We will be discussing how to save money. It happens to the best of us. All of a sudden we realize we have nothing saved. What happens when an emergency pops up or what if you have a large expense? Let’s not forget about retirement. Savings helps you prepare your future self financially, but you have to start now.
Learning how to save money isn’t as complicated as it seems. You just have to start somewhere. Are you unsure where that should be? Check out my top tips below.
Track Your Spending
First, you have to know where your money goes. Pull out your bank statements from the last few months, or if you feel really ambitious, pull out the last years’ worth of statements. Now you can really see where you spend your money. Download a free “budget template” online, add your expenses to keep track of your spending.
Place everything in categories, such as:
- Recurring bills (house payment, electricity, etc.)
- Non-essential bills (spending, eating out, entertainment)
- One-time bills (gifts, large purchases, etc.)
Now see where you can cut down. Even if it’s only one thing that you change – start somewhere. Let’s say you have a habit of eating out four times a week. What if you cut it down to two or three times a week for starters? Save the money you would normally spend and voila, you’ve started saving!
Look at the Fees you Pay
Are you even aware of the fees you pay? It may surprise you, so get ready. Look closely at your insurance bills, bank statements, and medical aid statements. Know the fees and rates that you pay. Are any negotiable?
Are you paying unnecessary fees, such as occurs when you use another bank’s ATM or when you pay a bill late? Get a hold of the fees, figure out why they happened and then try to eliminate them. Take the money that you normally spent on those fees and put it in your savings account. Your bank account won’t know the difference, but you will when you have an emergency fund set up.
Get Rid of Unnecessary Subscriptions
We are all guilty of it – we fall for the ‘free trials’ offered for subscriptions. But what happens when you forget to cancel the subscription before you start paying for it? Because more often than not, the money gets automatically deducted from your bank account, you probably don’t even realize it.
Go through your bank account and look for any recurring charges for subscriptions. Then ask yourself, do you need it? Do you use it? Did you even know you had it? Cancel any subscriptions you no longer need and save the money you would normally have spent.
Stop Using Your Credit Card In Order For You To Save Money
Credit card debt can eat up any extra money you have with its interest rates and fees. When you use your credit card, you use the money you don’t have. Then if you don’t pay the balance in full, you pay interest on that money. Add to that the late fees you’ll incur if you are even one day late and that purchase you ‘had to have’ just became very expensive.
Stop using your credit card and make it a goal to pay it off in full. Before you save money, pay your debt down. The interest you’ll pay on your credit card will far outweigh any interest you’ll earn on your savings account. Set a goal to pay the debt off by a certain date. Once you pay the credit card off in full, put the money you paid toward the credit card into your savings account, and don’t use the credit card anymore.
Pay Yourself First
So many of us have the problem of paying ourselves last when in reality, you should pay yourself first. Figure out how much of your paycheck you can stand to save and make it automatic.
Your ultimate goal should be 50/30/20. 50% of your income should cover your recurring expenses (housing, food, utilities); 30% should cover ‘other expenses’ and 20% should go straight to your savings account.
If 20% is too much to start with, knock it down to as little as 5% of your income. Just start somewhere and make it automatic. With the money going directly into your savings account, you will be less likely to spend it and have nothing left to save. As you get used to the lower percentage going into your savings account, increase it slightly until you hit the 20% point, where you should be.
Take Away Message
It’s not hard to learn how to save money – you just have to start somewhere. Every one of us has the ability to save; we just need to make it happen. Yes, it may require a few sacrifices here and there, but think of it as saving for your future self. You don’t know when or why you’ll need money in the future, but when you have the money ready, you’ll be grateful for those small sacrifices you made in life.
Looking for extra income? Be sure to read my article on “How To Make Money Online“.
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