December 2015

5 Tips to Save You Money in 2016

Author: Kent Thune

Will Rogers once said, “The best way to double your money is to fold it in half and put it in your back pocket.” Although he delivered this comment in a humorous way with his famous folksy wit, and the quote may be as much as 100 years old, the profound wisdom finds itself at the core of successful personal finance today. And keeping more of your money in your pockets, rather than putting it in someone else’s, may be the best financial philosophy of 2016.

But as simple as it seems, many people don’t stop to think that the single most controllable aspect of saving money is to spend less. Instead, they may think that the quickest path to saving more money is to get a pay raise or a higher paying job. While career advancement can be part of a smart, long-term financial plan, there’s no one on earth that has the ability to boost your bottom line quicker and better than you.

In simpler terms, cutting your expenses is like giving yourself a raise. So in that spirit, here are five simple but powerful tips to save more money in 2016:

1.Dine out less. Our number one way to save money in 2016 happens to be the number one way Americans blew their financial budgets in 2015: dining out at restaurants. According to the Principal Financial Group’s annual Financial Well-Being Index, 24 percent of Americans busted their budgets on restaurant food last year. And restaurant food is typically less healthy than the homemade variety. Therefore, more dining out often translates to higher health costs.

Other items cited by the study that Americans spend too much on include entertainment, travel, home improvements, clothing, gas, and coffee. But don’t worry. You don’t have to become a recluse and cut out all the fun and little pleasures of life to save money. You just need to cut back on some of it here and there. And deciding what to cut is up to you. That’s where the next item on our list will help.

2. Track your spending for three months. Most people don’t consciously choose to overspend; they unconsciously overspend. Without awareness, people don’t think about how the little expenses can add up to big costs over time. Therefore, to pinpoint the costly symptoms of the overspending disease, a good dose of reality is just what the financial doctor ordered. Any financial planner worth his fees will tell you that the first step in budgeting is not to cut your expenses, but to track them. You can’t see what expenses to cut if you don’t know what they are or how much they are costing you!

Most people have monthly spending patterns, but to capture a more accurate picture of your spending, track it closely for three months. Don’t just keep a record of how much you are spending; keep a list of every single item you buy. You can write them down, keep an Excel spreadsheet, or use a debit card. Credit cards are also good for tracking your expenses, but only if you pay the balance every month! Once you have three months’ worth of expenses, place them into two categories.

One will be the necessary expenses such as rent or mortgage, utilities, insurance and food staples, and the other will be the unnecessary category such as snack foods, coffee, alcohol, and entertainment. The expenses you can cut (or at least reduce) will be in the “unnecessary” column.

3. Cut the cable. One particular item you may choose to cut from the unnecessary category is cable TV. If you’re a normal American, you probably pay between $100 and $150 per month to receive a few hundred channels (although you may regularly watch only about two or three of them). But normal is not often healthy when it comes to personal finance. Fortunately, if you like to follow well-produced television shows, watch movies at home, or listen to your favorite music in your living room, a whole new world of streaming video is available at an extremely low cost compared to cable TV.

For example, you can buy a device such as a Roku or Apple TV connector that can bring streaming video to your television. All you need is an Internet connection and a one-time cost that ranges between $50 and $100 to buy the device, and you can have more options than cable or satellite provides. For an additional monthly cost of around $10, you can subscribe to Netflix or Amazon and gain access to award-winning television shows, classic and current movies, plus your favorite music. Bottom line: Cut the cable, get streaming video, and you can save more than $100 per month.

4. Pay down debt. Now that the holiday spending spree is over, pay off those credit cards! But chances are you already had thousands of dollars of debt before the holidays started. This is another one of those normal but unhealthy financial traits of the average American consumer. According to, the average household in America had $129,579 in debt in 2015, $15,355 of it in credit cards. And according to, the average credit card interest rate is 15.7 percent. That adds up to about $2,400 per year in interest or $200 per month, just to service the credit card debt.

Now imagine if you were able to reduce your expenses by a few hundred dollars per month by following some or all of the previous tips in this list, and you used that money, plus more if possible, to eliminate your debt. After a few years, you could be out of debt and have thousands of “extra” dollars to do something really spectacular with your money.

5. Increase retirement savings. Now that you’ve reduced your expenses, you can redirect that found money by putting it to work in a long-term savings vehicle such as a 401(k) plan at work or an Individual Retirement Account (IRA). Do you still remember the Will Rogers quote about doubling your money at the beginning of this article? Let’s take it a bit farther (or rather a lot farther). If it were possible to fold a piece of paper in half 42 times, it would reach the moon. Think I’m joking? Well, to prevent from digressing too far from my original point, you’ll need to Google it to see the science behind this yourself. In interest of brevity, let’s just say for now that investing your money takes advantage of the power of compounding interest.

For example, when you invest in securities like stocks, bonds or mutual funds, the dividends and interest can go to buy more shares of the investment securities. Even better, if you use a tax-deferred savings vehicle, such as a 401(k) or IRA, the dividends and interest are not taxed while in the account. This allows the investments to grow even faster. Add an employer match in a 401(k) plan, and you’re well on your way to the moon with your money.

For another fun example of how interest can add up over time, if you’ve ever visited the north, you might know about “the snowball effect,” which helps demonstrate the concept of compounding interest. But if you’ve never left the Lowcountry, you may need to Google that, too. 

Kent Thune is a money manager and the owner of a Hilton Head Island investment advisory firm, Atlantic Capital Investments. He is also a freelance writer and is currently working on a book to be published in 2016. You can follow his musings on mind, money and mastery of life at or on Twitter @ThinkersQuill.

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