If you’ve ever tried to save more money, chances are you failed a lot. But the truth is, it’s not your fault—you just didn’t have the right strategies and tools. So here are 8 proven ways to effortlessly save faster, according to science.
Money Saving Tip 1.
The first strategy is the pineapple pizza rule. The reason many people have trouble saving money is that personal finance can get confusing. When I first took it seriously, I had no idea what any of this meant. So I came up with the pineapple pizza rule—it’s the principle that reframes money to make it way more approachable. Whenever I bought something that wasn’t pineapple pizza, I would just think to myself, how many pineapple pizzas would this cost? How many pineapple pizzas could I buy with this amount of money?
For instance, if this candlestick costs $70 and I know a small pineapple pizza costs $7, then this candlestick costs 10 pineapple pizza dollars—meaning I could either buy this candlestick or get 10 pineapple pizzas. This simple reframing through the lens of something I love helps me determine whether buying that thing is worth giving up something I know I will love. You don’t need to use pineapple pizza dollars. You can use anything that you love—whether that’s hot dog dollars, coffee dollars, or Mr. Magic Lamp dollars.
Money Saving Tip 2.
The absolute price rule. When I didn’t have much money, I would always default to buying the cheapest things because I thought that I was saving money. I thought, why would I spend $60 on jeans when I could get one for $1.25 from Dollar Tree? But the problem I encountered was that everything fell apart in a few months.
Focusing on just the absolute price, or the outright cost to buy something, didn’t account for the additional cost and time needed to replace or repair those things. So now I buy things based on cost per use. For instance, I was obsessed for some time with high-quality coffee. Every day, I would buy myself an iced coffee at a café because I could never make it taste as good at home. So I thought to myself, I could probably save a lot more money if I could make café-quality coffee at home.
In New York City, an iced coffee costs $7, and I bought one every day from Monday to Friday. That means I spent about $1,820 on iced coffee. Now, I could keep doing that, or I could buy a used $500 Breville espresso machine for home. I know $500 for a coffee machine is a lot of money, but if I divide 500 by 365—the number of days I’d be drinking coffee—the cost per use for that is just $1.36. And if I use the Breville machine every single day for another year, so two years, the cost per use is now 68 cents. I’m okay spending 68 cents every time I make coffee compared to the $7 outside.
Money Saving Tip 3.
Make a budget. Before buying anything, I write it down in my plan 2 months in advance, and only then do I buy that thing, and if I like something but it is not on that list, then I will not buy it, or else I will add that thing to the list for next month.
The most impactful thing that helped me save a lot of money was doing this thing called a savings challenge. The harsh reality is that saving money can feel like an uphill battle because our brains are wired to resist change. In the book The Power of Habit, it says the best way to save more is by breaking our existing spending habit loop.
Money Saving Tip 4.
The 0-3-6 rule is something I recommend everyone do before they start investing or even paying off debt. I’ve been following this rule since I first started my 9-to-5 job. You might be familiar with the regular emergency fund rule that says you have to save 3 to 6 months of living expenses. Now, that’s a really good starting point, but we can improve this approach to better fit each of our lives because we’re all in unique situations. Not everyone needs to save as little as 3 months or as much as 6 months of living expenses.
Here’s how you can use the 0-3-6 rule to determine how much you should save. As a baseline, everyone needs to save 3 months of living expenses to start with, no matter what. Then, here’s where it gets more customized:
If you have kids or any dependents, you add anywhere from 0 to 3 more months to your emergency fund. Next, check out your job and your industry. Do you work in an industry where you can quit today and find a new job tomorrow? Or is your industry more cyclical and companies aren’t hiring right now? Based on this, add anywhere from 0 to 3 more months.
Next, do you have more than one stream of income? Depending on how easy it would be for you to generate cash in the future, you would again add anywhere from 0 to 3 more months.
For instance, in my situation, I’d start with the 3-month baseline. I have no kids or dependents, so I’ll add zero months to that. I am self-employed, meaning that my income varies from month to month, but I do work in a pretty high-demand industry—social media and content creation—and all the skills I’ve developed are very transferable. So I’ll just add two months to that. Next, I do have multiple income streams, so I’ll add zero months for that.
So, in my scenario, I would save 5 months of living expenses in my emergency fund, which is more than I had a few years ago when I worked on Wall Street. Back then, I still started at the 3-month baseline. I had no kids, I was working a stable 9-to-5 job, and I had multiple income streams, so I just kept it at 3 months and didn’t add anything else. The more income sources you have and the more demand your industry has, the less money you need in your emergency fund.
Money Saving Tip 5.
Next is the 20/4/10 rule, which is the antidote for America’s number one wealth killer. In 2022, AAA found that the average cost to own a car was $894,000.
To determine how much car you can afford without destroying your wealth, first, the 20 is your down payment. You should at least be able to put down 20% of the price of the car from the very beginning. Some lenders will allow you to put even less down, but to that, you have to say, “No, sir,” because the lenders are just going to charge you a higher monthly payment to make up for the lower down payment. But this is a pretty bad idea in the long run because it’s going to be a lot more money. Generally, the more you can put down from the start, the better.
Next, 4 is the four-year limit. Don’t agree to financing terms longer than four yeas, because the longer you let the loan run on, the more you’ll end up paying in interest. And oftentimes, shady lenders may include a clause or condition where it says interest rates can actually increase after the fifth year.
Next, aim to spend 10% or less of your gross monthly income on car expenses—things like loan payments, insurance, and maintenance. And if you can’t follow the 20/4/10 rule, there’s a good chance that that Lambo might not be for you next, Warren Buffett…
Money Saving Tip 6.
Once said, price is what you pay, and value is what you get. And although he was referring to investing in stocks, we can apply this to buying stuff in general.
An item’s value is what you get from it—how it makes you feel, what problems it helps you solve, and the transformations you experience. An item’s price is just what you pay to get that things. An item’s true value is the difference between what you can get from it and the cost to acquire it.
The trick to saving money is to stop focusing on the price of things. If you constantly focus on the price, you build an unhealthy relationship with money and spending. So yes, in a way, I’m permitting you to spend money—but under one condition.
The reality is, if you only focus on the price of something and saving money, you’re going to deprive yourself of life. You’ll be hesitant to go to birthday parties, to go on vacation, or even treat yourself to iced coffee once in a while. You’ll attempt to save all your money until you’re 75, and if you’re still alive by then, maybe you can spend some of it. But the problem is, deprivation will just make you burn out and give up.
The better way to approach saving money is to spend aggressively on things that bring you true value and joy—but only if you aggressively cut costs on things that don’t. So if a $5 iced coffee makes you the happiest person in the world, makes you more productive, more social, and reduces your stress for the rest of the day, chances are the true value that you get from that $5 cup of coffee is way more than that $5. So, go enjoy it.