42 Effective Ways to Save Money

There are many things we spend money on that we really don't need. We pay more for utilities than we should; we buy things we don't have a real need for; and we literally waste money that could be put to better use if we spent a little more time keeping track of where our money goes.

To help those who are using Vertex42's selection of budget templates and money management tools, we've compiled a huge list of effective ways to save money and help you stick to your family budget. The list started as a very long email that Jon sent me that included ideas and some personal examples. We then filled in some of the gaps via additional research. Please feel free to include more ideas via your comments.

1. Avoid Overage Charges on Cell phones (Savings $10-$200/month)

If you find you are paying extra every month for consistently using more minutes than your plan allows, or sending or receiving more texts than your plan allows – it may be less expensive to switch to a plan with a bigger allowance for minutes and texts each month.

"I once was hit with a $200 charge for going over minutes and texts!" - Jon

2. Weatherize Your Home (Savings: 25-40% of heating and cooling expenses)

If you weatherize your home, you'll help keep hot air in during the winter and help keep your home cooler during the hotter months.  It has been shown that when air leaks are plugged and sealed in a home, you can save between 25-40% on heating and cooling bills.

Homeowners may receive the most benefit for the least expense and effort by weatherizing their home, compared to many other types of home improvements.  Even a home that has been well-insulated can lose up to 30% of its heat through cracks around windows and doors.  Start by applying weather stripping to all of your windows and doors.

3. Quit smoking (Savings: High)

With the cost of a pack of cigarettes ranging from $4.74 (West Virginia) to $11.90 (New York), you can save a lot of money if you quit smoking.  At half a pack per day, you would save between $16.59 to $41.65 per week (depending on where you live). Plus, smoking is bad for your health.

4. Re-Evaluate Cell Phone Plans and Data Plans at Least Once a Year (Savings $30 - $40 / Month)

If you are currently paying for an unlimited plan, but find you consistently use less phone minutes than one of the limited monthly plans your provider offers, or you don't send or receive more texts than one of the limited monthly plans allows – you could be spending more than you need. Always make sure you are using the correct plan for your typical usage.

Jon saved money on his cell phone plan this year: "I saved $30 a month as of January 2012 by updating my old phone and internet plan. That is going to save me $360 a year!"

Debbie saved money on her cell phone plan last year: "I was paying for an unlimited text and minute plan, but found I never went over 400 minutes per month. I kept the unlimited texts and dropped my talk minutes down to 450 per month, saving $20 per month."

5. Pay Off Credit Cards (Savings: High)

Credit card interest rates eat away at your money, month after month. Paying off your high-interest credit cards is one of the best investments you can make. Use the Debt Reduction Calculator to see how quickly you can pay off your debts.

6. Pay Off Credit Cards in Full Each Month (Savings: Moderate)

You can save money by avoiding future interest on credit card purchases. Make it a policy to never use credit cards to spend money you don't have. Keep track of every purchase made on your card, just as you would with a checking account, and pay off your card in full each month. If you can't maintain that type of discipline, tear up your cards.

7. Eat Out Less (Savings: High)

If you eat in restaurants or grab take-out twice a week for an average of $80 a week, you can put money back in your pocket simply by making all of your own meals. The typical cost for a chicken parmesan dinner at an average restaurant is about $15 - you can make the same meal (and healthier) for under $5 at home.

8. Downsize Your Home or Apartment (Savings: $200+ per month)

Moving into a smaller home or finding a cheaper apartment could significantly reduce your mortgage or rent payment. The average 3-bedroom apartment in rural New York rents for around $950 a month - downsize to a 2-bedroom apartment in the same area and you would pay an average of $700 a month rent. Consider this approach if you are needing to make very large long-term budget cuts.

9. Refinance when it makes Sense (Savings: High)

You can save hundreds of dollars a month refinancing your mortgage, if the conditions are right. For example, if you have a mortgage with a $100,000 balance remaining, and you pay $1,250 per month with an interest rate of 7% - refinancing the balance with a 5% interest rate would save you $665.41 per month on your mortgage payment!

