Saving money can seem like an insurmountable goal requiring constant discipline. Temptations like your daily coffee and big sales enticing you to buy things can sway the most dedicated saver from their goals. However, in actual fact, anyone can build a substantial savings balance if they have a system in place and stay focused by knowing why they’re saving. Whether you’re saving for a small purchase or a big one like a housing deposit, learning to save is key to achieving not only your financial goals but your lifestyle and personal aspirations. For this reason, you’ll want to master the art of saving sooner rather than later.
1. Have a system
People who don’t save consistently could be more likely to be those who lack a system or framework. For the vast majority, it’s likely a systematic approach to both spending and saving is the antidote to leaving it to chance (or impulse). So what does a systematic approach involve? One element is to build a budget by reviewing what you currently spend and save. Use the budgeting tool you feel comfortable with, whether that’s software, a spreadsheet, or paper and pen; then start tracking your spending and identifying where you can cut back and save more. Withdraw a fixed amount every week and pay with cash so you can’t spend more than you have, even when it’s a social night out. Set aside a given amount of your pay cheque, and if possible, have it deposited directly into an online savings account to reduce the temptation to spend.
2. Money mindset
Deliberately cultivating a money mindset could support you in overcoming poor money habits. With a clear mindset or philosophy,, you’re seeking to rely on this mindset to compel you into replacing bad spending behaviours with favourable ones. So what principles should your mindset incorporate? Start by avoiding all comparisons or trying to keep up with the lifestyles of friends or neighbours. Your budget alone guides your spending and saving behaviour. It’s also important to put a stop to emotional spending or using shopping as an emotional reward. Also, learn to delay gratification to curb impulse purchases. Finally, avoid trends and fashion and buy what you need and what’s meaningful to you.
3. Pay down debt
Debt makes it challenging to save money since you’re diverting your cash into paying off both the interest and the principal. Pay off credit card and other debt as a matter of priority, so you can save hundreds or even thousands of dollars. In addition to paying it off as quickly as possible, look into negotiating with creditors for a better deal. Refinancing your home loan to pay out credit card and personal loans could also be a smart strategy as mortgages attract much lower interest rates. If you have multiple debts, it’s advisable to focus your efforts on the highest interest debt and paying it off before moving to the next debt. Also, have a strategy and set payoff timeframes to stay motivated. If you have a debt-repayment plan, you’ll be more likely to feel accountable and follow through.
4. Insource everything
Insourcing could see you saving a considerable amount of money while feeling a sense of accomplishment. So what does insourcing entail? Most of us rely on a range of services and goods that we could do ourselves and substantially reduce the cost of living. Instead of eating out and hiring a gardener, try to do more of everything yourself. Start by cooking more at home and eating fewer takeaway meals, and you could easily save $100 or more each month. For those who buy takeaway coffee five days a week, making your own coffee can save you up to $25 a week. Do your own nails and get a loved one or friend to cut your hair, and you’ll likely save hundreds on personal grooming each year. Wash your car at home in your driveway and you’ll also likely save hundreds on drive-through car washes. In short, be resourceful, sometimes doing it yourself is worth the trouble!
5. Overhaul shopping habits
Everyday shopping habits are another area with potentially untapped savings. Your everyday expenses, from petrol to groceries, might seem small, but they quickly add up. Simple behavioural changes could enable you to save a lot of money over the longer term. Start by shopping in bulk at wholesale stores, especially those with membership discounts. Do one trip a week to save on petrol. In most cases, it’s a good idea to shop with a list based on your meal plans so you’re buying only what you need in terms of food. Opt for secondhand furniture, clothing, and other items where possible. Look up prices before you head to the shops so you can identify which store has the same item for cheaper. Do research so you can take advantage of coupons and other special deals if they’re available. Use the library, cancel unused subscriptions, and switch to prepaid mobile. All of these small changes can add up to massive savings over time.
Be wise
At the end of the day, saving money is really about freedom, achieving your life goals, and building security. No matter how lacking your savings habits have been in the past, you can make a change today, start saving effectively, and achieve your money and life goals. Adopt a practical and objective perspective rather than an emotional or impulsive approach to your money. Set up a budget, pay down your debt, don’t fall into the trap of comparing yourself with others, and cut expenses. Do research and shop for recurring expenses wisely. With these simple behavioural changes, with enough time, you can realise the most ambitious of savings goals.
Source: How to Save More With Less: 5 Savings Habits To Adopt
