You have an ambitious goal to save more money and grow your net worth. Now is the time to make that happen.
The more money you save, the more it can grow. You also don’t have to stress about paying the bills or unforeseen expenses because you know there’s money to cover them.
This post explains how to save at least $100 per day—and why taking this approach could be one of the best things you do in your personal finance journey.
How to start saving a lot of money 1. Tighten your budget to cut down on spending
Budgeting often carries a negative connotation, as people tend to associate it with living a limited or reduced lifestyle. In fact, the opposite is true. Budgeting is the fastest way to get your personal finances in order.
By sticking to a budget, you’ll ensure that every dollar works to your advantage. It’s also a way to change bad spending habits and start acting with more financial discipline.
Here are some practical tips for cutting back on spending.
Go easy on credit cards
Credit cards can be very tempting to use because they give you points and rewards and the illusion that you have more money than you really do.
Unfortunately, far too often people rack up thousands of dollars worth of debt, thinking they’ll pay it off eventually. However, the debt keeps spiraling—and pretty soon, they can’t get out.
Whatever you do, don’t fall into the credit card trap. If you want to use credit cards, set a limit for yourself and pay off the balance in full at the end of every month.
Cut down on media consumption
It’s not quite as simple as cutting the cord on your cable to save money anymore. If you’re like most people these days, you probably pay for a number of individual streaming services. These costs can add up—especially if you’re already bundling cable with a home internet package.
The smarter move is to do a media and entertainment audit, and determine how much you’re spending on all of your combined services each month. For example, chances are you don’t just have Netflix but also Hulu or Amazon Prime. You may also be paying for streaming music services through Spotify, Google Play, or Amazon Music, or a video game package through Sony or Xbox.
Consider scaling down these services to save money. Spend your free time reading or working a side hustle instead.
Cook more at home
There’s a difference between doing your part to support local restaurants and giving them all of your hard-earned money. If you’re ordering delivery every night, you’re wasting money. It’s also much harder to eat sensibly because takeout food tends to be less healthy than home-cooked meals. When you do get takeout, consider picking it up yourself to save some extra cash that would otherwise be spent on delivery fees.
Instead of ordering out, get familiar with your local grocery store. If you can’t cook, consider it a challenge and learn how. You’ll save a ton of money cooking at home, and you’ll feel better eating fresh food.
Similarly, consider investing in a nice coffee or espresso machine instead of grabbing a cup of Starbucks every day. Sure, it might just be $5 here and there, but those costs add up quickly.
By cutting back on food spending, you can easily save a few hundred, or even a few thousand dollars each month, putting you much closer to your $100 daily goal.
Learn more:
How to Save Money on Groceries in 2021 Best Credit Cards for Groceries 2. Increase your cash flow
Chances are you’re on a fixed income, meaning you have a limited amount to work with every month. As a result, saving $100 a day could be difficult, if not impossible, when considering all your other bills (e.g., housing payments, student loan bills, gym membership fees, utility bills… the list goes on).
Sure, you can save money by eating ramen noodles 5 days a week, but who wants to do that?
The best way forward is increasing your cash flow, which makes it infinitely easier to put more money away into savings without resorting to extreme lifestyle adjustments.
Working a side hustle can be time-consuming, but once the money starts accumulating in the bank, or paying down your debt, you won’t look back.
Let’s take a look at some of the best ways to earn extra side income.
Top ways to make money fast Babysit or pet sit
Scope out your network of friends and family members and look for people with kids or pets. Even the best parents and pet owners need a break from time to time. You can make decent money babysitting and pet sitting, and neither job is very difficult (assuming the kids and animals are well behaved). Who knows? You could land a dream gig: getting paid to watch movies or hang out with cute animals.
Freelance
Freelancing is one of the best ways to make money from home. It’s also the most lucrative. For example, companies pay graphic designers and bloggers to create content for their websites. You can get paid by the hour or by the project. How much you make depends on the size of the company, the industry, and the complexity of the assignment.
