Savings Accounts

An annual survey by the Federal Reserve shows millions of Americans live paycheck-to-paycheck and lack the funds to pay an emergency expense. But if you have been able to tuck some cash away you may be looking for a place to put it.

Until recently bonds and certificates of deposit (CD) paid almost nothing but that has changed in recent months as the Fed has begun raising interest rates. So, what are your options?

The experts we consulted say there are currently three attractive options:

• CDs

• Money market funds

• U.S. Treasury bonds

 Andrew Boyd, a financial adviser at Finty, says a high-yield savings account is now a very good place to park cash. After paying less than 1% for more than two decades some of these accounts pay more than 4%. And the money is FDIC  insured up to $250,000. 

Money market accounts

“Money market accounts can be another attractive option,” Boyd told ConsumerAffairs. “They often offer check-writing privileges, which can make your cash more accessible.”

Money market accounts are offered through financial institutions and are also FDIC insured up to $250,000. While you can access your money most funds limit the number of transactions you can make.

“Money market funds can generate different returns, depending on how they invest, but the value per share is fixed,” said Patrick Wells, portfolio manager at Pinnacle Associates. “Each share will receive this amount back, whether you need the funds tomorrow or next year. There is stability in the principal amount, but the returns might vary as the holdings mature and are reinvested.”

Young Pham, a financial expert and investment analyst affiliated with BizReport, a business and finance publication, says CDs can be an attractive place for cash if you don’t need the money for a while and think rates might soon start to decline. Even if rates fall, your interest rate is locked in.

“So, for example, a bank could offer a CD that lets you lock $10,000 in an account for a period of, say, seven years and earn an interest rate of around 5% per annum,” Pham told us. “In essence, you will be paid $500 a year in interest, and when the seven years elapse, you get your $10,000 back. CDs are considered a low-risk vehicle, especially if you choose banks or credit unions that are covered by the FDIC. This means that even if the bank was to go under, you still get your deposits back up to $250,000.”

Treasury notes

U.S. Treasury bonds also offer an attractive option, backed by the “full faith and credit of the U.S. government.” Tim McCarthy, co-CEO and chairman at marketGOATS, says the current environment is attractive because you don’t have to tie up your money for five to 10 years.

“Given that the yield curve is inverted – meaning committing long term gets an investor no higher interest than short term treasuries – I can understand why many investors are choosing to remain in shorter durations, such as one to three years. So, it can make sense to leave a significant portion in this category, especially if you think you want the flexibility to change your mind.”

Interest rates and bond yields can fluctuate daily so it calls for some research before deciding where to put the money. A good place to start is ConsumerAffairs’ guide to CDs, which identifies some of the most attractive current offerings.

For more than 20 years savers have earned next to nothing on savings accounts and certificates of deposit (CD). During that time, inflation remained low and so did interest rates. 

In the last year, that’s changed. A number of banks have raised the rates they pay on deposits, even short-term deposits. Since Treasury bond yields have risen banks are having to compete for cash by paying higher interest rates.

While your local bank may offer a competitive rate, we found four banks that are paying north of 4% on fairly short-term CDs and may be worth consideration. All of the banks are insured by the Federal Deposit Insurance Corporation (FDIC) for deposits of up to $250,000.

Wells Fargo

Local and regional banks tend to offer higher interest rates than the large national banks but Wells Fargo is an exception. Currently, Wells Fargo pays 4.02% on a five-month CD when you open one of its Special Fixed-Rate CD accounts, with a minimum deposit of $5,000.

Ally Bank

Ally Bank, a national, internet-only institution, currently has a couple of compelling offers. Ally’s High-Yield CD pays an interest rate based on the length of the term. A three-month CD pays only 2% but a 12-month CD pays 4.5%. Lock it in for 18 months and the rate rises to 4.8%.

There is no minimum deposit required but you’ll pay a penalty if you withdraw the money before the term is up.

