Most of us make way more money than we need to survive.
Unfortunately, many of us get sucked into spending out of boredom, habit, or a lack of financial planning.
Fortunately, we have put together eight different ways to save $500 a month easily!
8 Ways To Save an Extra $500 Month
1. Automate Your Saving
According to this study by Statista, the savings rate in the U.S. was 7.6% in 2019. In 1960, the savings rate was 11.6%. They define the savings as either money people are putting away for future use or money from cutting costs. Either way, the savings rate will not get most people where they want to be.
To guarantee you save $500 a month, use the strategy of automatically paying yourself first. Most people do their best to limit their spending during the month and keep whatever is leftover at the end of the month.
Unfortunately, this strategy usually ends with spending more than anticipated, and little to nothing left to save at the end of the month. If you're using the cash envelope or other budget method, it can be hard to remain disciplined if you have extra money sitting around.
To pay yourself first, treat your saving goal as a bill to yourself. You can split your $500 saving goal into a weekly saving bill, bi-weekly (if paid twice a month), or monthly bill. Pay this bill first, and move the money into separate savings.
To save $500 each month, split your bills into:
- One large bill of $500
- Two smaller bills of $250 twice a month
- Four small bills of $125 each week
After paying your savings bill, pay all the remaining necessities before you leave the discretionary spending money in your account.
Paying yourself first will guarantee you save an extra $500 a month.
2. Cancel Your Gym Membership Due to COVID
I found some interesting statistics and facts on gym memberships in the U.S. In this analysis from Noob Gains, 12% of new gym memberships occur in January. Over 80% of those memberships cancel within five months. Of the 12% of January new memberships, 4% of those are gone by the end of the month. The average cost of those memberships nationwide is $58/mo. However, if you live in a high cost of living area, the costs can be considerably more.
If your gym is currently closed, are you positive you are not still paying for a membership?
During the pandemic, many gyms have closed. However, many of the gyms that closed have also continued to charge monthly membership rates -unless the subscriber manually canceled the memberships.
If your gym is currently closed, make sure you are not still paying the monthly fee.
If your gym is open, are you using it enough to justify the ongoing fees? Many of the exercises you do at the gym you can do at home by using cheap weights or your body weight.
Canceling a gym membership can save you a significant amount of money each month towards your $500 goal.
3. Refinance Your Student Loans
The student loan debt problem is a smaller version of the national debt. It keeps growing with no end in sight. The total student loan debt in the U.S. currently stands at over $1.7 trillion. The average per-person loan amount stands at just over $35,000.
Restructuring a high-interest student loan can be a great way to save money each month. Many students obtain their student loans as young adults, which results in a higher than average interest rate.
If you have obtained your degree and are a few years into paying down your loan, refinancing may help you lock in a historically low-interest rate. A low-interest rate can lower your monthly payments as well as save you money in interest paid to the bank over the term of the loan.
Be sure to factor in the fees associated with a restructure to ensure it makes sense to refinance.
4. Switch to a Streaming Service
The average cable bill in the U.S. often exceeds all other utility bills. Standing at $217.42/mo, it would appear we're watching way too much TV. Think about that for a minute. That annual total is $2,609.04! In ten years, that amounts to $26,090.40! Putting that money into your 401(k) at a conservative 5% growth rate means you would have $32,816.22 instead of zero. That's not a small amount of money.
Cable bills are notorious for slowly increasing your rates month over month until you are paying hundreds of dollars for channels you never watch. Rather than paying over $100 a month for a few select channels, you view, ditch cable, and “cut the cord.”
Switching to an online streaming service that matches your needs, you can easily save a bunch of money each month while still enjoying the shows you love. In this article, you see how one family saved over $125 monthly by switching services.
With so many online streaming options that offer their service for less than $20 each month, you're sure to find what you enjoy while saving money at the same time.
5. Have a Yard Sale
Last month we rounded up a bunch of stuff in our house in an attempt to “minimize” our junk. The initial intention was to get rid of a bunch of things we no longer use by donating it or throwing the items away.
At the last minute, I decided to draw up a few yard sale signs and tape them up around our neighborhood the night before. I didn't take the time to label any of the items with prices and prepared the night before.
The next morning I sat outside and watched the traffic flow in. For each item, people asked how much I wanted for it and most averaged between the $1 – $3 range. After about three hours, it was getting hot, so I decided to end the sale.
After three hours of work, on my own time, which also helped me get a bunch of old stuff out of my house, I was able to bring in an extra $140! I then took the remaining items and donated them to get them out of the house.
Don't underestimate the price someone is willing to pay for your old items such as clothes, furniture, books, and toys!
6. Rent Out Unused Space
While many people are familiar with how to rent to own, often we forget how much we can rent our unused space without giving up any ownership. If you have unused space at your home, you may be able to cash in by renting it out.
Rent Out a Bedroom
The traditional method is to rent out a spare bedroom to a roommate for extra cash. However, if you live in a tourist location, you may be able to rent a spare bedroom to vacationers through a site like Airbnb.
In addition to renting out spare bedrooms, there are other great ways to capitalize on unused space at your house.
Rent Out Garage Space
If you have an empty garage, you could demand a significant amount of money to rent it out as a storage unit. Keep in mind; the renter would need access to your garage to access their items.
Rent Out Your Backyard
People who live in areas with a homeowners association (HOA) routinely struggle to find places to park their recreational vehicles. If you have a large backyard without an HOA, you can rent out space in your yard for people to store their RVs and other expensive toys.
If you have beautiful landscaping or scenery, a backyard wedding may be the perfect venue for you to bring in extra money each month. With large wedding venues currently shut down, many people are going with non-traditional backyard settings.
Before you utilize any of these strategies, check with your homeowner's insurance to see what additional coverage you may need to protect yourself and your property.
7. Embrace Meal Planning
Making dinner and lunches at home will usually save you a significant amount of money compared to dining out. Even with many dining establishments currently being closed for in-person dining, take out services such as Grub Hub are seeing an all-time high amount of customers.
Even though many restaurants offer free delivery, the price you pay for this food is easily twice, if not three times, the amount you would pay if you made the food at home on your own.
Many people who try to meal plan fail after about a week. Often, this is due to a lack of motivation or a real strategy to be successful. Utilizing grocery curbside pickup options can help you meal plan every week as long as you intentionally carve out time to prepare your meals.
A meal planning habit can be challenging to develop, but it can save you a significant amount of money each month if you're able to stick with it.
8. Compare Auto and Home Insurance
The average cost of auto insurance annually is $978 per year for the state's minimum coverage. A full-coverage policy would cost $2,390 a year. The average cost of homeowners insurance is $1,445 annually.
Most of us have been with the same car and home insurance company for years. We either started with this company because our parents used them, or the company offered the lowest rates at the time. Often, many of us neglect to shop around every few years to guarantee we are still paying the lowest price possible.
To save money on insurance, do a quick online price quote for several well-known insurance providers. You may be surprised to find that your cheap plan has become much more expensive than other companies who are competing to get your business.
Keep your insurance company honest by shopping around every few years and calling to request a cheaper monthly rate.
Wrapping It Up
There are many great ways to save $500 each month. These include:
- Automate your savings by paying yourself first
- Make sure your gym is not still charging you
- Refinance your student loans
- Switch to a streaming service
- Declutter and have a yard sale
- Rent out unused space
- Take meal planning seriously
- Compare or renegotiate your current insurance rates
Whatever option you choose, avoid being complacent with your bills and financial strategy. We all overspend in certain areas. It's up to us to identify this waste and stop it once and for all.