This assumes you don't lengthen or shorten your mortgage repayment term. Use a mortgage calculator to help you figure out your savings when you refinance.

*Note: Make sure you see what fees are involved in refinancing your mortgage, and calculate your savings after you account for refinancing costs in the form of attorney fees, application fees, inspections and any other fees.

10. Refill Bottled Water with Filtered Water (Savings: $38 per month or more)

Seriously? Yes. Instead of buying a 20-oz bottle of water each day for an average of $1.29 per bottle, you could refill your bottle with filtered water from the tap or fridge and save over $38 a month on just one bottle per day. Buy a water filter (Brita makes an on-the-go filtered water bottle for a one-time cost of $8.99 and filters 40 gallons before it needs replacing) and refill your bottle all day long for free.

11. Drink Water Instead of Soda (Savings: $22-$67 per month)

If you drink an average of 3 cans of soda per day, you spend an average of $22.50 (based on buying twelve-packs of soda and an average price of $3 per pack). If you buy your soda from a vending machine for $.75 each, you're spending around $67 a month on soda! Switch to water and drink for free. Water is also healthier!

12. Buy Groceries in Bulk (Savings: Moderate)

When groceries and paper products are on sale, it makes sense to buy in bulk according to a 3-month storage plan. Keep three months' worth of these items stored in your home and you will only need to re-stock when the items are on sale again. You'll always get the best prices and never run out.

13. Keep Track of Ideal Prices on a Master Grocery List (Savings: Moderate)

Many items regularly go on sale at your favorite grocery stores. If you keep track of the prices and time of month or year when the items are on sale, you will know when to buy each of the items to get the best prices on them. You can also refer to your ideal price list when shopping in other stores to see if you are getting a good deal or not. Try one of Vertex42's grocery lists for keeping track of your frequently purchased items.

14. Avoid Impulse Buys (Savings: Moderate)

Create a shopping list and stick to it. If your grocery list includes items in your 3-month storage plan, buy them only if they happen to be on sale. Making a list ensures that get what you need and reduces the number of trips to the store. It also helps prevent buying an item just because it catches your eye. Never go to the store hungry.

15. Don't Pay for Unneeded Features (Savings: Moderate)

Salespeople are good at their jobs. Before making large purchases, do your research before going to the store. Arm yourself with information, sample prices, and deals offered by other stores. Decide ahead of time exactly what features you need and want, and don't let the sales person convince you to tack on another $100 for that extra feature you don't really need.

16. Avoid Paying for Extended Warranties (Savings: Moderate)

There is big money to be made these days selling extended warranties to naive consumers. Extended warranties are even being offered on low-cost items. Usually, store warranties are offered at the last minute as you are checking out, so you have very little time to think about or research the offer. There ARE times when you may need to use a warranty, but lemons usually show themselves during the first year and would be covered under the manufacturer's warranty. According to Consumer Reports (July 2011), "most repairs do not occur during the limited time period covered by the extended warranty."

One policy that works quite well is this: Don't purchase a warranty for an item that you can easily do without or can easily afford to replace. For all others, and especially for high-price items, do your research before you go to the checkout.

17. Choose Cheaper Dining Options (Savings: Moderate)

If you can't eliminate take-out or eating in restaurants completely, learn to make less expensive menu selections. Order water instead of soda or alcoholic beverages and save $2 to $6 per meal. Choose a meal that will provide you with enough leftovers for another meal, and you'll stretch your dining budget further. Avoid ordering dessert. Have some ice cream when you get home, instead - it will be a lot cheaper, and you'll likely forget about the dessert anyway.

18. Cancel Cable/Satellite TV (Savings: $50 to $150 a month)

Cable and satellite television programming is getting increasingly expensive. It's not uncommon for families to spend $150 a month to watch TV. You can put most of that money back into your family budget by using Netflix, Boxee or a Roku internet TV box to stream television shows and movies to your TV instead of cable or satellite service.