For people who think they may need to tap their savings before the end of the term, Ally’s No Penalty CD may be a good alternative. It pays 4.25% interest and you can withdraw all of your money any time after the first six days following the date you funded the account, and keep the interest earned with no penalties. There is no minimum deposit.

CIT Bank

CIT Bank, a division of First Citizens Bank, pays an even high rate of interest. Its six-month CD currently pays 5% with a $1,000 minimum deposit. It might be a good choice for savers who want a high rate of return but don’t want to tie up their money for more than six months.

Synchrony

Synchrony, another national, internet-only bank pays even more. It currently offers a 14-month CD that pays 5.15%. However, there is no minimum deposit required.

Synchrony also offers a No Penalty CD that pays 4.10%. It’s an 11-month term but there is no early withdrawal penalty if you need to access to your money.

For the first time in two decades, it’s now possible to sock money away and actually have it earn interest in a safe environment. As always, before making a major financial or investment decision it is a good idea to seek advice from a trusted and objective adviser.

For more than 20 years it hasn’t paid to save your money. Banks paid less than 1% on savings accounts and certificates of deposit (CD) didn’t pay much more.

But as the Federal Reserve has aggressively raised a key interest rate, that has begun to change. A new report by the Financial Technology Association (FTA), a Fintech trade group, shows banks have begun to increase the interest they pay in order to attract savers.

In particular, the report found online banks are taking the lead, with the interest rate on a passbook savings account rising above 2% in October for the first time in years. That stands in sharp contrast to brick-and-mortar banks. According to Bankrate, the average rate on savings accounts is around 0.16% with some of the larger banks paying almost nothing.

There are plenty of other savings instruments that pay more in interest but many consumers feel more comfortable with the traditional savings account. The money is available for withdrawal at any time, there are no minimum deposits, and the funds are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC).

Current rates

The report found that Ally Bank offers attractive terms this month. The current savings account rate has risen to 2.35% and the bank is paying an additional 1% cash bonus for new accounts.

At Marcus, the online affiliate of Goldman Sachs, the rate on a savings account is also 2.35%. It’s even higher at LendingClub, where the rate is 3.12%.

Savers who don’t mind tying up money for longer periods of time can earn even higher rates. According to Bankrate, CIT Bank is paying 4% on a minimum deposit of $1,000 in an 18 month CD and the account is FDIC-insured.

Marcus is paying 3.6% on a 12-month CD with a $500 minimum deposit, an offer matched by Bask Bank. Brick-and-mortar banks pay considerably less. Chase only pays 0.1% on a 12-month CD with a $1,000 minimum deposit.

To explore the best online banks, check out ConsumerAffairs’ guide to the top 10 online banks, with thousands of verified consumer reviews.

Government bonds

Loaning money to the U.S. government currently pays even more. Currently, most U.S. Treasury bonds are paying more than 4%. 

The two-year Treasury bond currently pays around 4.4%. Bonds can be sold during that time at either a profit or loss but kept the full two years until maturity, the bondholder is guaranteed to get all of their money back – plus interest – a guarantee backed by “the full faith and credit” of the U.S. government.

Just about the only savings instrument that currently pays more is the Treasury Department’s I Series bond. If purchased before Friday, Oct. 28, it pays 9.6% for the first six months. After that, the bond carries a still attractive rate of 6.48%, resetting every six months to correspond with the inflation rate.

The bond-holder can cash in the bond after 12 months, but if they hold it for fewer than five years they lose three months of interest.

As with any investment, it pays to do your research and consult with a qualified and objective financial adviser.

Personal finance experts are no doubt heartened by the emerging body of research suggesting the year-long coronavirus (COVID-19) pandemic has altered the way consumers look at their finances.

The latest encouraging study comes from Coinstar, which operates change machines in high-traffic retail locations. It found that 76 percent of respondents now have a household budget, and 74 percent are likely to set aside funds in an emergency budget – apart from general savings.

In 2019, a Debt.com poll found just 67 percent of respondents were on a household budget.

