions ever!

    • Matt Becker December 1, 2015

      Oh man, you’re even more hardcore than us! We still have Netflix. I’m a huge fan.

  • Chuck December 1, 2015

    We cut cable over a year ago and couldn’t be happier. That has saved us over $80 a month! Next month I’m going to be looking at the cell plan. Unfortunately, we’re supporting older parents on a family plan so it’s a little tougher to transition.


    • Matt Becker December 2, 2015

      Nice work with cable! And good luck with the cell phone plan too. I know it can be tougher when there are other people involved.

  • Kalie @ Pretend to Be Poor December 1, 2015

    These are great, relatively painless way to save a lot of money. The one remaining for me is to get a better cell phone plan. I haven’t bothered since the difference only amounts to $10 per month since my plan isn’t too outrageous, but knowing I could save that ongoing makes me want to.

    • Matt Becker December 2, 2015

      Yeah, if it’s only $10 per month then it may not be worth it, especially if you have to buy the phone too. You might be better off focusing on bigger wins at that point.

  • Andrew December 3, 2015

    Switched to Cricket wireless a few months back…I pay $35 a month with unlimited talk/text and get 2.5 gigs of data. It uses the AT&T network which is what I had before. Switching the family over! It’s $100 for 5 people! Great savings there! We have never had cable but still have Netflix which we don’t really use much. We have Prime but I haven’t really checked out their offerings.

    • Matt Becker December 3, 2015

      Good to hear about Cricket Wireless. I don’t know much about them so it’s nice to know that that’s another good option. Thanks!

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