To save more money, you don’t need to always make huge changes to your lifestyle. You don’t have to suddenly find a new job that pays for five times more than your currently salary. What you need to do is set a few realistic, do-able lifestyle tweaks and decide to commit to these changes which will allow you to increase your savings.
If you are just starting out or you already have a house and decent sized savings, the ideas below can make a difference to your savings and your future security.
Start Your Savings Journey as Soon as Possible
Don’t just focus on the usual life wishes, for example; purchasing a house, holiday, car etc. When you switch focus from saving money for “a thing” to always growing your savings in general, your financial future is automatically getting better.
It is a wise idea to pay yourself first and prioritise saving for two very important expenses; a retirement fund and an emergency savings fund.
The older you get, the more money you need to sustain your lifestyle and expenses. The older you get the harder it is to get another job should the worst happen. Creating an emergency fund is crucial and a Money market account/fund or a high yield savings account are the best options for storing it.
Automate Your Finances
The most effective habit of successful savers and entrepreneurs is to eliminate repetitive decisions about saving. If you don’t have to think about small things all the time, your mind is free to think about the bigger things that matter more. Automating basic processes makes your life or a business more efficient. It therefore makes sense that automating your finances makes your saving efforts more effective too.
When you transfer money into your savings account, it should just happen automatically. Don’t make saving into an option or a decision each time. Because if it’s “manual” then like most people, you will probably postpone saving or divert money to short-term purchases that aren’t really important for your life.
Automating the process takes human error or lack of resolve out of the picture. Set up a direct debit into your designated savings account so that your savings are whisked away from temptation straight away and therefore cannot be spent. Each payday, make sure that some of the money goes straight off to a separate savings account. By doing this you won’t be able to give your missing money a second thought.
Increase Your Savings When Your Income Grows
Whenever you receive a salary increase, before you do anything with the additional money, it would be wise to increase the amount you save. Preferably you should save at least the same percentage as your raise. Therefore, a 5 percent salary increase means a minimum 5 percent increase in how much you transfer into your savings. If you can increase that further, it would be wise to do so, before you get used to spending the extra income from your salary raise.
What if I can’t afford my savings plan?
Don’t panic. If you have set up an amount for automatic savings and it turns out you don’t have enough left to cover your basic expenses, you can trim it back so you don’t struggle to pay bills or other important expenses. But, try not to reduce your savings amount just to get extra ‘play’ money to spend disposably. This is a common mistake that people make and often regret in the long term.
Ask Your - Do you really know what you spend your money on?
Knowing what you spend is the first step in knowing what you are capable of saving. It’s often a bit of a shock when you sit down and work out what you spend each month on “non-essentials” or trivial items. If you haven’t already done this, check your bank statement and credit card plus track your cash spending for a little while. After you have done this, write your weekly and monthly expenses into two lists: the essentials and the non-essentials.
Take a close look at the non-essential list. Ask yourself if you are able to trim some items from this list, things you don’t really need to buy? Even if you don’t eliminate a lot of items, you can usually cut down the amount you spend on those same items.
How to prevent impulsive buying
Retailers are very skilled at enticing customers to make impulsive purchases with end-of-aisle products, two for the price of one deals and other add on specials. Online you are likely to see adverts for items you have purchased previously, wherever you go online. Marketers and merchandisers make it very easy to fall into bad habits and get caught up in a cycle of making impulsive purchases that are hard to stop. To save money efficiently, you need to try your best to commit to no longer making anymore impulsive purchases. Here are a few changes and tips that can help:
When you go out, leave your credit card at home. This reduces the temptation to make sudden purchase and it gives you some “cooling off time” to think more carefully about whether you really need to buy a product.
Before you go shopping, first write a list of what you need to buy and don’t buy anything that’s not on that list. It would also be wise to give yourself a ‘play money’ limit. A limit for all non-essential purchases or expenses. It doesn’t need to mean you can’t do fun stuff that you like, all it simply means is that fun spending is not a daily random habit and it must have limits.
Don’t visit a shopping centre unless you really need to. This can really cut down impulse spending and after a couple weeks, you might not even notice the lifestyle change. It would also be wise to eat a meal at home before you go to the supermarket. When you are shopping for food, a full tummy means much less temptation to buy extra treats.
Tips for Managing your debts
One of the biggest roadblocks to saving money is existing debts. Thankfully this can be fixed. Don’t ignore debts and hope they’ll go away. They won’t. Debts only get bigger and harder to deal with.
Here are some tips to handle your debt problems:
Prioritise debts with high interest, such as credit cards. These are the ones you pay off first, because these debts can grow quickly all by themselves if you don’t stamp them out.
If your debts are affecting your life negatively, consider re-structuring or consolidating so that your debt is more manageable. Talk to a professional who can help you get on track.
It is also to never rely on payday loans, or anything like that. Stop taking money or buying things that you have to pay later. If that seems harsh, don’t worry. After your debts are gone, your life gets back to a much happier ‘new normal’.
Save something, even if it’s just a few dollars a week, $10 a week is still $520 a year. Always be searching for new innovative ways to achieve more of your saving goals.