The economic uncertainty caused by the pandemic was likely highly motivating for many people when it comes to their finances. Some were forced to make sacrifices because of a loss of income. Others cut back because they were worried about their jobs. Nearly everyone spent less because there were fewer places to spend it.

Remaining frugal

Now that the pandemic clouds are beginning to lift, the natural inclination might be to spend more, and some people undoubtedly will. But the Coinstar survey found 46 percent of consumers said they plan to stay on a fairly tight budget.

When consumers do treat themselves, the survey suggests restaurants and hotels will benefit. Nearly half -- 47 percent -- plan to dine out more frequently. An equal percentage plans to take a summer vacation.

The pressure to spend more will surely be around once movie theaters and restaurants return to full capacity. But at least a significant number of people have the intention of maintaining their more frugal ways. Of those who do plan to splurge, fewer than 20 percent held back during the height of the pandemic but are now ready to open their pocketbooks.

Of those who plan to improve their financial situation in 2021, 43 percent said they will cut back on discretionary spending, 31 percent plan to sell personal items, and 27 percent say they will take on an additional job. 

Personal finance experts suggest the first step, aside from establishing a household budget, is to put away some money in case of an unexpected expense, such as a car or home repair. A 2019 GoBankingRates survey found 70 percent of Americans had less than $1,000 in savings.

In June, as the economic impact of the pandemic was spreading across the country, a Harris Poll found one-third of homeowners have less than $500 in an emergency account.

A new study conducted by researchers from the American Marketing Association explored how consumers’ generosity changes when they receive promotions at work. 

While several factors come into play, the researchers learned that consumers who received promotions -- and larger paychecks -- were likely to donate more money to charity. 

“Price promotions can have a positive effect on consumers’ donation behavior because the monetary savings from price promotions increase consumers’ perceived resources,” said researcher Kuangjie Zhang. “We also show that the positive effect of price promotions on consumers’ donation behavior is stronger when consumers focus on the amount of money saved, when the purchase falls within their budget, and when the monetary savings can be realized immediately.” 

What makes consumers more likely to give back?

To better understand how getting a job promotion can affect consumers’ generosity, the researchers analyzed seven previous studies that explored similar ideas. 

Ultimately, the researchers learned that making more money led to larger charitable donations. They explained that a larger paycheck is likely to make consumers feel more financially secure, and with that security, they feel better equipped to give back more. Additionally, they found that consumers were the most likely to give back when prompted for a charitable donation right after making a purchase. 

The researchers say it’s important for consumers to see the benefits of the donation; otherwise, it could make them more skeptical to donate in the future. Though making more money can lead to greater security, it can also make consumers more aware of just how much they’re spending and saving. 

The researchers found that consumers are likely to second-guess their charitable contributions when they focus more on money going out than on money coming in. This line of thinking can lead to worries about overspending, which might impact how much or how often they donate in the future. 

Greater insight for charities

However, there are several positives to take away from this study. In knowing that job promotions are likely to make consumers more generous, the researchers suggest that these findings could be particularly important for charitable organizations. For groups that are looking for donations, focusing the search on those who have just received promotions can be a great place to start. 

The researchers are excited about these findings because they show how consumers’ behavior following a job promotion can work to improve the world at-large. 

U.S. consumers are putting away cash at a rate not seen since November 1981, according to a report released Thursday by the government’s Bureau of Economic Analysis (BEA). The report found that the savings rate hit 13.1 percent in March -- up from 8 percent in February. 

In March, Americans accrued a total of $2.17 trillion in personal savings. Experts are attributing the surge in savings to the fact that bank savings, money market accounts, and Treasury bonds are yielding meager amounts after the Fed dropped interest rates down to zero last month. The COVID-19 pandemic also prompted the Fed to launch numerous lending programs. 

The report said personal income fell 2 percent in March, “in part due to the response to the spread of COVID-19, as governments issued ‘stay-at-home’ orders.” The BEA said this spurred “rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending.” 

