5 Tips to Saving your Money
As a follow up to our previous article ‘Thinking of Buying a House in your Twenties?’ we are going to talk more about the best ways to save money, the five best ways to be precise. If you struggle to save money or are always wondering where it has all gone keep reading and we’ll tell you how to change that.
Review your Finances
Start by reviewing your finances, this is the most painful step when trying to save money because it is where you find out exactly how much you’ve spent and on what. While looking over your bank statement separate your purchases into categories; food, personal items (such as makeup or shoes), petrol and bills (for your rent and electricity). Once you have done this, calculate your weekly average excluding your personal items and that should be your new weekly spending limit.
Next you’ll want to divide the cost of your personal items to find your weekly average and use that amount as your monthly limit to reduce your spending on any unnecessary items.
Now that you’ve cut out most of your extra spending refocus on your weekly limit, if it’s more than seventy five percent of your weekly income then its time to prioritise your spending. Start compromising, instead of eating out five nights a week only eat out once, buy generic brands when grocery shopping as an alternative to big name brands and become aware of your surroundings. Watch the petrol prices and fill up when they are below the average cost, and use coupons and sales to your advantage.
Have a Goal
Having a goal will keep you motivated and encourage you to stick to your budget. Remember to have more than one goal however, you will want to have one long term goal such as saving for a deposit on a house and then multiple short term goals, for example; a holiday and a new phone. Prioritising these goals is important as well, you want your short term goals to be achieved over months or a year as opposed to weeks. Your long term goal should be the reason you are saving and should therefore receive the majority of your funds. You should have these short terms goals in place for when you need motivation to keep saving, rewarding yourself once a year with a portion of your savings will help you remember why you are saving to begin with.
Pick the Right Tools
One of the key reasons you might find it difficult to save money is if you don’t have a separate savings account. You may find yourself going into your bank account expecting to see one figure and finding an entirely different one, this is because you are now able to tap and go with your bank card and arrange automatic deductions to be withdrawn from your account. To prevent this from eating into your savings we suggest opening a separate savings account and arranging an automatic transfer of the amount you’re hoping to save the same day you receive your income. When opening a savings account look into several banks, don’t just open one with the company you’re already with as you may be able to find one with a higher interest return rate. Additionally when opening a savings account ensure there is no option to spend money directly from that account, instead ensure the only way to spend that money is through a transfer into your main bank account, this will prevent you being able to spend money without looking directly at how much you’re spending.
Monitor your Savings
Review your budget monthly and check your savings progress. Reviewing both your main account and your savings account will help you evaluate if you are able to save more or if there are certain subscriptions you don’t need anymore. Not only will this help to encourage your saving but it will help to identify and fix any issues that may arise.
The hardest part about saving money is getting started but having a realistic plan to save for your goals can help. Following these five simple tips and tricks should have you saving money in no time and may even inspire you to save more than your initial goal.