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The 7 Best Ways to Save Money

By: David Bach  |  Last Updated: October 14, 2020
Financial Expert & 10x New York Times Bestseller
IN THIS ARTICLE1. Determine your Latte Factor and invest it
2. Lower your interest payments
3. Shop insurance quotes every year
4. Trade up to a high-yield savings account
5. Cancel subscriptions you don't use anymore
6. Cut the cord
7. Buy a used car
Keep your eyes open for other ideas

I’ve made it my life’s work to help people get rich. 

I’ve written so many books on the topic, but know that there are still so many people that need help! And reading the Fed’s 2019 study on household finances confirmed that very thought: Did you know that 40% of adults don’t have enough cash to even cover a $400 emergency?! 

The solution to your money problems isn’t earning more money. If you’re like most people, you’ll just spend more money as you earn it. 

Instead, here’s the REAL solution: You need to develop new habits around saving money. 

If you develop a habit of always looking out for ways to save, it won’t matter how much money you make. You’ll always have enough. Here are some of my favorite ways to save money.

1. Determine your Latte Factor and invest it

Your “Latte Factor” is money that you can cut from your spending — like your $5 latte — and then invest. Consider this: If all you did was cut $10 per day in spending and invested it, assuming a 10% annual return, you could have $1.9 million in 40 years.

That’s the power of the Latte Factor.

In my most recent book, “The Latte Factor,” I share Zoey’s story. She realizes that if she made a few small tweaks to her daily spending habits, she could be a millionaire by the time she retires. The truth is, I’ve been teaching the Latte Factor to people for over 20 years!

It’s a simple strategy to help you take ownership of your spending. I’m not talking about making any big changes to your life here.  

Try this exercise: Every day for a week, I want you to write down everything you spend money on, starting from when you wake up until when you go to bed. 

Do you see any patterns? Any expenses you’re not really using? Good. Next, I want you to cut them! And INVEST that money instead. Your future self will thank you.

2. Lower your interest payments

Interest rates are at historic lows right now. Think about what your biggest debt is — it could be your mortgage, an auto loan or credit card debt. Now, I want you to look at how much you’re paying in interest.

Chances are, your interest rates are higher than today’s average. 

Right now, you can refinance your debt to a very low rate. If you’re a homeowner, refinancing your mortgage into a fixed-rate home loan at a low rate could save you thousands of dollars over the next 15 to 30 years. Rates for 30-year fixed-rate mortgages are 2.9%, as of September 2020.

If you can afford it, I recommend refinancing to a 15-year fixed mortgage loan for even lower interest rates (15-year FRM rates are 2.4%, as of September 2020) . You’ll pay less on your debt overall and get out of debt faster.

View my top recommended mortgage refinance companies.

3. Shop insurance quotes every year

Insurance is one of those things that’s easy to set and forget. Meanwhile, five years later, you realize that your insurance company has raised your rate year after year. Insurance is a competitive space, so make insurance companies compete for your business.

Every year, I recommend re-quoting your car insurance and your home insurance. This potentially saves you a lot of money and makes sure you are adequately covered in case of an emergency. 

To get started, shop car insurance quotes by selecting your state below and getting matched with top-rated insurers near you.

4. Trade up to a high-yield savings account

Getting a better rate on your savings account is like finding extra money — and it’s so simple to do. In my books, I’ve recommended that you open a money market account because it pays a better interest rate. These days, I’ve found that you can earn an even higher interest rate with a high-yield savings account at an online bank.

The fact is, if you’re still earning 0.10% or less on your savings account, you’re losing money every day. Trade up to a high yield savings account and earn up to 15 times the national average savings rate.

5. Cancel subscriptions you don't use anymore

I generally like setting things up on auto-pay, and that’s really all that subscriptions are: automatic payments. But you need to actually use them to justify paying for them. If you barely use certain subscriptions or don’t use them at all, you’re wasting money. 

Take a minute now to look through your old bank and credit card statements. Make sure you check your iTunes store, too, since subscriptions from your smartphone can often live here without you seeing them for months or even years. 

I recommend using an app called Trim to help you find even more ways to save. Trim finds areas where you can save and cancels subscriptions for you. It’ll even negotiating some of your bills on your behalf.

6. Cut the cord

With so much cheap television available, there’s really no reason at all for cable TV today, unless there’s something you really can’t get elsewhere. 

Consider this: You could be paying $85 or more for a cable TV subscription and have to watch commercial ads every night that try to sell you things that you don’t need. 

Streaming services like Netflix, on the other hand, only cost $15 or less, and you deal with fewer ads. It’s a better experience, and it’s cheaper, so why are you still watching cable?

7. Buy a used car

In today’s world, there’s simply no reason to purchase a new car. Period. Your new car’s value tanks the very moment you drive it off of the lot. If there’s one way NOT to become rich, it’s by buying new cars every time you need a new ride. 

Even though buying a used car takes a little bit more work, it’s definitely worth the hassle. You’ll save thousands. It’s like NOT buying a year’s worth of lattes, all at once!

Keep your eyes open for other ideas

I’ve just highlighted a few habits that I’ve seen over the years. There are so many more ways to save. In fact, every time you spend money, I want you to ask yourself: Is there a way to get this cheaper? Can I get a better rate on my mortgage? Can I dial down the thermostat in my house so my electric bill is cheaper?

I truly believe that the options are as endless as your own imagination. Let me know what other ways you’re saving money. I want to know!

Read next: David’s 11 Money Tips to Start Living Rich Today