Saving money is one topic that everyone knows about – yet it is one of the most difficult to achieve. Unless you have an unlimited budget, you need to save for a new house, car, or any big purchase. You can also use this opportunity to build your savings, so you have funds during a crucial time.
This blog gives you tips for saving money no matter what your goal may be. Here are the best strategies that will allow you to take control of your finances in the long run:
Create a budget that works for you.
The first thing that you need to do is to assess how much money you have and where the cash typically goes. Budgeting does not have to be complicated. There are quite a few rules where you allocate a portion of your regular salary to your savings.
The 50/20/30 rule, for example, is quite useful for many Australians. This rule states the following:
- 50 per cent of your income goes to your essentials, including food and rent
- 20 per cent goes to your savings
- 30 per cent will be for your personal expenses, such as going to the movies and other entertainment sources
You can adjust the percentage given above based on what you are most comfortable with. Remember that saving money does not mean you will have to avoid spending for your enjoyment.
When creating a budget, you may want to track your expenses as well. List down where your money goes, which will probably surprise you. Record everything, including your small expenses. Even if you pay for certain unnecessary items for $1 to $5, you will see how they add up.
Save your funds automatically.
After knowing how much you can afford to save each month, you should choose to transfer the money to your accounts automatically. When you manually do this task, you could end up forgoing saving money altogether. It always helps if you could have a portion of your paycheck directly deposited into your savings account. This way, you can reach your goal because you contribute consistently.
Cut down your credit card debt.
Avoiding debt is easier said than done. So, we will give you something simpler to achieve: reduce your use of credit card debt. The Australian Securities and Investments Commission claimed that Australians have a balance of $4,385 on average. The amount may not be much when you pay it down little by little each month, but it also means that you will need to pay extra hundreds in interest charges.
If your credit card has 17%, you could be paying over $702 in excess for just the interest charges each year. Even worse, it would take you over 23 years to pay down your debt if you only settle the minimum repayments.
The best thing that you can do is to make more than the minimum payments. You could save thousands and get rid of your debt in just a year. What’s more, paying on time can help you increase your credit score. It is useful in case you need to apply for a loan in the future.
Have a plan.
Another thing that you can do to make payments manageable is to create a plan. Break down your long-term goals into much smaller ones. These milestones should be achievable within a month or so. With this plan, you have an idea of what you would like to do short-term. You can then plan how much you would like to save and set the right limits, especially for the non-essential purchases.
Using credit cards and ATMs can make online shopping convenient. Unfortunately, they also encourage you to spend more, particularly when you are at home. You tend to buy things that you do not even need. Humans are known for making impulsive decisions. If you have been planning on a large purchase, think of it first. Is it truly necessary? If you are unsure, wait about 30 days before you buy. If you still believe you need to make the purchase after the mentioned period, you should certainly buy it.
Smooth your bills.
Utility providers offer this payment system where you pay these bills monthly or fortnightly. It gives you flexibility since you do not have to pay the entire bill in one go. If you are on a tight budget, you will surely benefit from this feature. It also helps avoid going into debt and paying high interest.
This approach is not just for your gas, electricity, and water. You can also adapt it to your everyday finances. The trick is to squirrel money away, which will let you pay the larger bills down the line. With this method, you can also save money so that you can pay certain bills. For instance, instead of paying the annual bill once yearly, you can adjust it to a monthly expense.
Plan your meals.
You hardly think about how much you spend on your meals, but they actually take a considerable chunk out of your monthly budget. It is why planning what you eat is one of the easiest yet most effective methods of saving money.
Here is what you need to do: know what you will eat for the entire week. This way, you would have already shopped accordingly. You do not have to make extra stops at the supermarket where you could end up spending more money than what you intend. Even worse, you could waste more food. Stay within your budget by purchasing your staple items at one lower-priced store.
Shop for better deals.
Many consumers become loyal customers. It’s not a bad trait, but it also means they are missing out on the best deals out there. Your favourite vendor may take advantage of you buying from them because you may have become less price-sensitive compared to new and prospective customers.
If you are like this type of customer, it’s time to stop that emotional connection with the vendor. Instead, you should shop around to find better deals, meaning more competitive prices. There is a good chance that just the threat of you leaving will prompt the vendor to give you an attractive offer. After all, any good businessperson understands that keeping old customers is far cheaper than getting new ones.
With these tips and tricks, you will find your way into a stable financial future. If ever you plan to get a loan, it will not be difficult for you to finance it. You have a good credit score, secure finances, and the discipline needed for budgeting and repayments. If you need any help with your finances or loan advice, we can help.