Saving more

Consumers spent significantly less last month, which could be a key reason they’re saving more. The BEA said Thursday that consumption expenditures fell 7.5 percent last month, likely in large part due to coronavirus-related business closures. 

U.S. consumers dropped less money on non-essential medical care, leisure and recreation, and motor vehicles. However, spending increased in the category of food and beverages consumed at home. 

The BEA noted in its report that the full impact of the coronavirus pandemic on the economy couldn’t be captured in the initial estimate. 

“The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified,” the BEA said.

Robert Frick, corporate economist with Navy Federal Credit Union, said in a tweet that putting money away can only help the nation recover from a recession. 

"The savings rate had risen dramatically in the last couple years already," he said. "Speculation is people were bracing for the next recession. I don't look for silver linings, but the more people bank, the better the recovery.” 

“Maybe I shouldn’t have bought a triple grande latte with soy milk every day, or all those new shoes, or that electric car I can’t seem to find a charging station for, or…”

New warning signs are popping up for millennials which suggest that they’ve got some serious savings work to do if they want to retire by age 65.

While their baby boomer parents were able to prepare for the future by setting aside 15-20 percent of their paychecks, millennials are going to have to almost triple that in order to get it done in the next 30 years, says Olivia S. Mitchell, executive director of Wharton’s Pension Research Council at the University of Pennsylvania.

“The mantra for the future – Millenials and the rest – is ‘Work Longer, Save More, and Expect Less,’” Mitchell told ConsumerAffairs. 

Mitchell’s not alone in this forecast. “Although they have frequently been labeled as materialistic, spoiled and saddled with a sense of entitlement, many millennials feel that they will not be able to achieve material goals like finding their dream job, buying a house or retiring until much later in their lives than their parents did,” said certified financial planner Mark P. Cussen. 

Unfortunately, millennials are facing a big, fat “if.” They’re looking at an economic tunnel where there are no lights on -- green or red -- and they face the most uncertain economic future of perhaps any generation in America since the Great Depression.

“Paying off student loan debt has become increasingly difficult for many who are struggling with unemployment and low-paying jobs,” said Cussen. “The recession left over 15 percent of Millennials in their early 20s out of work, many of whom are still struggling to get their feet on the ground. This will hurt them long after they do get work. Economic studies of those who were unemployed during the recession in the early 1980s revealed that they were still behind schedule financially 20 years later.”

Doing the math

Let’s say you’re age 40, live in Atlanta, and earn $35,592 a year -- the average according to the Bureau of Labor Statistics. After taxes, your annual take-home pay will be $28,583 or $2,382 a month.

Now, taking that $2,382 a month and investing half of that -- $1,191 -- expecting the low end of Vanguard’s estimated 3.5 percent rate-of-return -- comes out to $571,636.41 as the end result after 30 years of saving.

Mind you, the remaining $1,191 out of the paycheck will need to pay for your rent, mortgage, car payment, insurance, etc. For many millennials, that may be a stretch thanks to their list of “wannas” -- the sorts of things that aren’t necessary and avoidable.

″$4 coffee. Incredibly stupid,” Shark Tank’s Kevil O’Leary told CNBC at the World Government Summit earlier this year. “Look, I know I’m going to get hate mail from all the coffee brands, but coffee costs 18 cents to make yourself. Until you have savings and have paid off your college debt, do not buy a $4 coffee, I forbid you.”

Saving money and investing in the future

As is his nature, O’Leary didn’t stop with that cup ‘o joe, either. Shoes were next on his list of extravagances -- a particular problem for female millennials who spend an average of $25,000 on footwear over the course of their life. 

“You don’t need more than four pairs of shoes,” said O’Leary. “You need flip flops, something to work out in, and two pairs of dress shoes — everything else, you’re an idiot if you’re buying more shoes. Because you’ll never wear them, and they’ll be sitting there for years.”

O’Leary also took jeans to the woodshed. “I forbid buying any more than three pairs of jeans. That’s it.”

