Whether you plan to get the latest gadget, go to college, buy a new house, or just make a general lifestyle change, you need money. Unless your last name is Bezos or Musk, you'll most likely have to save up some money to be able to afford some of these things.
There's advice spread all over the internet on how to save money but most of them miss the basics. Keep reading and we reveal the top most important and simple tips on how to save money!
1. Prioritize Homemade Meals and Smart Entertainment Choices
Apart from being cost-effective, eating homemade meals is a good way to bond with your family. You get to catch up with the latest happenings in everyone's lives. And hey, you also get to save up the extra money that you should have spent if you eat out.
For your entertainment, it is good to prioritize them according to the times and seasons. For instance, if watching the Aussie league is the main reason why you subscribe for a cable connection, you shouldn't subscribe when they are off-season.
If you're an adult who gambles, you can take advantage of online casinos that allow you to claim free spins on registration no deposit. That way you get bonuses to use on your favorite pokie machines without spending your own money. This together with eating homemade meals is the first tip to help you save better.
2. Clear Debts and Reclaim Your Income
Saving when you have huge debts to clear will make it look like you're pouring water into a basket. In simple terms, debts rob you of your income. The first way to start to pay off debts is to ensure that you do not take up new ones.
A good way to clear your debt is to start by clearing the smaller ones before moving to the larger ones. This is called the debt snowball method. The idea is to change your spending habits in a way that frees up your income.
Prioritize your needs by considering the most important ones and clear out the things that can afford to give way. Once this is done, you'll see that you can move your account from being in red to green and this allows you to save your money.
3. Pay Yourself First
One of the best books on finance — The Richest Man in Babylon suggests that a portion of your earnings is yours to keep. The book goes further to explain that you should keep 10% of your income for yourself before you start sorting out your bills.
For instance, if you earn A$1500 every month, you must keep A$150 for yourself before you start doing anything. The good thing is you can automate this process, so once you receive your pay cheque, the 10% is automatically removed and kept in a separate account.
That way it appears as if you were paid only A$1350. This is the amount you should use to determine your expenses for the month. Set your budget with this and you're good to go. The 10% should be seen as the minimum, you can decide to keep a larger portion of your income for yourself.
4. Wisely Manage Unexpected Income
When you get an unexpected bonus at work or a generous friend decides to surprise you with some cash, don't go on a spending spree. Rather, we suggest that you should keep at least 40% of this money.
After all, you weren't expecting any money and you had been doing just fine. The remaining 60% can be used for anything you like. You can decide to use it to get some of the things that your saving pattern has deprived you of in recent months.
There is also another category of free money that many people do not pay attention to. These are free shopping coupons either from your workplace, bank or even a service provider. Anytime they are available, always take advantage of them.
5. Favour Staycations Over Vacations!
Last but not the least, is staycations! Staycations can be a smart and budget-friendly way to save money while still enjoying a break from your daily routine. This is because:
- You don't have to pay much in travel expenses.
- It is less stressful and you get to save on dining.
- Opting for a staycation allows you to support local businesses which are often good quality yet relatively cheaper.
- You can explore your local environment in more fascinating ways.
- You get to create long-lasting memories with loved ones without thinking of long flights.
When you look at these advantages of staycations, you'll be surprised to see how much you'll have been able to save as opposed to taking vacations.
Final Thoughts
Saving money is good and can come in handy on rainy days. However, it takes a lot of discipline and commitment but it is doable. The best tips for savings include making your meals at home and focusing on smart entertainment choices, clearing your debts to free up your income, paying yourself first, managing unexpected income properly, and choosing staycations over vacations. Do these and watch your savings go up!
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
