Saving is hard and sometimes can become a headache. Time ago I was struggling with how to save money. I wanted to buy a car, move to a bigger house and travel around the world; the only problem is that if I wanted to do all those things I wouldn’t be able to save much. In this post, you will read my top 10 strategies which help me to increase my savings in a 30% and allow me to do all those things I wanted in my life.
#1 List your expenses during one month.
Saving money is not as hard as it seems to be, but before cutting your expenses, you need to know exactly where the bottle neck is.
To figure it out, write for a month your daily, weekly and monthly expenses. You can do it with a phone App as I did. It’s quite possible that you take a surprise.
Once you realise what you spend the money, you can decide what things are necessary and what things are dispensable. That coffee which you buy on your way to work or the bottled mineral water you usually drink can add up a considerable amount at the end of the year, you could have saved a lot with a little planning.
You can for example, always leave home with a bottle filled with tap water or by buying a thermos to bring home coffee to work. If your work office has coffee machine, another option is to wait to get to your job facilities and to take the coveted cup of coffee.
And what about that new pair of jeans which you pay with your credit card? Think about the number of interests that they charge each month if you don’t pay the total amount of your shopping. Don’t think that you will not be able to enjoy your coffee or to buy those new jeans. Of course, you can do it! The important is to find alternatives that allow you to save money. Ask yourself the goal of spending a little bit less and save a little bit more each month. If you think so, maybe you’ll have more motivation to avoid unnecessary expenses.
#2 Pay yourself first
The secret to making saving a habit is to give priority to you. This doesn’t mean that you need to buy everything that catches your attention, but you’ll pay yourself each month as you pay all your usual creditors.
Ask yourself a realistic long-term goal and then “pay yourself” by saving a fixed amount of money in a savings account or investment. Be sure to do it the same day each month (for example, every 10th of the month). If you wait until the end of the month to see how much you have left, you’ll probably find you’re not left much.
The easiest way to do this is to schedule an automatic transfer of part of your salary, even if it’s not much, from your main account to a savings account, a pension fund or a saving account for college for your children. At the end of each month, you will have the satisfaction of knowing that you have saved a minimum of money which will help you in your future.
#3 Plan your transfer in stages
Most pension funds, as the IRA (stands for Individual Retirement Accounts), saving accounts for college or other saving options allow you to choose the date for automatic transfer from your main account. Plan this with time so that you know you will not transfer money the same day to several accounts.
If you get paid every two weeks, program your transfers every two weeks. If you are self-employed and the money comes to you irregularly, try to plan to different dates half of the month.
#4 Reduce your debt
Settle your debts is one of the best ways to save money because the interest you pay on most loans (especially credit cards) is much higher than the one your earn in most savings accounts. So, reduce as much as you can your debts on credit cards, student loans, loans to buy the car and any other debt you may have. The only big debt that is reasonable to have for a long time is a real state mortgage.
#5 Become your own loan officer
When you finish paying a loan, continue making monthly payments, but to you! Program an automatic transfer with the same amount from your main account to a savings account or an investment fund.
#6 Motivate yourself with a specific goal
Decide what you really want or need (a new sofa, a new smartphone, holidays) and research how much does it cost. Then, set a realistic goal; for example, give you six months to save enough. Put pictures of your goal in the refrigerator or in your wallet. Every time you will want to buy new shoes or buy your child a toy that in fact doesn’t need, look at the picture and ask yourself if you want it as much as the purpose for which you are saving.
#7 Open a savings account that you can’t touch
Save for larger expenses such as down payment on a house or car by opening a saving account that you can’t touch. These bank accounts don’t pose any risk and offer higher than normal savings accounts interest rate, but the money should remain in the deposit for a period of time (if you take it out early, you have to pay a penalty). That way, you cannot touch it when you are tempted to buy something you don’t really need.
#8 Fill a jar with coins
Place a large bottle with a narrow neck (so you can’t pick up the coins) in a visible location, and every night leave coins that you carry in your wallet. When the jar is full, you can bring them to the bank to get notes instead. After few months, this money can be enough to buy a birthday gift or the gym fee.
#9 Save the extra income
Anytime you receive any extra money, such as a tax refund, a bonus at work or a monetary gift, enter it in your savings account. Or, if you have debt, use it to pay your credit cards and loans, or to make an extra payment on your mortgage (so the amount of interest you pay over the years is reduced)
#10 Reduce petrol expenses
Petrol is expensive and the less you use it, the more you save. If you can’t buy a car that uses less petrol, try to use yours less frequently.
Take turns with your working colleagues to go and come back from work. Plan your shops so you can do most of them in the same area and day. Whenever you can, walk between a shop and another or use public transport. And for your next vacation by car, consider travelling to a nearby location.
#11 Extra Tip: Wait 48 hours before you buy the product on internet.
Set up a price, for example, $20. Put on hold everything you want to buy for more than $20 by clicking the “buy” button. Wait 48 hours before you buy it. If after those 2 days you still think that you need that product, go ahead. But most of the time you will see that in fact, many things that we “need” in fact are we “want”.
This is everything! It requires a bit of planning and effort but the results will be amazing. If this worked out for me, it can work for you as well. At least it worth give it a try!