While O’Leary is tackling the millennials save-for-tomorrow plan differently than Mitchell, he thinks a saver can tack on an extra 10 percent abiding by his rules. 

“Then you invest that and the market gives you 7 percent a year,” he added. “The average salary in America is $58,000, you save 10 percent a year, you have $1.25 million in the bank when you’re 65.”

Consumers’ savings rates have steadily declined over the years, and perhaps it isn’t surprising. Banks have paid little to no interest on savings for the last couple of decades.

But the rise of online banks and fintech firms has been a game-changer. With less overhead, these firms can pay higher rates of interest while still offering FDIC protection.

Earlier this year, Wealthfront launched a simple savings account that paid the highest interest rate available. Recently, the rate has gone up to 2.51 percent, significantly higher than the U.S. government’s 10-year Treasury bond.

What makes the Wealthfront Cash Account particularly compelling is the fact that there are no fees; you can open an account with as little as $1 and withdraw your money at any time. Deposits are FDIC insured up to $1 million, which is more than most banks.

‘Self-driving money’

"Our cash account is another important milestone on our path to deliver our ultimate vision of self-driving money," said Wealthfront CEO Andy Rachleff when the account was launched. "In order to optimize and automate all of our clients finances, we need to offer ideal short and long-term destinations for their cash. You can expect us to further extend our services into the banking sector this year."

Once upon a time, a passbook savings account at your local bank might pay as much as 3 percent interest, but those days are long gone. Today, the average bank savings account rate is a paltry 0.1 percent, meaning the return on a Wealthfront Cash Account is about 25 times higher.

"Every year the four largest banks in the U.S. make over $300 billion in revenue while paying consumers next to nothing on their cash deposits," said Dan Carroll, co-founder of Wealthfront. "If the $8 trillion in cash sitting at the commercial banks was moved to a service like Wealthfront instead, consumers would have an additional $170 billion in their pockets every year. Imagine how impactful that extra money could be on people's lives."

Other investment products

Weathfront offers a range of financial services and investments, many of which are subject to market forces. Those kinds of investments should be carefully considered, perhaps with guidance from an objective and qualified financial advisor.

Savings accounts, on the other hand, are pretty straightforward. They can be a good place to tuck away money for an emergency fund. As always, it’s advisable to read the fine print carefully so that you fully understand the terms.

There's good news and bad news in GoBankingRates.com's annual savings survey.

Each year the personal finance site asks consumers how much money they've managed to save. This year 54% reported having less than $1,000 in the bank.

While that might not sound like the good news, it is. Last year, 69% of consumers had less than $1,000 set aside.

"We did see that the percentage of people who have less than a thousand dollars saved, and that includes people with zero savings, fall -- and that is good news because it shows a higher percentage of people have $1,000 in savings," Cameron Huddleston, a reporter at GoBankingRates, told ConsumerAffairs.

Now here's the bad news: 39% of consumers admitted they had no savings at all, up from 34% who were in that predicament last year. So despite a steadily improving economy, a lot of consumers are moving backward.

It should be pointed out that the survey specifically asked consumers how much money they had in "a savings account," and Huddleston concedes that it is possible consumers have socked money away in other things, like money market accounts or even checking accounts that pay a higher rate of interest.

"Part of it could just be semantics," Huddleston said. "On the other hand, the increase in people with $1,000 in savings could have to do with their improving financial condition.

Incomes are rising

Consumers, it turns out, are making more money. The Census Bureau reports that real median household income increased by a little more than 3% between 2015 and 2016. At the same time, fewer consumers were officially "poor," with a nearly 1% drop in the poverty rate.

The official tally shows median household income last year was $59,039, up from $57,230 the year before. But while consumers were making more money, it was harder to save.

"The people who are doing okay and seeing their financial situation improve -- perhaps they are actually setting aside more," Huddleston said. "They're finding a little more room in their budget to increase their savings.

But the improvement is not across the board. Drilling down into the numbers, we see that younger people seem to have the hardest time putting money away. There could be several reasons for that.

