Let's say you have a goal in mind that you're looking to save some money for, maybe a dream trip around the world or a wedding or even your own house then how would you save the money?
Well, I'm here to help with some money saving tips and ideas. I'm no expert I simply share what's worked for me in the past and hope that these tips with help you too.
Why not try these strategies to save money and see how they work for you in your life.
In my opinion the most important skill we can learn is to budget and manage our money and so making a conscious attempt to learn how to do this is a great first step.
Before we dive into the money saving tips, here are some books I would recommend you read when it comes to learning how to save money or manage your finances in general:
- I Will Teach You To Be Rich By Ramit Sethi (he has an awesome blog too!)
- The Millionaire Fastlane By MJ Dmarco
- Rich Dad Poor Dad By Robert Kiosaki
- Secrets Of The Millionaire Mind By T Harv Eker
- The Psychology Of Money By Morgan Housel
There are lots more books that I could recommend but these books will give you a great primer on how to manage, save, and invest your money and allow you to make the process as simple as possible.
You know what I always say, the best system is the simplest one, so the more simple you can make this process the better, as you're more likely to stick to it!
Let's move on to the 1st money saving tip, which is...
1. Automate Your Savings
The first tip to save money is to automate the process.
This is such a simple strategy but so powerful that I wanted to mention it first, and it's probably the strategy with the highest leverage!
So the method I use to automate my finances is something I learned from T Harv Eker and it’s the process of “jars” or “pots”.
He describes it as the JARS Money Management System, but instead of using jars, I use bank accounts.
The way this strategy works is that any income I receive is divided automatically (through standing orders) between my 6 accounts.
The division and purpose of the 6 accounts is as follows:
- Necessities: 55% of my income goes here and this is for stuff like rent or mortgage payments, food, utility bills, petrol, insurances etc
- Financial Freedom Account: 10% of my income gets sent here automatically and this is used for stuff like investing, building side hustles, passive income vehicles, real estate investing, crypto, index funds any other investments.
- Long Term Savings: 10% gets sent here for big purchases, rainy day fund, vacations, unexpected emergencies
- Play: 10% goes into this account for leisure expenses, for spoiling myself and family, for guilt free spending on treating myself and my daughter
- Education: 10% for stuff like coaching, mentoring, courses, books, self growth
- Charity: 5% is for charitable donations, good causes, or stuff that I believe in and want to help with
As you can see from this system, everything is accounted for, which means that when you automate this you should have money for everything. I've had this system in place for the last 4 years now and it works great.
All it requires is some tweaking now and again and some time to initially set it up and automate with standing orders, which means I have to put in very little thought to maintain it, and it runs like clockwork!
You don't have to have millions coming in to do this you can even do it with £1 or a little as $1, just split that up in the ratios described, the percentages can also be moved about too you don't have to stick to the ones I've chosen.
The point is to do what works for your circumstances and create a habit of saving this way no matter how small of an amount you do it with.
You can see from this system that you have automated the "saving money" process and so no longer have to think about it.
2. Track Your Expenses
Tracking where your money is being spent and how much is a great start to figuring out where you may be able to save more money.
It's important to look at all your accounts including bank accounts, savings, credit card statements and anything else so you can take a full inventory of where you spend your money.
This doesn't have to be a long chore, nowadays there are so many amazing apps that do this automatically for you. They can categorise each of your transactions to allow you to see where your money is going.
If you're not a fan of apps then a simple excel document will suffice, you don't have to get too technical. Brace yourself though as you may be surprised with the breakdown!
What you monitor gets managed and so you need to monitor for a month or two what you're spending money on because only then will you know where you need to focus to save more money.
You can't manage what you don't know.
The biggest benefit you can get from tracking your expenses in my opinion is financial control. Most of us believe that we have no control over our money, so tracking your expenses can give you a sense of control over your money because you know exactly where and how you need to make changes.
It also allows us to be responsible and accountable for our spending because there's nowhere to hide. We can't make useless excuses when the numbers are right there in front of us.
3. Do A Money Makeover
As an adult, there are lots of non-negotiable or necessary bills we have to maintain every month. This includes stuff like electric bills, gas bills, insurances, water bills, vehicle maintenance bills, food shopping, mobile and internet bills etc.
Why pay more than you have to for these, when you can always find a cheaper option by comparing and shopping around.
Spending a day to make sure you are not overspending on these necessities can save you $$$$ in the long run.
The way this works is simple, you take 1 day each month (or whatever works for you) and you sit down and compare all the prices you are paying for your necessities and see if you are still getting the best deal.
This makeover ensures that you are never spending more than you need to on these necessities.
Ring around to your current suppliers to see if they have better deals, offers, or rates, or go online to compare on comparison websites to see if your are still getting a bargain.
Often companies give more lucrative deals to new customers to entice them to switch so being loyal to your current supplier may not be the best option, but then other times loyalty really pays off.
So ring them and see what they offer, and then take the steps that are in your best interest.
4. Check Your Direct Debits & Subscriptions
This is such a simple but often overlooked strategy to save more money. We've all taken out subscriptions to services which we were really excited about at the time but then the excitement fizzled out and we no longer use.
However, sometimes in the busyness of life we don't even realise that we're still paying for that monthly subscription even though we don't use it anymore.
This includes stuff like gym memberships, magazine subscriptions, digital TV or online streaming subscriptions, music library subscriptions, app subscription etc.
Take a look at your statements and identify any monthly direct debits that you no longer use or don't use enough to justify the cost, either eliminate it or start using it more to justify the cost!
If you feel like you don't use it as much then it's better to get rid of it.
A prime example (no pun intended!) is an Amazon Prime subscription that you may take out for free or next day shipping.
Do you even buy enough stuff from Amazon to justify the cost, or do you really need something the same day or next day? It might be better just paying for expedited shipping for that one order that you need fast than pay a monthly payment just in case, which may cost you more over the long term if you don't use the service enough.
5. Pay Off Debts First
If you use credit cards or currently has debt then try to pay this off as soon as possible, as usually the interest rate on those things often outweighs any savings attempts you make.
If you feel like you can't do this or it's proving impossible then just start off with £1, transferring this amount into your long-term savings jar, and then having it go towards your debt each month automatically.
starting off with a tiny amount will help get the momentum going and you won't even notice the money gone but will add up as you slowly increase the amount over time.
Siphoning this money off your income as soon as it comes in means that you don't rely on money being left at the end of the month as you do it right at the beginning.
If you use credit cards then avoid putting additional money on them UNTIL you have paid off what's on them already, this will allow you to create a habit of sticking to what you already have in your bank account.
You can even ring your credit card or loan provider and negotiate a better rate or transfer your debt to a zero-interest offer to give you more breathing room.
After all, If you don't ask you won't get!