You are using an unsupported browser Please switch to a supported browser so you can get the best experience on this site
Need Help? Contact Us or Live Chat
Family learning how to save money while repaying loans

Easy Ways To: Save Money WHILE you are Repaying Loans

 Making payments on your loan comes with multiple benefits and it is normal for questions to arise during the process. While making payments on your loan you may have wondered how you can go about saving money at the same time. On-time payments and saving money both help financial security and increase credit. So how do you go about saving money? We'll take a look at several ways to help you achieve this financial goal.

Why Save Money?

The main principle of saving money starts by having an income that is higher than your expenses. Even though you may have had to borrow money in the past, you should aim to be able to save money while making your payments.

Saving money provides financial security for you and your family and can come in handy for unexpected situations. It allows you to take more risks than you normally might not take. It gives you the ability to try new things you may have held off on with a tight budget. Both vacations and retirement require the savings of money.

Saving Money Through Budgeting

Having money in a savings account brings you freedom from the stress of everyday expenses. In order to start saving, you need to account for each expense you have.

Creating a budget is a standard tool used to take a look at how much money you have every month for your savings. Having a budget is a way to stay aware of what's coming in and what's going out moneywise. Let's go over some budgeting basics.

The first thing you need to assess is the amount of money you have incoming. This could be from an employer, a side job, or any other source of funds you have. You want this to be your take-home pay after taxes.

Now you want to add up your expenses and subtract them from your total. This is going to include more than just necessities. This should include some of your wants also, such as entertainment or going shopping over the weekend.

A general concept that is adopted by many advisors is the 50/30/20 rule. This rule divides necessities, wants, and savings accordingly. Around 50% of your income should be devoted to necessities. 30% is the estimated amount to put towards your wants, and 20% will be left for any savings.

This should give you a good idea of how much you should be saving. If your expenses are too high, you will want to consider removing some of the wants from your budget. Set a goal for what percentage you want your savings to be and adjust accordingly.

50/30/20 Budgeting Rule

Cut Spending To Save Money

We talked about removing some of those wants from the list of expenditures. Some expenses come from things we can afford to get rid of or change. Let's take a look at some of the more common expenses.

Get Rid of Subscriptions

Taking a look at your monthly bills, this often includes cable and online subscriptions to streaming services. If you currently have cable, it is a service that many people switch from to streaming services to save money. Streaming subscriptions often include just as many channels at a fraction of the cost of cable.

Or do you have too many online subscriptions? With Netflix, Hulu, Vudu, Amazon, and many more, these can add up over time. If you aren't using a subscription-like you once did or can manage without it, consider removing it from your list of expenses.

Eat at Home

A great chance to not only explore your cooking abilities but to save money at the same time is to cook at home. Home meals on average cost around $4 compared to the cost of $13 on a meal from a restaurant. The time it takes to cook a meal is worth the payoff of savings. Americans on average spend around $3,000 every year eating out.

Save Money on Utilities

In your home or apartment, there are some simple things like turning lights off or adjusting your thermostat that can significantly reduce your power bill, saving you a good chunk of money every month.

Budget billing is also an option provided by most power companies that provide a set monthly amount billed, based on your past usage. This allows you to be aware of your monthly expense and plan accordingly, instead of having a fluctuating bill in the winter and summer months.

Call Your Insurance Company

Whether it's home, auto, or cell phone insurance, it is worth the time to call your current company and negotiate better terms. Oftentimes people let their current rate renew every year without any reconsideration. If you haven't had an abundance of claims, you may be eligible for a reduced rate compared to what your expense was the previous year.

Compare rates with other companies. Many companies provide online quotes that you can use for comparison to what you are currently paying. It may be time to switch, just make sure the coverage you are getting is adequate to suit your needs.

Savings Through Discounts and Rewards

If you are willing to put in some effort searching, you can often find discounts on the things you purchase every day. Hunting for coupons and savings on the internet has been made easy by many companies.

Take a look at the companies you normally have expenses with and shop at. See if they have a rewards program or something similar that you can join. These often give you extra savings for being a member, or cashback for your purchases. Many times the cost of being a member is worth the expense if it saves you more in the long run.

Shop Used Instead of New

When considering making bigger purchases on things you need, there are many online forums to consider first if you are willing to buy used. Facebook Marketplace and OfferUp allow you to connect to people in your local neighborhood that sell used items such as electronics and appliances at a fraction of the cost of new.

Shopping at thrift stores such as Salvation Army and Goodwill can be a great way to save money on common household items and clothing.

Pay Off Your Debt Early

Paying off your debt earlier than the standard due date is a great way to begin your journey to saving more money. This may cost more money in the beginning, but it pays off in the end.

Paying off your debt is more important than focusing on how much money you are saving every month. The earlier you pay off your debt, the more money you can save by not paying all the interest you would if you were to let a loan mature in the planned time frame.

Focus on the highest interest debt, such as credit cards, first, so that these bills will be behind you. This will allow more money to be put into savings after you eliminate paying any expensive interest.

To use this approach, you want to make sure that you have enough savings allotted to your emergency fund first, just in case something unexpected pops up in your life.

Short-Term and Long-Term Savings Goals

Are you more focused on the short-term or long-term when it comes to your goals? Depending on what your goals are, you should focus on different areas.

