6 ways to save money and build wealth without cutting expenses

January 17, 2020

If you could save and invest an extra $100 each month, you would have over $50,000 after 20 years assuming an annual 7% return. Just a little more than $3 per day! Cut out your daily coffee routine or pack your lunch or go out with friends less. All these suggestions would certainly trim your expenses and boost savings, but what if there were easier ways to save money without constraining your lifestyle? After all, I can’t imagine removing coffee from my morning routine.

You are in luck because to kick off 2020 I am highlighting 6 lifestyle-maintaining ways to save money, so you can build more wealth.

Note: I am not affiliated with, or earn any compensation from, any of the recommended external products or services. There are likely other competitive products and services to those that I discuss, but I am highlighting those that I use and find useful.

1) Eliminate unused subscriptions

The best way to save money is to cut out expenses that you don’t use. It doesn’t impact your daily life and can save you hundreds per month. The average American spends $237 per month on subscriptions even though they estimated they spent less than $80 per month. Subscription-based business models are encouraged because they have resulted in huge increases in sales – everything from your television to kitchen to clothing now has a subscription-based offering.

One way to trim these unused expenses is with TrueBill. TrueBill is a mobile app that connects to your bank accounts and analyzes your spending. The app helps you identify and cancel unwanted subscriptions, lower your bills, and refund you for fees and outages. The app asks you to set a fair price for what you think their service is worth, I pay $5 per month.

2) Lower your interest rate

If you have a mortgage, refinance options today from a variety of lenders are well below 4%. You could be saving hundreds, if not thousands, each month by lowering your interest rate on large debt balances, like your mortgage. Also consider consolidating any high-interest rate credit card balances with fixed-term loans from online lenders like Lending Club. I’ve carried credit card balances previously and was able to cut my interest rate in half with a loan from Lending Club.

Every dollar you save paying someone else interest is a dollar you can invest for yourself. Or, you can pay down your debt faster. It’s important to speak with a financial advisor (like me!) before taking one of these steps as it could have implications for your holistic plan.

3) Invest in your greatest asset - Yourself

One of the best ways to build wealth is to increase your earning potential, or human capital. There are two main ways to build wealth – spend less or earn more. Instead of cutting your lifestyle budget, invest in yourself to earn more. You should evaluate your return on investment before diving into more education or training, and we can help with that.

There are a few cost-effective, and highly regarded, routes to deepen your expertise. You could always apply for on-campus education, but online learning has exploded recently. If you are interested in a graduate degree, top-ranked universities such as Harvard and Stanford offer a variety of programs, and an even more affordable option is through online programs like edX or Coursera. Each of these institutions offer free courses to develop your skills as well.

4) Practice "purchase patience"

We all know when the big sales are: Black Friday, Cyber Monday, Amazon Prime Day, and a few more. To save a few bucks, instead of buying your next time-insensitive purchase right away, add the item to your list of ‘sale day buys’. A little patience can go a long way, especially for large purchases like new furniture or electronics. When those sales roll around, take out your list and see if you can get a great deal on what you have been waiting for – purchase patience I call it.

A good way to keep track of items you need to purchase is with the browser extension Honey. With Honey, you can create a list which they refer to as a ‘Droplist’ and you will be notified if the price drops for an item on your list so you can wait for a deal before buying. Honey also finds promo codes and applies them to your order automatically when you’re shopping on a retailer’s website, which is another great way to save.

5) Have cost-effective fun!

There are many often overlooked activities in cities and towns across the country that are free. To save some cash while still having a great time, look at local museums or parks near your town. Instead of an expensive dinner date try a spontaneous picnic (when it warms up). You can also save on adventurous vacations – either camping or hiking – which are more affordable than most hotels and just as invigorating, if not more.

A good place to discover camp sites across the country is Reserve America. To find museums in your hometown try the Smithsonian’s museum search tool. Also, review this list with 47 fun, cheap things to do on the weekend.

6) Put your cash to work

If you have savings at your bank or in a Certificate of Deposit (CD), you could likely earn much more by investing those funds in cash-like investments. There are many options today through exchange-traded funds (ETFs) that target a high-yield with minimal ups and downs. All investments come with variability, but a good portfolio manager (like me!) can help you earn a higher return than your savings account if you are willing to take a little risk.

ETFs like LDUR or BYLD have historically paid a divided in excess of 3% to 3.5%, while exhibiting low volatility[1]. Before accepting your banks interest rates, explore what else you can earn. It’s always important to consider the risks before investing and it’s best to work with a financial professional.