Isn't payday the best day of the month? You get your hard-earned money in your account and can buy that dress that's been collecting dust on your wishlist, or go on that trip you've been daydreaming of. As much as you should do all of that, at the back of your mind, you also know you need to save some of that money and develop a habit of saving for your future. You never know what tomorrow holds, so the least we can do is be prepared for it, at least financially.
If you have hard time-saving money for your future, then we have the perfect learning pathway to help you, Finance Pass: Personal finance made easy. In this detailed course, you will learn all about the right saving methods that can secure your future and the best ways to save money.
And if you’re looking for 7 clever ways to save money that your 50-year-old richer version will thank you for, then keep reading on because we’ve got just the right money saving tips for you.
Money saving tips
- Set your saving goals
- Know your spending priorities
- Keep an expense tracking book
Best ways to save money
- Draw a monthly budget
- Separate desires and needs
- Cut your spending where you can
- Clever way to save money: switch to auto
Set your saving goals
A great way to motivate yourself into saving money is to set savings goals. If you know what you want to save for, you’ll be better able to better manage your expenses. Begin by compartmentalising your short term and long term savings goals. Then calculate how much money you'll need to set aside for each goal, and set a deadline for it.
Some beginner goals to get you started include:
- Short-term goals
- Car payments
- Emergency funds
- Vacation savings
- Long term goals
- Property purchases
- Business investment
- Retirement planning
Know your spending priorities
Now that you have some goals in mind, start prioritising them. You must decide which savings goal is the most important to you right now and which can be pushed to later.
Assume your goals are: A new laptop, phone, retirement planning, tax savings, and wedding planning.
Based on your needs and current priorities, you can prioritise them and divide your savings accordingly:
#1. Purchase a new laptop
#2. Tax preparation
#3. Purchase a new phone
#4. Wedding preparations
#5. Consider retirement planning
This priority method will assist you in better compartmentalising what needs to be your immediate focus and what can wait.
Keep an expense tracking book
Whether it's pencil and paper or a spreadsheet, everything’s easier when you write it down. Maintaining a record of your expenses will help you figure out how much you’re spending so you can better strategise savings goals and learn how to save money for your future.
When creating categories for your expense tracking, a good rule of thumb is to include the following divisions:
1) Housing and utilities: Such as rent, electricity and water bills.
2) Transportation: Such as the cost of your morning commute.
3) Food: Set aside a certain amount for groceries as well as for expenditure on eating out.
4) Healthcare: An emergency fund for unforeseen healthcare expenses is a must.
5) Personal expenditures: This section will help you compartmentalise your impulse buys, such as a new pair of boots or that cute stationary set you’ve had your eye on.
Organise your data by categories and total each one. Check your credit card and bank statements to make sure everything is included in your expense tracker.
Best Ways to Save Money
Now that you’ve set your savings goals and compartmentalised your expenses, let’s take a look at how to further save your money for your future and be smart with your finances.
Draw a monthly budget
Now that you have an idea of your monthly expenses, you can draw a monthly budget. Your budget tracking should show how your expenses compare to your income so that you can plan your expenses and avoid overspending. Only add expenses that are recurring, and not one-time expenses like AC repairs. Identify a reasonable amount as your savings goal, work toward reaching it and create your financial plan.
Separate desires and needs
We all have needs and desires, but the difference between those who are able to follow through with good saving habits and those who can’t is -
Prioritising desires > needs
Concentrate on diverging your expenses toward your needs, and you will start saving much more money than before.
- Going out to eat every weekend is a want, whereas getting a washing machine is a need.
- Buying those limited edition shoes when your shoe rack is already flooded is a want. Whereas replacing your torn socks with fresh ones is a need.
Cut your spending where you can
If you are unable to save as much as you would like, it may be time to reduce your spending. Determine which non-essentials you can cut back on, such as entertainment or eating out. Start looking for free fun activities, cancel subscriptions you don't need, cook at home as much as possible, and so on.
To get started you can try:
- Replacing expensive restaurant dinners with candle-light dinners made at home
- Replacing OTT subscriptions with free theatre/drama shows in your town
- Replacing expensive smoothies and nutri bars with fresh fruits and nuts at home
This way you’ll start replacing unwanted expenses and start saving more.
Clever way to save money: Switch to auto
Here’s a clever way to save money that you may not have thought of. These days all banks provide an automatic saving option, where an amount of money specified by you is locked into your savings automatically. Trying to save at the end of the month might not be the best idea because chances are there won't be much left, so transferring a portion of your income to your savings account automatically will ensure your savings goals are 100% met.
These are some insightful and important money saving tips that can help you save a lot of money in the long run. By drawing a monthly budget, setting your savings goal, and knowing your spending priorities you can get on top of your finances. Regularly maintaining an expense tracking book, drawing your monthly budget and switching your bank account to auto will also help supplement and keep track of your savings.
If you wish to learn more clever ways to save money, you can register for our “Finance Pass: Personal Finance Made Easy” course to help you save for a brighter future. We also have a number of other finance courses in the works, such as budgeting, insurance, emergency funds and investing in the right mutual funds, to help you become your most financially independent self.
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