For more short-term goals, like saving money for Christmas presents or for a vacation in a couple of years, a simple Savings account can be satisfactory, giving you a specific place to place your money every week or month so that you have it set aside for when you need it.

Another option to look at through a bank is a Certificate of Deposit (CD). This option takes the money you currently have and gives you a fixed interest rate of growth. This way you know what to expect at the end of the time period.

For more long-term goals such as retirement, you will want to investigate options such as a 401(k) or IRA. These are tax-efficient options for savings in the future. Stocks and mutual funds are also a way to grow your savings account over the long haul.

With some investments being more reliable than others, keep in mind the risk involved when investing. Use a broker-dealer to assist you in the process to ensure your full understanding of how your money will be used for long-term savings.

Increase Your Income

What better way to be able to save more money than to have more money coming in every month? Having extra income gives you more money to put into different areas of your life.

You can increase spending in the “wants” area, but more importantly, can save more every month if you choose to do so. What are some ways to bump up your income potential? Here are some common ways.

Start a Side-Hustle

Side-hustles are becoming more and more common for people that have extra time outside of their regular employment to explore extra income sources. There are many different ventures you can explore, but here are some popular methods of side-hustling to consider:

  • Become a freelancer - there are many opportunities in the world of freelancing such as blog writing, research, or becoming a virtual assistant. Various platforms exist to boost your income through work at home opportunities.
  • Rideshare - Uber, and Lyft are popular choices and often have a signup bonus. If you have a vehicle within set standards and don’t mind interacting with an assortment of people, giving rides can earn you a great paycheck.
  • Buy and sell online - Whether you are getting rid of some old items around the house or are the type of person to find old items and fix them up, this can be a means to getting additional money to pad your savings account.
  • Online surveys - There are an assortment of companies on the internet that will pay for your time and your opinion. If you feel comfortable with sharing a limited amount of information and your experience, this can provide the benefit of additional revenue.
  • Start a drop shipping business - If you have marketing and website creating skills, starting a dropshipping business can allow you to sell anything you can think of, without having to stock the product yourself. You can earn a portion of the sales income by selling products that are delivered by someone else.

Increase Your Employment Income

Does your career not only satisfy you but provide you with the income you need to meet your budget? If you feel as if you are worth more at your current job, there is always the option of asking for a raise. Note your achievements and areas of success to your employer to justify your need for additional pay.

Maybe it’s time to pursue a career in a different field that suits your skills and compensates you beneficially at the same time. This can be achieved by enrolling in college and getting a degree if you haven’t done so yet.

If you have the time and energy, getting a part-time job, just like a side-hustle, is an option to consider if you are that serious about increasing your monthly savings.

Refinancing Current Debt

Repaying loans can require you to look at the current loans that you have and consider the possibility of refinancing them. Refinancing your loans starts with looking at your credit score and seeing if it has improved over the time of your loan. Knowing your score can provide you with the knowledge of knowing where you stand as you go into the refinancing process.

Things To Avoid When Saving

We’ve talked about some different ways to get you on the right track towards saving. To make saving money easier for yourself, there are some things you will want to avoid in the process.

  • Using credit - Using payment methods such as credit cards only leaves you with a bill every month that can accrue interest over time. Keep your expenses within your budget every month to avoid the pitfall of having to rely on credit to pay for your needs.
  • Avoiding your emergency fund - Make the emergency fund your priority. Not putting enough effort into saving for the unknown can leave you in a tough situation. This can cut into your budget’s needs for the next month if you keep this reserve low and something comes up.
  • Doing the math in your head - There are a multitude of resources and applications for your computer and mobile device that keep track of expenditures for you. Adding up your expenses and attempting to remember what bills you have left for the month and compare that to the money in your account can be difficult to keep track of.
  • Keeping high-interest debt - Again, this is the first type of debt you want to get rid of if you are trying to save. Avoiding high-interest debt will only leave you with less money to put into that savings account you are trying to actively build.
  • Leaving out your wants - As we stated, wants should account for around 30% of your budget. There is a reason that wants are a higher percentage than savings. You shouldn’t neglect the things that bring you enjoyment and put a pause on these. Thinking of the short-term is identical to long-term thinking in the realm of your wants.
  • Purchasing due to sales - Sales are a great way to save money if they are something you already needed to buy. However, if you are purchasing items only due to the fact they are on sale, you need to reevaluate your spending. This is a common mistake and goes right along with impulsive spending.

Conclusion

When it comes to saving money, the concepts are fairly basic. Every technique and piece of advice generally falls within the areas of cutting expenses or increasing your income.

While you are trying to achieve your savings goals, make sure those goals are achievable and don’t leave you feeling as if you don’t have the funds to do the things you want to do with your spare time.

Focus on your short-term savings goals first, and then focus more on the long-term. Find a balance of different means to support your different savings goals, planning both for the unexpected of today, and the retirement of the future.

Following the guidelines, you determine for yourself through a budget will be your guide to a successful savings plan. Keep your budget updated with new expenses and income changes to stay on top of accomplishing your goals.

About this blog

Browse through the Blog to read articles and tips on managing debt, improving your credit and saving more money!