5 Practical Tips on How to Save Money
If you have never gotten into the habit of saving money, then trying to know where to start can be difficult. You want to save money each month but at the same time you don't want to be broke at the end of the month. Set yourself a goal of how much you would like to have in 3-6 months as an emergency fund or 1-2 years to save for a car. If you want to invest in your retirement then try to set some money aside each month for this and then talk to a financial broker.
You need to implement small changes each month. Firstly begin by saving your loose change. Next you need to assign a day in your week as a day where you won't spend any cash. You could save as much as $£€640 a year doing just these two things alone.
The next step is to give yourself a specific amount of spending money for the week just like a teenagers would get. You need to live off this for the whole week.
Next you need to stop following retailers on social media and put a pause on any newsletters that you have signed up to. This is to reduce your compulsion to buy items you might not need.
Finally you need to do a complete reboot of your monthly finances and take them apart to see if there is any place that you can actually save some extra cash in.
These are all small things that you can accomplish and won’t be too difficult to implement. After a few weeks when you get into a routine, then it will become a habit to do all of these things. If at any time you fail during that week to do these steps, don’t beat yourself up, and just start your routine up again the following week.
“Your future is created by what you do today, not tomorrow”— Robert Kiyosaki
1. Put Any Spare Change Into a Money Box
Get into the habit each evening or at the weekend of putting aside any loose change you have left over in your purse or pockets. Doing this could lead to a saving of $£€5 to $£€10 a week which is a year could amount to £€60 to $€£120.
You can use any type of container for this. However, something that is sealed would be better as you wouldn't be as inclined to open it.
If you can't find a sealed container, an old sweet box or a mason jar would do. Place this somewhere in your house where you won’t see it during the week so you won’t end up being tempted to rob from it on a bad day.
Empty your purse and pockets on a Friday or a Sunday night and keep up the routine every week till it becomes second nature for you.
2. For One Day a Week Don't Spend Any Money
The next thing you need to do is assign one day out of your week where you won't spend any money that day. If you know that you will be out and about that day, plan in advance to already have gas in the car or your bus/ train ticket pre-booked. Bring a packed lunch and snacks to work or college from home on the day that you aren't going to be spending money.
This will be more difficult than you think. You might actually be surprised to find that you do visit a shop each day when you are out and about for things like lunch, gas, stationary or a grocery top up.
If you fail on the day that you have assigned as a no spending day then you need to pick another day in that week to complete the task. You need to do this every week for a month. If you don't spend $£€10 for that one day each week, after 52 weeks, you have saved $£€520.
If it is possible try to increase it to two or three days a week where you don't go near a shop or spend any money online. This can be easier for people who don't live or work close to shops.
A Bankrate.com survey done in May 2019 found that only 18 percent of Americans had enough in their saving account to cover their living expenses for up to 6 months.
“Look everywhere you can to cut a little bit from your expenses. It will all add up to a meaningful sum.”— Suze Orman
3. Assign Yourself Spending Money
This next tip involves giving oneself a set sum of spending money each week. So assign yourself $£€50 for the week. This is to cover lunches, snacks or any groceries top ups.
While this amount is small, it also causes you to recess what you buy. Instead of eating out five days a week, you might now only eat about twice a week.
You need to ensure that you only spend the amount that you have assigned for yourself that week and nothing more. If you see a pattern of being broke or having extra left over, investigates why. Maybe you're buying something you don't need.
It’s a good way to ensure that you don’t use your debit/ credit cards during the week. Also it makes you more aware of what it is that you are buying each day as you need to make sure you have enough cash in your wallet to pay for it.
4. Stop Following Brands on Social Media
If like the majority of the population you follow well-known brands on social media, and then start unfollowing them. You aren't going to miss much for a month if you unfollow them.
You might also be subscribed to some companies’ newsletters that you receive either weekly or biweekly. You will see advertisements each time for new upcoming offers happening in the next few days. This is an advertising method to attract your attention. Unsubscribing from all of these things will mean that you won't be tempted to but any of their product.
5. Look at Your Monthly Budget
Before you think about cutting into your monthly expenses and saving any money, you need to analysis your finances to see what you can actually afford to save. This means you need to look at what is coming in and what is going out of your bank account each week.
Mortgage / Rent
All of these expenses should be similar in amount each month except maybe in winter where some might increase.
Once you have a realistic idea of your expenses, subtract your total monthly expenses from your total monthly salary. Whatever is leftover is what should be saved each month
You need to set up an automatic transfer to put this amount into your savings account and when you are doing your budget you need to include this as one of your expenses.
What if I have nothing leftover?
If after you have done your budget and you have nothing left over or you are in a deficit, then you need to look at what it is you are spending your money on each week. It is likely that you are buying something that you can't afford.
Start Keeping a Record Book
Start keeping a record book and record everything that you spend your money on each day for a week. Then continue doing this for one month to see where your cash is going for the month.
You can record expenses in the notes app in your cell phone when you are out and about. Then every evening or at the weekend, write the total expenses you spent that week into your record book. You need to note down what it was you spent your money on as well as the exact amount. This will be important later on when you are looking to cut out unnecessary expenses.
Once you know what it is you are spending your cash on every month, now you need to cut down on these expenses to increase the amount of money it is that you can save each month.
Analysis your Record Book
Once your month is up look at your record book and see what you spent money on each day. Highlight any unnecessary spending you feel was money wasted that week. Your task for the next month now is to not buy any of these items.
The areas you need to cut back on is takeaway coffees, stationary, wasted food items, unnecessary 2for1 offers, lunches, snacks, subscriptions, eating out, alcohol, and sundry expenses.
Have you any savings set aside for your retirement?
Which Age Groups Are the Best at Saving for Retirement
A report released by Fidelity Investment in January 2020, found that Millennial's (Ages 25-38) are surpassing Generation X (Ages 39-54) in their ability to save for their retirement. Their rate of saving has increased from 7.5% to 9.7%. However, the Gen X has seen a decline of 3% down to 80% in the number of people savings this year.
The Baby Boomers (Ages 55-73) are well ahead of both of these groups and are saving as much as 11.7% of their salaries.
Saving money begins by firstly looking at ways where you can save and secondly actually doing it. Implementing the measures to start saving and staying on track can be hit and miss till you get into a routine.
Always start small and then as you accomplish one task, take on another task. Keep looking at other areas in your life where you can save money as you are mostly wasting cash without noticing it. You will eventually see your hard work pay of the more that your savings increase each month.
Jeff Rose, (2016), 6 Financial Advisors Share Their Best Financial Advice for Saving Money, Forbes, https://www.forbes.com/sites/jrose/2016/08/20/6-financial-advisors-share-their-best-financial-advice-for-saving-money/#404ed2244358
Beginner’s guide to managing your money, Moneyadviceservice.org.uk, https://www.moneyadviceservice.org.uk/en/articles/beginners-guide-to-managing-your-money
Fidelity Investments (2020), Press Release: America Retirement Score Improves with more families in the green, https://s2.q4cdn.com/997146844/files/doc_news/archive/8ff559ab-d124-4dd8-9501-45a2ff618327.pdf
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2020 Sp Greaney