With gasoline and home heating oil prices surging since the Russian invasion of Ukraine, consumers are looking for ways to cut their gas bills.
Crude oil prices have risen to their highest level since 2014 amid the war in Ukraine, which began in February 2022 — and has no clear path for a ceasefire in sight. Gasoline and heating oil are some of the petroleum products derived from crude oil, so higher gasoline and heating oil prices may be around for some time.
Fortunately, motorists and homeowners can save money on gas by embracing energy-efficient practices. Here are some of the easiest ways to reduce the pain both at the pump and when paying for heating costs.
15 Ways to Pay Less for Gas for Your Car and Home
Here are 15 ways you can pay less on fuel for your car and home heating system:
1. Follow the Speed Limit
Following the speed limit can help you save money on gas. In general, gas mileage decreases rapidly as you accelerate above 50 mph. Driving 55 mph rather than 65 mph can improve your gas mileage by 15%, according to the U.S. Environmental Protection Agency.
2. Avoid Aggressive Driving
Aggressive driving, including speeding and rapid acceleration, can lower your gas mileage by 33% on the highway and by 5% on city roadways. Motorists who avoid aggressive driving can realize cost-savings by burning less fuel on roads and highways.
3. Remove Unnecessary Weight
Removing unnecessary weight from your vehicle can save money on gas. Storing an extra 100 pounds in your vehicle could reduce your miles per gallon by up to 2%, according to the U.S. Department of Energy.
4. Use Cruise Control on Highways
Using cruise control on highways can help you save up to 14% on gas by maintaining a continuous speed. Constantly accelerating and decelerating burns more fuel, which gives you less bang for your buck on the road.
5. Keep Tires Properly Inflated
Keeping your tires properly inflated can improve your gas mileage by 3%. Conversely, driving with underinflated tires can decrease your gas mileage by 0.3% for each unit drop in pounds per square inch (psi) of air pressure.
6. Stick With Regular Gasoline
Gasoline prices vary by their octane level, with regular being the cheapest and premium being the most expensive. Unless your car requires premium fuel, you can save money by sticking with unleaded regular gasoline as opposed to choosing midgrade or premium alternatives.
President Joe Biden has predicted gas prices will go up further as a result of Russia’s invasion of Ukraine. The potential for crude oil prices to continue rising may motivate some observers to invest in energy stocks. Others may see this as an ideal time to invest in utilities.
7. Don’t Idle When Parked
Allowing your car engine to run idle while parked is wasteful. Idling can consume up to half a gallon of fuel per hour, according to the U.S. Department of Energy. You can save gas money by turning off your car when it’s parked.
8. Search Online for Cheapest Fuel Stations
Some gas stations may offer cheaper fuel than other gas stations in your geographic area. You can search online for the cheapest gas stations in your area. Websites or apps like GasBuddy can help you find the lowest gas prices in your city or town.
9. Reduce Aerodynamic Drag
Your vehicle has to overcome wind resistance or aerodynamic drag whenever you drive it in the open. Reducing aerodynamic drag can save money on gas, and motorists can reduce aerodynamic drag by driving with the windows closed.
10. Minimize A/C Usage
Minimizing your vehicle’s air conditioner usage can save gas money. Using the air conditioner in some cases can reduce your vehicle’s fuel economy by more than 25%, which is akin to paying more at the pump over time, according to the EPA and U.S. Department of Energy.
11. Clean or Replace Air Filter as Necessary
Cleaning or replacing your vehicle’s air filter as necessary can save gas money, particularly if you’re driving an older vehicle manufactured before 1980. Older vehicles may feature a carbureted engine that becomes less fuel efficient when operating with a clogged air filter, according to the U.S. Department of Energy.
12. Get Engine Tune-Ups as Needed
Getting engine tune-ups as needed can improve gas mileage by an average of 4%, according to the U.S. Department of Energy. An engine tune-up is a comprehensive inspection that determines whether any components of the engine need to be replaced.
13. Consider New Vehicle Options
You can consider buying a new or used vehicle with better gas mileage to save money on gas. Consumers can also consider buying all-electric vehicles to move away from gasoline and diesel fuel entirely.
Homeowners can save money on their home heating bills by setting their thermostats to 68 degrees Fahrenheit. The Delaware Public Service Commission says you can save 5% on your home heating costs for every degree you lower your thermostat below 70.
The price of gasoline and heating oil may stay at its high level – or even rise as the conflict in Eastern Europe continues. Feeling the pinch in their wallets, consumers may want to try changing their habits and practices to be more energy efficient.
Another simple way to save money on gas is to pay for it using a credit card that offers cash back. [cc_three_percent]
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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The marginal propensity to save (MPS) refers to the amount of disposable income a consumer is able to save. It’s used to reflect the proportion someone is willing to save for each additional dollar of their income.
To understand why MPS is important when quantifying fluctuations in savings and income, we’ll go over how to calculate MPS and how to apply it to your budgeting strategy.
