Yahoo Finance 3 Ways to Save Money on Every Purchase
The amount you are able to save each month is one of the biggest factors in determining when you will ultimately be able to retire. But saving more money is difficult to achieve unless you learn to control your spending. Luckily, you have options to save a few bucks every time you make a purchase. It takes only a few minutes of your time to save sometimes a significant amount on everyday purchases. Here's what I do whenever I want to buy something new.
1. Look for a discounted gift card. There are websites where you can buy and sell gift cards, and sometimes you can buy gift cards for less than the amount on the card. You can often buy a gift card from retailers, hotels and restaurants for 10 or even 20 percent less than the value of the card. Once you start using these cards you won't have to pay full price again at many stores. It's a good idea to check out several gift card websites each time you want to make a purchase from a specific merchant so you can get the best deal for your money.
2. Use a cash back credit card. A cash back credit card will refund you a small percentage of specific types of purchases or even every purchase you make. Some people sign up for multiple cash back credit cards and use whichever one provides the best discount for each purchase, but I just use one that gives 2 percent back on everything. This way, I won't have to juggle a bunch of cards and decide what spending category each item falls into. You may even be able to buy a discounted gift card with a cash back credit card to get an even bigger discount.
3. Use cash back sites to get cash rebates. This strategy only works for online retailers, but the discounts can be worth it. Basically, you register with a cash back site, click through to the online merchant and then the purchases you make there qualify you to get a cash rebate. It takes a few weeks to get your rebate, but the discounts typically range from 1 to 5 percent and sometimes even top 10 percent. It can be helpful to register with a few rebate sites and check the rebate percentages for specific merchants each time you shop to get the best deal.
It does take some time to qualify for these discounts, and the small amounts you save on each purchase can seem insignificant. But saving a few dollars every time you shop can add up over the course of the year, and sometimes you can realize as much as 10 or 20 percent off if you use all three methods together.
Over the holidays, I bought a pair of jeans from a major retailer. The original price was $300, and they marked it down to $92.50. I went to a discount gift card site and found a 22.5 percent discount. I paid $77.50 for a $100 gift card to cover taxes for the purchase as well. My cash back credit card will send me back $1.55 for the gift card purchase, bringing my cost to $75.95. Then one of the cash back sites was offering a holiday special that gave me 10 percent of the purchase price before tax, which was $92.50. The $9.25 rebate meant that my final cost was $66.70. That's not bad for designer jeans that a few months ago would have cost someone else $324 with taxes factored in. And even if you don't look at the original price, I still got a 30 percent discount on the sale price of $92.50 by using three different methods of saving. And it's really not that much of a hassle once you get used to dealing with the procedures of clicking through the screens on the different sites.
This example shows a rather large discount. The amount you save is usually a bit less, but it's still better than paying full price. And if you contribute the amount you save to a retirement account it will compound tax free for decades. The ultimate benefit will depend on your time horizon, but it's easy to see that the effect could be huge if you consistently save the money you could have spent on everyday purchases. Plus, if you continue to use these frugal strategies in retirement there will also be fewer expenses you need to use your nest egg to cover. If you feel like you don't earn enough money to save for retirement, it's a good idea to start deploying all three of these money saving methods and redirect your savings to a retirement account.
David Ning is the founder of MoneyNing.com.
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