Imagine what you can do with that extra $5000 by eliminating some of the non-essential things in your life. Imagine if you didn’t spend it, but instead invest it. Imagine if you do this every year for 10 years. Want to learn how to turn that $5,000 into $87,000?
Invest in index funds.
Let’s start off with an example. To simplify this scenario, I will use 10% as an average return rate from index funds every year.
If you have $5000 extra to invest in index funds with the average return rate of 10%, you will have earned an extra $500 by the end of year 1. Now you will have a grand total of $5,500.
Doesn’t seem like much right? But the second year, your investment amount will be $10,500 ($5,500 from year 1 and $5,000 from year 2).
Just like that, it keeps growing. After 10 years, it will be roughly $87,000 instead of $50,000. It all starts with you cutting out the non-essential things in your life to make it happen.
I wish I did this 10 years ago. I only started a little over a year ago and last year I made an extra $18,000 between index funds and stocks. So far, it’s $6,000 for this year.
Are you motivated yet to get started with saving? Let’s go through some of the things you can do to save money.
Instead of cable, get Netflix or Amazon Prime. I have both Netflix and Amazon Prime for free (leeching from other people). I watch Netflix here and there, but other than that, I really don’t have time to watch anything anymore. This blog has kept me so busy.
My parents were paying $90/month for cable until they finally got rid of it a couple of years ago. Now they watch everything for free on YouTube. They have turned into some serious hardcore YouTube users.
Related: 10 Ways to Save Money on Medications
2. Morning Coffee
An average American spends more than $1,100 on coffee every year. Pretty crazy right? This doesn’t even count the coffee at home and at work. This is an easy save.
If you spend $4/day for a cup of coffee for 5 days a week, that’s $1040/year.
Fun fact: Did you know that caffeine is the most consumed drug in the world?
3. Dining Out
If you eat out at a fast food joint such as McDonald’s once a week for a family of 4, that would set you back $1000 a year.
A big mac meal is $6 and a family of 4 would cost $24/week. I am not even counting pizza or eating out at a nicer restaurant. That’s over $1000 in saving with just 1 fast food meal a week with the family.
When I was living on a budget, my monthly grocery was only $100/month. There are a lot of ways to save on grocery, but the easiest way is having a grocery list. It prevents you from buying things with your eyes. You also shouldn’t go grocery shopping when you’re hungry. I want to buy everything when I’m hungry.
Saving: Varies $1200- $2400/year
5. High-Speed Internet
I was paying $55/month for my internet alone AND I was also paying for the $5 monthly fee for the modem. It took me forever before I finally switched to the Time Warner Cable $14/month for a lifetime. I got my own modem on eBay for $20 and it’s mine to keep.
Saving: $40/month = ~$500/year
6. Cell phone plan/Landline
I was paying $79/month by myself for years and it was a discounted price through my work. After I switched provider and got on the same plan as my friend, I now pay $33/month.
My parents had both a landline and cell phone for years. They were always afraid that people couldn’t reach them. They finally got rid of it to save money. I don’t know too many people that still have a landline, but I do know a few people that still have it.
Saving: $25/month or ~$300/year for cell phone + $550/year for landline
7. Gym Membership
After years of going back and forth, I finally purchased a gym membership. I probably wouldn’t renew my membership again. There are many ways to exercise for free outside the gym.
If you do decide to get a gym membership, look for the ones that cost $10/month such as Crunch or Planet Fitness or your local gyms. There are also many YouTube workout videos that you don’t even need to spend a dime on.
Saving: $30-$40/month or ~$360 – $480/year
8. Shop for Car Insurance
I had State Farm and was paying around $800 every 6 months. You know those Geico commercials about saving you 15% when you switch? I did a quote and it came out to be around $500 for 6 months! That is way more than 15%. It’s good to shop around when it comes to automobile insurance.
Related: 12 Side Hustles to Make Money Fast
9. Plastic Water Bottles
This one is harder to estimate, but I used to buy 1 case a week for around $4. That’s roughly $200/year. Not only you get to save $200 a year, but you also save the environment. Water is free and paying $200/year for it is expensive even when you think it’s nothing.
10. Get Cash Back
My friend first introduced me to eBates about a year ago. She was getting $200 back from shopping at her normal places after 6 months of using it. Sign up here to get $10 back after spending $25 at places like Walmart, Amazon, Macy’s, etc.
The 10 simple ways listed above can easily save you over $5000 a year. Not everybody can use everything on the list and the list is definitely not all-inclusive. It’s hard to imagine a little saving here and there can really make a big difference, but it can if you save and invest.
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- 12 Side Hustles to Make Extra Money Fast
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- 10 Ways to Save Money on Medications
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