Millennial headwinds

Millennials are early in their careers and their paychecks aren't that big. If they have started a family, their expenses could be growing. Then, there are those student loans.

"It probably comes as no surprise that Millennials are dealing with a lot of student loan debt," Huddleston said. "Every year student loan balances rise as college tuition rises."

And that takes a big bite out of the monthly budget. That leaves less to pay day-to-day expenses, much less to sock away in savings.

Huddleston says that may make saving money harder, but not impossible. She cites the case of a young couple she recently interviewed with a take-home pay of $3,200 a month. Yet, she says they managed to pay off $5,000 in debt in one month by tightening their belt and liquidating assets.

"During that time they had been paying off student loans, they had actually been putting money aside into savings," she said.

Make saving a priority

If you're going to save money, Huddleston says, you have to make it a priority. If you don't, you'll be tempted to spend any extra money in your budget. The concept of "paying yourself first" actually works if you build a regular payment into your savings account into your monthly budget.

And while saving for retirement, a down payment on a home, or a child's education are worthy savings goals, Huddleston says the first goal should be to fund an emergency savings account.

"Something is going to come up," she said. "Your car is going to break down, you're going to need emergency dental surgery, you're going to have a big medical bill, and you're going to have to come up with the cash to pay for it."

Why does it seem so hard to save money? Yes, life does seem to have a lot more expenses than it did in earlier generations, but Huddleston doesn't discount the role of social media. When consumers see posts about their friends' fun vacations or nights on the town, they naturally want to join in.

In fact, she cites previous studies that show it isn't low-income consumers who live paycheck to paycheck as much as those making good salaries. Households earning $100,000 a year or more are most likely to be the ones living paycheck-to-paycheck.

When it comes to savings, the priorities of Gen Xers and Millennials are more alike than you’d think. A new survey by online loan marketplace LendingTree showed that members of both generations agree that saving for an emergency fund should be a top priority.

Millennials choose to sock away money in an effort to save for the following ten things, according to the survey:

• Emergency fund (14.86%)
• A house or an apartment (12.50%)
• Vacation (8.44%)
• New computer (6.72%)
• Retirement (6.44%)
• Travel abroad (6.06%)
• New car (5.81%)
• Clothing, accessories, or shoes (5.11%)
• Holiday gifts (4.72%)
• Education (4.36%)

Gen Xers prioritize retirement savings

In contrast, Gen Xers were much more likely to make saving for retirement a top priority. Almost 11% percent of Gen Xers said their second priority for saving was retirement, but only 6.44% of Millennials ranked saving for retirement as one of their top ten priorities for saving.

And while many of the 2,000 Millennials who responded to LendingTree's survey were still saving for a home or an apartment, Gen Xers seem to be more focused on saving money to fix up the residence they're currently in. 

Around 8% of Gen Xers said saving for home repairs or improvements was a top priority. Home repairs or improvements didn't crack the top ten savings priorities for Millennials.

Other prominent priorities

However, both generations agreed on the importance of saving money for an emergency, such as an unexpected car repair or trip to the hospital. Nearly 15% of Millennials and 16.11% of Gen Xers said saving for an emergency fund was their top saving priority.

Young people and Gen Xers may also be on the same page regarding vacations. In the survey, around 8% of Millennials and 10% of Gen Xers said they were saving for their next vacation.

Other popular purchases to save for included:

• A new car -- almost 6% of Millennials and nearly 8% of Gen Xers
• A new computer -- almost 7% of Millennials and about 5% of Gen Xers
• Holiday gifts -- roughly 5% for both generations

One of the goals of savers, besides putting money away for retirement, is to have a “rainy day” fund, enough money on hand to cover a financial emergency, such as car repair bill or trip to the emergency room.

Other emergencies can include a sudden loss of income, such as losing your job. Personal finance experts generally recommend, as a rule of thumb, to have savings equal to six months of income. But how many households can actually do that?

