Increasing your income is one way to get more cash, but it's usually a hard route to take. It often involves working longer or harder, which leaves you with less time to enjoy the extra cash you're earning. But there's another option.
You can free up more cash by reducing the amount of money you're throwing away on extras you don't really need. Here are five places you can start cutting back today.
1. Dining out
The average American spends about $3,000 per year on dining out, according to Bureau of Labor Statistics data. And some people spend tens of thousands of dollars just to avoid cooking a meal. A $10 lunch here and there may not seem that bad, but when it becomes a habit, it doesn't take long to add up. A daily $10 lunch adds up to $3,650 in one year. And if you're eating at expensive restaurants or going out to dinner too, you're spending even more.
Cooking at home may take a little extra time, but it could save you thousands of dollars. A Forbes survey found that it's five times more expensive to order takeout than to cook at home. Meal kits fared a little better, but even these options cost three times as much as buying the ingredients and making the recipes yourself. You don't have to stop going out to eat altogether, but try to limit yourself to a few times a month if you'd like to free up more cash.
It shouldn't surprise anyone that Americans willing to fork over thousands of dollars on takeout are also wasting about $1,100 per year on coffee, according to an Acorns study. For many, stopping by their regular coffee shop on their way to work has become a part of the daily routine, but making coffee at home is the much smarter option if you're on a budget.
An analysis by ToughNickel found that depending on the coffee grounds, filter, and coffee maker you use, a 16-ounce cup of home-brewed coffee could cost anywhere from $0.11 to $1.80 -- far cheaper than the $4 to $5 you could pay for the same thing at your local coffee shop.
3. Cell phone bill
Many people are guilty of paying too much for their cellphone bill. You pick a data plan based on what you think you'll need, but then when you actually look back at your usage history, you realize you didn't even use half of that. The actual cost of all this unused data depends on your carrier and plan, but it's not unreasonable to think you could save at least $10 to $20 per month by downgrading your data plan. That amounts to anywhere from $120 to $240 saved per year.
Check with your cellphone carrier to see how much data you've used over the last few months. Then, compare that to its available data plans. Choose one that's slightly more than what you use in the average month so that if you have one month of high data usage, you won't have to pay overage fees. Cell phone providers may occasionally update their payment structure so check in periodically to make sure you're still getting the best deal.
4. Unused subscriptions
If you haven't hit the gym recently, now's the time to cancel that membership. Think about quitting cable as well if you mostly use streaming services. These subscription services cost tens or even hundreds of dollars per month, which may be worth it if you're using them, but if you're not, you're better off keeping that money in your pocket.
Go through your monthly expenditures and ask yourself whether you're actually getting value out of the subscriptions you're paying for. If not, cut them out. You can always sign up again if you decide you miss them later.
5. Phantom electricity
Your electronic devices consume electricity even when you're not actively using them. This is called phantom electricity, and it's costing Americans $19 billion annually, according to the Natural Resources Defense Council. That's about $165 per household. But it could be more for you if you have many devices plugged in all the time or if you live in an area where electricity is more expensive.
Fortunately, the solution is simple. Unplug your electronic devices when you're not using them so they can't run up your bill. If plugging and unplugging is a pain, get a power strip that you can turn on and off. Shut off these extra device before you go to bed at night and before you go to work, and then turn them on again when you need to use the devices.
It's not difficult to find places to save money when you start looking. The five suggestions above will get you started, but don't stop there. Go through your monthly expenditures with a fine-toothed comb and look for other opportunities to save.