19. Pack a Lunch instead of Eating Out (Savings: $35 per week, $140 per month)

Do you usually buy lunch on work days? Spending just $7 a day on lunch, 5 days a week adds $35 a week to your food expenses. Bring last night's dinner leftovers or other packed lunch from home daily and save $35 a week, or an average of $140 a month. Our meal planner helps you plan ahead to ensure you have everything you need to pack a lunch and avoid the last minute take-out when you aren't sure what to make!

20. Avoid the Vending Machine (Savings: $6.25 a week, $25 per month)

With the average vending machine snack costing $1.25, you can save over $6.25 a week if you stopped buying one snack per day. Quickly deposit your small bills and change into the bank or keep it at home to help avoid the vending machine temptation.

21. Work Out at Home (Savings: $30-80 per month)

It is possible to get a good workout from home. If you learn to incorporate fitness without the gym membership, you can save between $30 and $80 per month (depending on your current gym membership costs). You could try using Vertex42's daily exercise log or weekly workout chart to help you reach your health and fitness goals on a budget.

22. Keep Track of Cash (Savings: Moderate)

Cash is easily spent, and most of us don't keep track of where our cash goes the way we do purchases made by check or debit card. Write down every penny you spend for a period of two weeks or more, and see where you are wasting cash. You can use the information learned from this process to develop a monthly budget.

When I kept track of my expenses for one month, it was quite the eye opening experiment. We had video rental late fees, and a lot more money was spent on take-out meals and convenience store trips than expected! In a month's time, we had spent over $210 on things we didn't plan for.

23. Don't Covet (Savings: Moderate)

Sheryl Crow says it best in the lyrics of a song: "It's not having what you want; it's wanting what you've got". If you learn to accept what you have and not covet the things you don't have – you'll save considerable amounts of money each year.

24. Make Less Expensive Friends (Savings: Moderate)

If you have many friends who only want to dine in expensive restaurants or seek out high-cost activities for entertainment, it may be time to make some new, less expensive friends. We don't mean to be callous, just realistic.

25. Choose a Car with Good Gas Mileage (Savings: Moderate)

When buying a car, pick a car that offers the best gas mileage for the most affordable price to get the best savings when commuting to and from work every day. If you're not sure what mileage your car is getting, use Vertex42's gas mileage log to help you figure it out.

26. Avoid Automotive Service Contracts (Savings: $200-$500)

So, you're about to finalize the purchase of a car and the dealer begins talking to you about what a great deal their service contract is. Just say no. Instead, stick the money into your savings to budget for future repairs and the recommended maintenance schedule.

"Avoiding the service contract also gives you the freedom to get your oil changed at cheaper (and faster) service stations." - Jon

27. Use Public Transportation (Savings: Moderate)

If you live in an area where it makes sense to use public transportation, you can avoid buying a car, avoid paying car insurance, and avoid paying for gas each week.

28. Carpool (Savings: Moderate)

Share commuting costs with others and you can reduce your travel expenses considerably. Find another traveler or two and take turns driving each other to and from work each week.

29. Don't Get a Pet (Savings: Moderate)

If you're looking to keep to a strict budget, reconsider getting a pet. Between veterinarian bills, supplies and pet food – having a pet can get expensive.

30. Garden (Savings: Low to Moderate)

Instead of buying all of your fruits, vegetables and herbs, consider an in-season garden. Your savings will depend on how much you normally buy of these produce items that you can grow on your own, but it can really add up. Some vegetables and herbs can be frozen, too – which helps you keep more of your home grown produce available even when the garden season ends.

31. Use Farmers Markets and/or Co-Ops (Savings: Low to Moderate)

Buy produce you can't grow yourself from a farmers market or through a food co-op. Buying from a farmers market or co-op often allows you to buy produce in bulk for less than you pay in the store.

32. Become Friends with the Library (Savings: Moderate)

Instead of buying or renting books, movies and music, start using your local library. Many libraries are even equipped to lend ebooks for your e-readers.

33. Challenge Property Tax Assessment (Savings: Moderate to High)

If your home seems to be assessed too high, you can challenge the assessment. If you are awarded with an adjustment, you could save a few hundred dollars or more per year on your property taxes.