A recent report by personal finance site Bankrate says more than half of consumers do not have enough money on hand to pay an unexpected $500 car repair bill. While these bills don't crop up every month, they do occur.

And even if you do have an emergency fund, it might not have enough money in it to meet today's unexpected expenses. After all, car repair bills can be a lot more than $500.

62% say they would struggle

A survey conducted by Harris Poll on behalf of Oasis Financial found that even though 63% of consumers said they have an emergency fund, 62% of consumers think they would struggle financially if their income were interrupted for three months.

"The survey illuminates the need for Americans to evaluate their finances honestly, with an eye toward the unexpected," said Ralph Shayne, CEO of Oasis Financial.

Sometimes emergency situations are covered by insurance, but the coverage can be spotty in some cases, the survey found. A wide majority of consumers in the survey think consumers have to fight insurance companies to get a fair and timely settlement.

How much to save each month?

Shayne says consumers should dedicate a portion of their income to savings each month. How much? Experts at TIAA say the percentage will vary, depending on your goals. But as far as an emergency fund goes, it recommends between three and nine months of current income.

To get there, it suggests identifying all the non-essential spending in your monthly budget, such as cable TV, and divide that number in half. That, the company says, is the amount you need to put away each month to get an adequate emergency fund within a year.

Forbes counsels that three months of income in savings may only be adequate if you're single, renting, and have the option of moving back in with your parents.

For families and individuals living paycheck-to-paycheck, saving money for the future, or for an emergency fund, might seem out of the question. But by developing a budget plan and sticking with it, it is possible to get ahead, assuming you are not currently drowning in debt.

The secret, according to many financial advisers, is to take baby steps, cutting costs a little here and there, and then not spending the savings on other things. Here are five ideas that might help you carve out a little room in your budget.

Eat at home

Food costs account for a huge part of spending each month, and unfortunately this spending isn't always subject to a budget. If you aren't tracking what you're spending at the supermarket each week, you're probably spending a lot more than you think.

That's bad enough, but when you throw in a few meals at restaurants, then spending on food can quickly get out of control.

Eating meals at home will save money, pure and simple. To maximize savings, plan meals before going to the supermarket. Use coupons and buy things on sale. Saving money on food will deliver the biggest bang for the buck when it comes to a household budget.

Don't pay for banking services

Ever wondered how banks can afford to offer free checking and other services? Because most of their customers are paying for them. Don't be one of them.

A monthly service charge on a checking account can easily be $10 a month. Out of network ATM fees can be $6 or more. Look for a bank or credit union that not only offers free checking, but will also pay you interest on your balance and reimburse ATM fees. If you keep your savings in your checking account, and have the discipline not to spend it, you can probably earn more interest than you would in a passbook savings accounts.

And, for heaven's sake, don't use a credit card that charges an annual fee. There are plenty of credit cards with no fee and that pay some kind of cash back rewards.

Negotiate lower rates

Most of us have fixed costs in our budget, but just how fixed are they? Your auto and homeowners' insurance premium may be the same amount each month, but these companies may be very willing to reduce your rate in order to keep you as a customer.

Call them and tell them you have been shopping around and have found lower rates. Ask them what they can do. To save money, sometimes you only have to ask.

The same is true for your cellphone provider. And while they might not lower your rate, you may be able to move into a less expensive plan.

Reduce interest payments

If you have a large credit card balance, it's probably taking a big bite out of your budget. You are also probably paying 15% or more in interest, making it harder to pay off.

If you can transfer all or part of the balance to a credit card with a 0% introductory rate on balance transfers, you can save hundreds of dollars a year in interest. Just select a card that doesn't charge a high balance transfer fee. The Chase Slate card is one that doesn't.

Track your spending for a week

Finally, carry a small notebook with you for a week. Every time you spend any money, whether it's pocket change or a credit card purchase, write down what it was for and how much you spent.

It's amazing, but at the end of seven days you'll have an eye-opening picture of your spending habits and where you might be able to cut back.