Here’s a pro tip: Get a job babysitting or pet sitting and freelance during your downtime when there is nothing else to do. This way, you can get paid for doing two jobs at once.
Manage social media
There is an art and a science to crafting the perfect social media post. If you’re great at creating compelling content that resonates with online audiences, consider approaching local businesses and asking to help grow their social presence.
Many organizations are looking to expand their social media but lack the resources to do it. There is a great opportunity at hand to make money on social media.
Rent your car on Turo
If you live in a populated area and work from home, consider renting your car during the day using a car-sharing app like Turo.
Turo is a safe and easy way to put money back in your pocket. It’s easier than driving for a service like Uber or Lyft because you don’t even have to leave your own house.
Learn more:
How to Become a Freelance Writer 31 Best Side Hustle Ideas to Make an Extra $2,000/month How to Make Money on the Side 3. Form a saving and investment strategy Where to put your money
You’re probably already using retail checking or savings accounts. While they’re useful for daily transactions and for quick access to capital, there are some better places where you could be allocating your money.
Debt payments
Trying to save while you’re in debt is like trying to climb a mountain from the bottom of a deep hole. If you ever want to reach the top, you first have to get to the surface.
If you’re in debt, find a way to get out as quickly as possible—even if it means putting the majority of your hard-earned side hustle money into your escape strategy.
If your goal is financial freedom, put all the money you can into debt payments to reduce what you owe. Then reassess your situation when you get to a place where it makes sense to start saving.
If you don’t pay down your debt, you’re just spinning your wheels. In some ways, working a side hustle and letting debt accumulate is even worse because you’re wasting your precious time and energy.
High-yield savings account (HYSA)
Another type of savings account to consider is an HYSA, which you get from an online bank like Ally.
HYSAs offer interest rates well above industry averages. For example, at the time of writing, Ally offers an interest rate of 0.5% APY, whereas most traditional savings accounts offer interest rates in the 0.01% to 0.05% APY range.
The only downside to using an HYSA is that you won’t be able to access your money via a debit card. Most online banks require you to transfer your money to a checking account.
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One of the best things you can do with your money is to invest it in the stock market, which you can do by opening a brokerage account.
When you open a brokerage account, you have access to a variety of financial products like stocks, bonds, Vanguard index funds, and exchange-traded funds (ETFs). You’ll pay taxes on any capital gains and dividend distributions that you receive.
Retirement accounts
You should also consider putting money away into tax-advantaged retirement accounts, which will allow you to maximize growth over a long period of time.
If your company offers a 401(k) plan with a company match, this is something you should look into using. You can put up to $19,500 away for tax-deferred growth in 2021, and you can also take advantage of any employer matching opportunities.
Another type of retirement account to consider is an individual retirement account (IRA). This is something you can invest in whether or not you have a 401(k).
The three most common types of IRAs include a traditional IRA, a Roth IRA, and a SEP IRA (if you work for yourself). Traditional IRAs and Roth IRAs have a combined contribution limit of $6,000 for 2021. The 2021 contribution limit for SEP IRAs is much higher at $58,000 (assuming your salary is large enough).
Looking at the numbers, by saving $100 a day, you can max out your IRA in 60 days, and your 401k in 195 days. Repeat this process for a few years and you’ll have over six figures saved before you know it.
Betterment No matter your investing experience, Betterment offers a robust and easy to use platform to help you grow your money. Learn More About Betterment
Learn more:
Best IRA Accounts for 2021 Index Funds vs. ETFs Roth vs. Traditional IRAs Why save $100 a day?
Saving extra money isn’t easy, so you need to start with the why.
Having a clear mission or purpose—apart from simply wanting more money—is going to help you stay motivated and striving towards your goal.
Here are some of the top reasons why you should strive to save at least $100 a day.