34. Plan Vacations Far in Advance (Savings: Moderate)

Sometimes you can get great last minute deals, but when you plan a vacation in advance you can research your options and choose the one that gives you the most bang for your buck. You also have more time to budget the costs and are less likely to rely on credit cards to go on vacation.

35. Budget for Home and Car Maintenance (Savings: Moderate)

What do people do if their roof needs to be repaired or their car breaks down unexpectedly if they don't have money saved? They finance the repairs with a credit card or loan – and pay more than the total cost of maintenance because of interest. Experts calculate home maintenance costs at about 2% of your home's value each year, so open a bank account and make sure you set aside enough to cover your maintenance expenses. To keep track of how much money you have saved toward each of your savings goals, you can use Vertex42's savings goal tracking spreadsheet.

36. Shop at Thrift Stores (Savings: Moderate)

You can get jeans with the tags still on them for $2 at a thrift store! Before hitting the mall when you need clothes, try the thrift store. You might be surprised at what you can find, and at substantial savings.

37. Eliminate Bank Fees (Savings: $5-$20 / month)

Make sure you're not paying checking account maintenance fees, atm fees, credit card annual fees, or late fees. If you are, make changes to your bank and credit card company. Sign up for automatic payments on anything you have paid late in the past to make sure you don't miss a payment.

38. Use Coupons Only When it Makes Sense (Savings: Low to Moderate)

Don't buy items just because you have a coupon for them! Match coupons to items you will buy anyway and preferably when the item is on sale to increase your savings even more. If the sale and/or coupon price of an item is still higher than the generic version – buy the generic.

I regularly use coupons combined with my store's "buy one, get one free" deals. I like to watch for coupons that are for products already on sale. My favorite are the buy one get one free sales combined with coupons. I stock up on items like laundry detergent, dish soap, and freezer items and get two for less than the price of one!

39. Conserve Electricity (Savings: Low to Moderate)

Many of your appliances and electronics pull electricity even when they're not being used, and even if they are turned off. If you leave chargers plugged into the wall, they will use some electricity (even if they're not attached to anything). Phantom electricity adds up, and it's a waste of money.

Unplug everything that doesn't need to run unless you are using power strips – when not in use, you can hit the off switch on the power switch and cut the power supply off to everything plugged into that power strip. There are some appliances this won't work for - you wouldn't want to plug your refrigerator into a power strip to turn off, for example!

But for just about everything else – the toaster, coffee maker, microwave, televisions, radios, computers, and electronic games, only plug them in when you're using them and you'll start to see savings on your electric bill over time.

Other ways to reduce electricity costs is to switch out your light bulbs with the lower energy versions and turn lights off when they're not needed instead of leaving every light in the house blazing all night long.

40. Use a Clothes Line (Savings: $127 per year)

Instead of running the dryer for every load of laundry, get a clothes line and let them air dry. The average cost per load of laundry is $.35 cents (with an electric dryer) and the average American family dries 365 loads per year for a total of $127.75 a year.

41. Conserve Water (Savings: Low)

If your water is metered and you pay based on the amount of water you use, learning to conserve water will lower your water bill. The less water you use, the less you'll spend and water conservation has the added benefit of being better for the environment. Fill a plastic water or soda bottle with a few pebbles or sand and water; and place it into the toilet tank. Most toilets will flush just as well with a water bottle submerged in the tank, and will save about half a gallon to a gallon per flush.

42. Buy Generic Brands (Savings: 25 – 50%)

When grocery shopping and buying medications, consider buying generic instead of brand names to save money. For example, when buying aspirin, the generic brand is required by the Food and Drug Administration to be just as effective as the brand name aspirin, but is often sold for half the price of the brand name version.

More Ideas

One of our favorite articles on the topic of saving money is published on TheSimpleDollar.com. They offer 100 Great Tips for Saving Money if you're just getting started and need ideas for little things you can do to start keeping more of your hard-earned money. Additional resources for saving money are found all over the internet.

As you find different methods for saving money that work for your family, don't forget to adjust your family budget accordingly – and put the saved money to good use!

Disclaimer: This article is intended for educational and informational use only and not as professional financial advice.