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How to bank hundreds of dollars more each month

·Senior Columnist

Robert Shiller, the Nobel Prize-winning economist, offered some simple advice for people trying to get ahead when he visited Yahoo Finance recently: Live like a student.

“My students are living alright,” Shiller said. “I’ve suggested to them, why don’t you just continue to live at that level after you get a job? It would pile up into a lot of money.”

Struggling workers might take offense at a comfortable, accomplished Yale professor suggesting middle-class Americans should subsist on ramen noodles and hand-me-down furniture.

But Shiller, like other economists, is addressing a stark reality: Many Americans live beyond their means, with 20% of adults spending more than they earn, according to the Federal Reserve. Less that half of all adult Americans have enough money saved to cover a $400 financial emergency. Millions more are far short of the funds they’ll need to retire comfortably.

Shiller’s basic point is that the longer working folks can hold onto the frugal habits they're forced to adopt when money is tight, the better off they’ll be when they have to come up with money for their kids’ college, cover the cost of a medical emergency or ride out an unexpected bout of unemployment -- and then, if there’s anything left, fund retirement.

The concept is easy to understand — and damn hard to execute. I tried it out on myself — theoretically -- and discovered that if I were to live like a student, here’s what I’d have to change:

Stop fixing up my house. Owning the home isn’t really the problem, since it’s a pretty good deal for me, compared with renting. But the amount I spend on upgrades, maintenance, landscaping and basic repairs takes hundreds of dollars out of my wallet every month (and sometimes, every week).

Estimated savings from caring less about my house: $300 per month.

Make do with my old car. It runs well and has most basic features -- and it’s paid for. But I want heated seats! I’ve already identified a couple new models I’d love to check out, but I guess I can live with my eight-year-old Mazda for a few more years.

Savings if I don't take on new monthly car payments: $300 to $400 per month.

Tolerate dumb TV. I just bought my first smart TV. Not because my old TV broke, but because who wants a dumb TV when you can have a smart one connected directly to the Internet? Of course, now that I think about it, I got by with a puny TV — artfully outfitted with rabbit ears — back when I was first starting out. And I have to admit, I’ve also upgraded my smartphone, tablet and several other gizmos simply because a newer model seemed better.

Money wasted on unnecessary upgrades: $100 per month.

Downsize to one entertainment choice. I have cable, Netflix, Amazon Prime and a few other subscription services, and I’m probably not maximizing the value of any of them.

Money wasted just to make sure I’m never bored: $50 per month.

Get my hands dirtier. Last month I bought a snowblower, even though I’m capable of shoveling by hand. Before that, it was an electric garage-door opener, even though my arms are capable of raising and lowering the door. And as any DIY-er knows, tackling projects yourself always requires some new power tool or labor-saving device. Machines that handle once-tedious household chores are a modern marvel, but I guess it's still okay to break a sweat every now and then.

Money spent on appliances so I can do less work: $50 per month.

Ban amusements and little life enhancers. This might be TMI, but for Halloween last fall I bought a rubber chicken mask I wore while greeting trick-or-treaters, which I found amusing even if it alarmed a few little kids. I’ve also purchased sports equipment, pet gear and assorted knick-knacks I could probably forego without compromising my living standards.

Money wasted on small impulse buys: $50 per month.

I could go on, but scrutinizing just a few lines of my monthly budget shows how spending, rather than saving, dominates my financial life. That, for better or worse, has become the American way. The national savings rate is about 5%, and anybody able to bank double that is a highly disciplined outlier. Still, there's nothing wrong with saving 30% or 50% of your income, especially in an uncertain economy.

Marketers, needless to say, are terrific at helping us justify all that spending: It will make us feel better! We need to keep up with technology! There’s nothing wrong with a little splurging! You deserve it! What they never remind us of is the future cost of spending our money today, and going without it tomorrow.

If I were able to fend off lifestyle creep and feel happy with less — to return, in modest ways, to the more frugal habits of earlier days — it would make a big difference. If I could save an additional $500 a month, it would add up to $200,000 after 20 years, assuming a reasonable 5% annualized return. That nugget might end up bigger or smaller depending on when you start and how much you sock away, but any amount of untouched principal will expand itself thanks to compounding over time.

Is it worth it? On paper, it sure seems to be. But back in the real world, the urge to spend can be remarkably powerful. Besides, what’s wrong with spending a bit of my hard-earned pay on heated seats? I deserve to be comfortable, don’t I?

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.