10 Ways to Maximize Savings in 2021

4. House Hack to Reduce or Eliminate Your Housing Payment

Housing is the biggest expense in most people’s budgets. That means it has the biggest potential to save you money.

There are many ways to “house hack” and have someone else pay your housing bill for you. The classic model is to buy a small multi-unit property, move into one of the units, and rent out the others. You can even use an FHA loan with a 3.5% down payment to finance it.

You can also build an accessory dwelling unit – also known as an in-law suite or granny flat – and rent it out. Or you can rent out a room in your house; in my first house, my housemate paid nearly three-quarters of my mortgage.

If you don’t like the idea of a permanent housemate, you could rent out rooms on Airbnb occasionally to bring in some extra money. Or you could forego other humans altogether and simply rent out storage space on Neighbor or Store At My House.

Far too many people make the mistake of thinking that their housing payment is fixed. It’s not.

5. Get Rid of a Car

Transportation is the second-highest expense in most people’s budgets. And it’s far, far higher than most people assume.

The cost of owning, maintaining, and driving a car includes not just the car payment, but also insurance, gas, maintenance and repairs, and parking. The average cost of car ownership in the United States is nearly $9,000 a year, according to AAA. That’s a big dent in your budget.

First, seriously consider living without a car or sharing a car with your spouse, significant other, or housemate. Most people immediately dismiss the idea, but take the time to truly think through the implications and what you would give up compared with what you would save.

Could you bike or walk to work instead? Carpool? Take public transportation? Utilize ridesharing programs like Uber and Lyft more effectively? Start thinking outside the box and look for ways to save money on transportation costs.

6. Cook more meals at home

The third-largest expense in most people’s budgets is food.

Sure, a dinner out is nice every once in a while, but that’s an entertainment expense, not a food expense. Beyond charging several times the cost of the ingredients, restaurants also mark up beverages such as wine by 200% to 400%, according to Business Insider – not to mention the extra 15% to 20% for a tip. Which says nothing of babysitting costs if you have children.

We all know one of the best way to stretch your food budget is to avoid dining out. But we also know that’s easier said than done. Alicia R. said she sets aside a few hours to cook a month’s worth of dinners to freeze: “If it’s already cooked and ready to heat up, we are more likely to stay home and eat than be tempted with going out.”

Set a lower food budget based on the costs of cooking every meal – breakfast, lunch, and dinner – at home. If time or energy at the end of a long workday is a problem, try these recipes for make-ahead freezer meals.

Save money on lunches by bringing lunch to work every day. Check out these cheap brown bag lunch ideas for adults and healthy school lunch ideas for kids. My wife and I cook a double portion for dinner, so we have leftovers to take for lunch the next day. Try these recipes and tips to make the most of your leftovers.

The more I cook, the more I enjoy it, and the better I get at it. It’s a virtuous cycle. Start with easy recipes for your favorite meals. Stop paying someone else to prepare your meals, and start doing it yourself if you want to get serious about savings. While this may seem like common advice, it’s important to remember these strategies really do work.

3 thoughts on “10 Ways to Maximize Savings in 2021

  1. The content is great, good job Kurt. I think the first point “set a target savings rate before setting your budget” combined with consistency are the keys to succeed with a savings plan.

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