How to save $1,200 in a year

How to save $1,200 in a year. (Photo: KUTV)

(KUTV) — Local finance expert Kevin Bauer joined 2News in studio to show us four simple ways to save $1,200 in a year.

Tip #1: Cut your food expenses

  • A family of four can spend anywhere from $560 to over $1,000 per month on their grocery bill.
  • One trick that can make a difference is analyzing what you buy and cutting out unnecessary or frivolous items. For example, eliminating the weekly bag of potato chips or 12-pack of soda.
  • Dining out also becomes expensive. Remember restaurants mark up items they are selling. A $15 entree might only cost $3-5 to make at home.
  • You don't need to cut out every trip to the restaurant, but eliminating two to three meals a month is significant money back in your pocket.

Tip #2: Negotiate and compare

  • You can try saving money on monthly services. Shop around to find which company is willing to give you the best deal.
  • You might even be able to negotiate with your current providers.
  • Some cable bills are over $100. Look into a cheaper streaming service or cut the cord altogether.
  • It's also worth a call to your auto insurance to see if you can negotiate a lower rate based on criteria such as your profession, the age of the car you drive or theft-deterrent systems on your vehicle.
  • If you're struggling to pay off credit card debt, call the company. They want their money back, so they may be willing to lower your interest rate to make it easier to pay down debt.

Tip #3: Challenge yourself

  • Every month take a set amount of money from your checking or other spending accounts and put it into savings. Automatic transfers are easy to set up!
  • Take on the 5 cent challenge. This is how it works: on the first day save a nickel, increase those savings by a nickel each day. Do this for one year. The most you’ll set aside is $18.25 on day 365. After a year you will have saved $3,358.05.
  • I have a guide you can print to follow on my website.
  • Make it a competition and have a friend, relative or group all come up with a savings goal and compete to see who can get there first.
  • Any time you get friends involved, it is someone to hold you accountable and it creates some extra motivation to save.

Tip #4: Reduce withholding at work

  • If you’re waiting on bated breath for your tax refund each spring, consider changing your withholding to benefit your finances year-round.
  • You can make this change at any time by going to your payroll office and filling out a new W-4.
  • You won’t get as big of a refund, but you will get more in each paycheck throughout the year.
  • Make sure you are making good use of the extra money in your paycheck. Set up an automatic transfer to a savings account or bump up your 401(k) contribution rate.
  • The IRS has a calculator to help you figure it out if changing your withholding is best for your financial situation. You can find a link to the calculator on my website.

What to do with your monthly savings:

  • It really depends on your personal financial goals. If you’re saving for something specific, put the money in a savings account so you’re not tempted to spend it.
  • If you have credit card debt, consider putting the money toward your next bill.
  • Another good idea is to start an emergency fund for those unexpected expenses you could face.
  • Parents and grandparents could start an educational savings plan for their children or grandchildren.