Create a safety net
Life comes at you quickly. For example, your car could require major repairs, you could lose your job, or your refrigerator could break. And sometimes, these types of situations can all happen at once — when you least expect them. As they say: when it rains, it pours.
For this reason, it’s a good idea to create an emergency fund that enables you to cover at least six months’ worth of daily expenses to protect yourself from an unforeseen situation. By forming an aggressive savings strategy, you can create a safety net while building wealth over time.
This, in turn, can prevent you from having to rely on credit cards or take out loans to make ends meet.
Invest
Once you have at least six months’ worth of expenses saved, you will be in a much stronger financial position. At this point, you can stop living day-to-day and start putting money aside into strategic accounts so that it can grow more quickly and begin compounding.
Ally Ally Invest is a great choice for active investors. With many different account options offering no minimum to open, you can't go wrong with Ally. Learn More Achieve financial freedom
By saving as much as you can, investing your earnings, and becoming familiar with compound interest, you will eventually achieve financial freedom. Truth be told, this is one of the most rewarding financial goals you can pursue.
In short, financial freedom is a position where you are no longer reliant on anything, or anyone, for money. Financial freedom means working when you want, where you want, and in the industry that you want—not because you have to but because you choose to.
In short, financial freedom is the difference between dreading getting up and going to work in the morning and being happy.
Believe it or not, financial freedom is possible for a lot of people, and you can get there if you put your mind to it. You just need to start saving money today—and develop a mindset that encourages you to save money every day.
Frequently Asked Questions Are credit cards bad?
At the end of the day, a credit card is a tool. Like any tool, you can get hurt if you’re not careful.
In other words, credit cards can be very dangerous if you don’t live within your means. If you aren’t careful, you could spiral into debt. At the same time, if you responsibly pay off your credit cards each month, you can rack up some pretty serious rewards.
What is the printable money savings challenge?
The printable money saving challenge is a 52-week challenge where you set cash aside incrementally throughout the year.
The first week, you save one dollar. Then, you increase to two dollars in the second week, three in the third week, and so on. By the end of the year, you’ll rack up a total of $1,378 in savings.
This strategy is a fun way of gamifying savings. However, the truth is you can save much more than this. Try challenging yourself to save more than $52 per week by the end of the year by increasing your cash flow and cutting down on living expenses.
Is it worth making personal sacrifices to save money?
All saving is a form of sacrifice and delaying gratification. Only you can determine how much is practical to cut out of your budget.
My advice is to avoid going too hard on yourself. Saving money is hard and it’s not a good idea to start depriving yourself of basic necessities to get ahead. Your best move is to increase your cash flow, which you can do by starting a side hustle or negotiating a raise.
Keep in mind that if you stop buying quality food and eliminate all forms of fun, you’ll wind up unhappy and unhealthy. Prioritize your health and well-being so that you protect your energy and remain positioned for success.
Should I lower the cost of my auto insurance for my savings plan?
Yes. Car insurance is something for which you don’t want to overpay. Obtain a few quotes from the leading auto insurance providers to see if you can save money each month.
If you don’t drive a lot, you probably don’t need an expensive plan. However, if you have an expensive car, you will want to have a quality coverage plan for it.
The better question is: do you even still need a car or multiple cars? Car ownership is very expensive. By foregoing car ownership altogether, you can easily save a few hundred each month.
Is a side hustle a good idea?
Yes. Starting a side hustle can be one of the best ways to improve your personal finances.
But before you dive in, make sure your employer allows you to start a side hustle if you’re working full-time. Also, make sure you enjoy whatever side hustle it is you are doing.
Check out my picks on the best side hustles.
The Bottom Line
It might seem like an insurmountable task at first, but the fact of the matter is that saving $100 a day is just the start of your journey toward financial independence.
You probably can—and should—save more than this, especially as your earnings increase over time.
Update your budget and make sure that your savings goal stays aligned with your current income and life situation. Develop a plan and stick to it, and you’ll be in a strong financial situation before you know it.
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