Could you save $10,000 in a year? Sounds good right about now, doesn't it. Many households could. And they could become millionaires as a result.

The average four-person American household spends more than $66,000 a year, according to the federal government's most recent Consumer Expenditure Survey. Cutting $10,000 would mean scaling back a mere 15 percent. Or expressed another way, find ways to cut a buck from every $6 or $7 you spend.

And the great news? Your efforts to save $10,000 mean you're $10,000 richer. That's as opposed to earning an extra $10,000, of which you keep maybe $7,000 after taxes and Social Security take their bites.

How do you save such huge sums of money? Spending smart.

First, let me tell you what spending smart is NOT:  It is not about being a cheapskate. It's not some “live cheap, die loaded plan” or some exercise in financial anorexia. I don't tell you how to make sweater vests from dryer lint or separate two-ply toilet paper into two rolls.

No, spending smart is about spending on purpose, rather than by accident and habit. It's about plugging the leaks of wasteful spending and redirecting that money to things you truly care about. In that way, it's not about deprivation. It's about liberation. It's about how to spend smarter on stuff you're buying already anyway. The goal is to reallocate spending so you satisfy all your needs and a whole lot of your wants too.

So how do you save $10,000 in one year?

Many personal finance writers who dole out such advice get their biggest savings from suggesting you refinance your home mortgage from a high rate to a low rate. I'm not going to do that. I'll assume you've already refinanced if it was in your best interest. After all, we've had low interest rates for quite a few years now. If you haven't refinanced, rates are revisiting all-time lows, so it might be worthwhile.

Instead, let's look at your regular spending. It might reveal easy, painless cuts you might not even be aware of. Below are just a few examples of spending areas that, combined, reap a cool $10,725. These ideas may not all apply to your household, but they will give you some ideas.

Food

Food spending has two main categories: eating in and eating out. You can save big money on both.

Spending on eating in requires grocery shopping, of course. The idea while grocery shopping is you shouldn't go to the store each week to buy what you need. Instead, you should buy what's on sale and stockpile it. Think about that for a minute: You buy the exact same products and brands, you just buy them at ideal times. You compound your savings when you buy multiple items at the sales price. You further compound savings on those sale items by using coupons – both the Sunday newspaper kind and those you print off the Internet. Printable coupons are available at such websites as CouponMom.com, SmartSource.com, and Coupons.com.

To save money on eating out, the big idea is to do it less often. Dine out on special occasions and because you want to, not because you're a poor meal planner. We've all done it. You come home tired and frazzled, and haven't given dinner a thought. It's just easier to head to a restaurant.

The solution is freezer meals. What are freezer meals? Whenever you cook, make double and triple batches. If you're making meatloaf, make three and freeze two. Then on those rushed evenings, you're only microwave minutes away from a healthy and inexpensive dinner.

And of course, you could bring your lunch to work. It doesn't take much time. You could pack a lunch during television commercial breaks of American Idol or Lost.

You can easily save 20 percent on your grocery bill by matching coupons with store sales and stockpiling what you buy. Expert shoppers say they save 50 percent or more. For eating out, could you get by with $150 per month if you planned more home-cooked meals? Here's the annual accounting, using figures from the U.S. Consumer Expenditure Survey:

• Food at home: $4,967 reduced to $3,974. Savings $993.
• Food out: $3,704 reduced to $1,800. Savings $1,904.
• Total savings: $2,897

 

Insurance

The main idea here is you don't insure against little things. Insurance is to protect you from financial disaster, not nuisance expenses. That means “just say no” to extended warranties. They're almost never worthwhile.

And life insurance is to protect people who rely on your income no matter how you die, whether from cancer or alien abduction. That usually means you just need plenty of term insurance, which is cheap.

If you already have term life insurance, you should “refinance it.” By that, I mean consider getting a new policy and dumping your old one. Why? Because rates have plummeted over the past decade. You could probably get a lot more coverage for less money, even given that you're older than when you took out your current policy. A man who got a policy in 1994 for $1,300 a year could “refinance” to a new policy and be paying half that.

Also, raise those deductibles on home and auto insurance. Doing so will lower your premiums substantially. Raise auto insurance deductibles to at least $500, and, preferably, $1,000. Raise home insurance deductibles to $1,000 or $2,500.

Shop all your insurances regularly. Prices vary widely on the exact same coverage. And paying more does not ensure better service, a study by the Consumer Federation of America found.

Most people can knock off 20 percent from home and auto insurance premiums just by raising deductibles, comparing prices, and getting the discounts you're entitled to.

So the accounting for insurance during a year might go like this:

• No extended warranties. $300 reduced to $0. Savings: $300
• Home and auto insurance: $1,600 reduced to $1,280. Savings: $320.
• Refinancing term life insurance. $1,300 reduced to $700. Savings: $600.
• Total savings: $1,220

Telecommunications

This category refers to such services as phone and television. The big idea here is to make sure you're not paying for more service than you need. That sounds like a “no-duh” type of advice. But take a look at your bills for wireless and landline telephone and television. Do you use all those services you're paying for? Do you really need unlimited long-distance or Web access on your cell phone?

Telecom companies make pricing plans confusing on purpose, in hopes you'll overbuy. There's more competition than ever, so price and offerings change continually. That means shop around for telecom – frequently.

Having all the bells and whistles, including free long distance, on both your wireless and home phone is overkill for many people. In fact, some people might be able to ditch their landline phone altogether and use an Internet-based phone service. One of the cheapest ways to go is using MagicJack, www.magicjack.com, which costs just $40. The price includes a simple device that hooks to your computer and a year's worth of service. If you're a light user of wireless, say less than 300 minutes per month, try prepaid service, especially if you have dozens or hundreds of minutes left over every month. You might be able to reduce your cost to $15 per month, taxes and junk fees included, instead of the average $85 per month.

It might be radical, but what if you got your television over-the-air with an antenna for free? If you have a high-definition TV, those signals will look fantastic, although you'll only be able to receive broadcast network stations. You can supplement your TV watching with all the online content available at the networks' websites or such aggregation sites as Hulu.com and Joost.com. You can watch on your computer or hook your computer to your television. You could ditch a $75-a-month bill entirely.

• Landline phone. $600 reduced to $40. Savings: $560.
• Switch to prepaid wireless. $1,020 reduced to $180. Savings: $840.
• Pay TV. $900 reduced to $0. Savings: $900
• Total savings: $2,300

These are examples of becoming financially FIT – by addressing the spending categories of Food, Insurance, and Telecommunications. Even if you don't take these exact tips, try concentrating your spending cuts in these general areas. They are ripe for painless cost-cutting.

How else can you save? How about breaking a few of your bad habits?

Break daily habits

Daily habits are the most insidious because the expense is so small but it compounds so quickly. Cut an $18 case of beer a week, a $7 case of bottled water a week, a $4 latte every work day. and a $5.50 pack of cigarette a day.

• Beer: $936
• Bottled water: $364
• Latte: $1,000
• Cigarettes: $2,008
• Total savings: $4,308

The grand total of savings comes to more than $10,000 – in fact, it's pushing $11,000. Of course, you'll have to customize spending cuts to your own household. Most people will find plenty, just by taking the time to look.

Now, for the magic: If you can find $10,000 in spending cuts and invested the money for 30 years, earning a modest 8 percent return, you would amass $1.2 million.

That's how you'll be Living Rich by Spending Smart.