Everyone wants to save money for the future, but few people manage to do so successfully. If you are looking for smart ways to save money, this article will equip you with a few effective money management techniques you can employ to help you get your saving game on point.
1. Employ Auto-Save Tools
Out of sight, out of mind. The best way to save is to set up automatic savings, so the money gets deposited into your savings account as soon as you receive your salary. Automatic transfer savings help keep you consistent and disciplined, a significant part of a successful savings plan. Taking the decision out of your hands also prevents you from making impulsive financial decisions that compromise your savings.
2. Get Rid of Debt
Creating a savings plan should come after making a debt-clearing strategy. Debt accumulates interest which can drain your finances, leaving no room for savings. Just do the math, add up your monthly payment and interest and see how much you pay to service the loan—you will be shocked. On the same note, avoid using your credit card to pay for anything, including your bills. If you have multiple debts from different lenders, you can start by consolidating them.
3. Create Realistic Savings Goals
You’ve probably heard the quote “failing to plan is planning to fail”. This is true when it comes to saving money. If you do not create savings goals, you will lose motivation and spend money on unnecessary things. Reasonable saving plans include starting a business or funding your education. If you are a visual person, you can create a vision board to help you stay focused on your goals. It is also essential to develop both long-term and short-term goals. Your plan should also be measurable and specific. Everything should be planned down to the last detail.
4. Cancel Unnecessary Subscriptions
If you have subscriptions like cable or club membership, you may want to cancel them, especially if you pay top dollar. Do your research and find better low-cost ways to keep yourself occupied and entertained. Be careful how you spend your free time. When idle, you may be tempted to make impulsive financial decisions that could harm your financial saving plan.
5. Watch Where you Buy Things
Smart saving involves smart spending, including finding products that come at the lowest possible price. Most people think expensive products are of better quality; this is not always the case. If you have a large family to feed, buying groceries during clearance sales or using coupons dramatically reduces your expenses. Discount stores offer quality items like sugar, flour, spices, and paper towels at a fair price.
6. Pack your Lunch and Cook your Meals at Home
Eating in restaurants and other food points is generally more expensive than cooking your meals, especially if you have a family to feed. Cooking up your meals at home is healthy and helps you save on the unnecessary cost of restaurant food. Packing your lunch will also help keep your spending on track. If you dislike cooking, you can try looking for low-priced eateries where you can have your meals. Some businesses deliver pre-made meals that you can freeze and eat later. This may not work if you have a large family.
Pro tip: Avoid going out on an empty stomach as it increases the chances of eating out on impulse. Creating a meal plan will also help you stay satiated.
7. Minimize your Bills
Do you spend way too much time in the shower? Are your friends always complaining that your house is an oven? These habits create a perfect recipe for high utility bills. Take a closer look at your utility bills over the last six months and find ways to reduce them. The plan is to minimize any recurrent expenditure as much as possible and curb unnecessary spending. Remember, the more you save, the faster you achieve your saving goals and attain financial independence.
8. Find Ways to Grow your Wealth
Putting money away may seem like a great idea until you realize it is losing value due to inflation. Do your research and find ways to make your money work for you. Most people will invest part of their savings in stocks by working on an investment portfolio. You can open an interest-bearing account if the stock market does not tickle your fancy. An interest-bearing account helps you save more because it deters you from spending the savings. This plan is most effective for people who keep a savings account for a long time.
9. Annualize your Expenditure
Spending twenty dollars on a snack every day does not seem like a lot until you realize that it amounts to thousands over a year. Annualize your budget to understand how small financial spending habits build into larger financial drains. The first step towards annualizing your expenditure is breaking all your daily expenses down to the change. You can do this by using mobile payment applications or creating a daily expenditure spreadsheet in excel.
Most people want to ignore their poor spending habits. But, if you want to save money, you must give up blissful ignorance and face your poor financial habits head-on. Each financial decision must be put under a microscope and annualized to see the bigger picture.
10. Get rid of Bad Habits that Waste Money
Do you love smoking or consuming alcohol? These bad habits must go if you wish to achieve your saving objectives. Drugs waste a lot of money that would otherwise have been saved. In extreme cases of addiction, people drain their savings, a scenario that hurts their journey to achieving financial independence.
The Bottom Line
Some bad financial habits are fostered by the company we keep. If your friends are not encouraging you to save, you should look for new friends keen on helping you grow financially through saving and investing. Financial independence is not hard to achieve if you are dedicated to your goals and stick to these ten saving tips. Avoid making impulsive financial decisions by employing the 24-hour rule. This means you’ve got to wait until 24 hours have elapsed before making any purchase you are unsure about. Finally, don’t forget to treat yourself often as a reward for achieving your savings goals.