What is the Marginal Propensity to Save?
The marginal propensity to save is defined as the portion of an increase in income that goes towards household savings. In other words, it’s the percentage of additional income a household saves instead of spending on goods and services, and it offers insight into the consumption habits of consumers.
MPS is also referred to as leakage, where the savings is an amount (expressed as a percentage that doesn’t go back into the economy via consumption. Typically, the more a household saves, the more likely it indicates that there is a higher income and better equipped to cover their household expenses.
So, theoretically, if a household saves 10%, it means that for every additional dollar they earn, they’ll save 10 cents.
When consumers are more likely to save as their income grows, the chances are higher they’ll become wealthier. Plus, households will also be able to access services and goods that require more money, such as larger homes in higher cost of living areas, elaborate vacations, or luxury vehicles.
How Income Level Affects Marginal Propensity to Save
Given data on household income and household saving, economists can calculate households’ MPS by income level. This calculation is important because MPS is not constant—it varies by income level. Typically, the higher the income, the higher the MPS because as wealth increases so does the ability to satisfy needs and wants, and so each additional dollar is less likely to go toward additional spending. However, the possibility remains that a consumer might alter savings and consumption habits with an increase in pay.
The Multiplier Effect
The MPS plays an important part in regulating the multiplier effect. The multiplier effect looks at the proportional increase or decrease in income that comes from consumption or savings.
For instance, if there is spending at the government level, it’ll have a multiplier effect (much like how a snowball rolls down a hill) on different parts of the economy. This change is due to the fact there is now additional disposable income consumers can spend on consumption and savings.
By understanding what the MPS is, economists can see how increased government spending can influence savings. It’ll also help to determine how consumers’ saving habits will influence the overall economy. The lower the MPS, the more of an impact on changes in government spending there will be.
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Calculating the Marginal Propensity to Save
Calculating the MPS involves dividing the change in savings by a change in disposable income.
The following formula is used to calculate the MPS:
MPS = change in savings / change in disposable income
The savings represented by the value of the MPS will change if income changes by a dollar. Presented on a graph, the MPS is the equivalent of the savings line that’s created by plotting changes in income on the horizontal line (x-axis) and changes in savings on the vertical line (y-axis).
Another important point to note is that MPS will range between zero and one. If the MPS is zero, then it means changes in income doesn’t have an effect on savings (consumers spend all additional income). If MPS is one, then all additional income is saved.
Example
Jasmine successfully negotiated a promotion and annual bonus and received an additional $3,000 with her next paycheck. Jasmine decides she wants to spend this amount on a nice dinner out with friends totaling $150, and a vacation in Mexico for $2,000. The total she spends out of her bonus is $2,150, saving $850.
Using the above MPS formula, the calculation is as follows:
$850 / $3,000 = 0.283 = 28.3%
Therefore, Jasmine saved 28% of her additional income or 28 cents for each additional dollar she earns.
Remember, MPS isn’t constant since various factors in addition to changes in income will influence consumer spending habits. For instance, the time of the year can influence seasonal trends, which can correlate with higher spending.
Applying MPS to Your Budget Strategy
Though it seems like MPS is more for economists, you can apply this tactic to your personal budget.
When it comes to increasing your income, it might be tempting to spend a large portion of it. After all, you might want to celebrate a pay raise or promotion. Or, you might decide to increase your grocery budget, swapping out some of your regular produce for organic varieties.
However, there are benefits to saving some of the extra money. Perhaps you have a financial goal you can use it towards, like saving for a down payment on a house. Or you want to start investing and with this boost in income, you now have the means to do so.
If you haven’t yet decided what you’re saving for, just getting into the habit of saving will get you on the right track. Plus, you’ll learn how to budget effectively, no matter which type of budgeting technique you use.
Let’s say you want to be able to set aside 20% of each paycheck towards investments and a larger emergency fund. You received a $1,000 bonus from work this month and want to make sure you’re not tempted to spend it all.
Using the above formula, you want to have an MPS of 30%, or 0.3. That means with that bonus, you want to be able to save $300, allowing you to put $800 of it towards other areas in your budget. Once you have this number, you can take proactive steps to save that money. Automatically transferring $300 to a separate savings account is a good start.
Considering your income may fluctuate, you’ll probably want to revisit this formula on occasion to make sure you’re on track. Plus, it’s likely your spending habits will also change—such as spending more during the holidays—so if you need to spend more, then you can adjust your savings rate temporarily. At the end of the day, it’s all about being aware of where your money is going.
Marginal propensity to save may seem like a term that doesn’t relate to your budget since it’s normally used to help economists. However, thinking about it in simple terms such as a savings rate is more helpful. That way, you can use it to apply it towards your savings goals and budgeting tactics as your income changes.
Saving money is half the battle: making sure your money is working for you is the other half. Opening a checking and savings account with SoFi can earn you more than the national interest average, squeezing even more value from your hard-earned dollars.
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