This short guide outlines five simple strategies for saving money that could turn your income stream around and help build a stronger financial position.
Money makes the world go round. Without money, you are limited. But understanding your finances, and learning strategies for saving money, can empower you to make better choices in your personal life, and your career. The economy can be volatile, but you can control the way that you react and the actions you take with your money.
It is important to put aside a little time to consider your finances, to ensure you are investing your money well, not spending money on unnecessary direct debits, or being ripped off by big corporate companies. You want the best deals, a decent savings account, and improve your quality of life.
5 strategies for saving money
To help you get started, here are some top strategies for saving money.
#1 Review your spending
It is first important to review your current situation as the first of the strategies for saving money. This includes looking at your finances in detail and considering what you bring in each month, what outgoings you currently have, and what you spend your money on. In this case, it can be helpful to put together a spreadsheet, where you can highlight and categorize each item into groups. This way you can gain a better idea of where your money is going, for example, take away food, night outs, etc. and start to make an assessment.
Review all your outgoings, and see which ones are necessary, and which ones are a waste, or you could do without. They may seem small individually, but they will start to add up. Just think about how much extra money you will have when you get rid of the unwanted direct debits that can be better spent elsewhere.
#2 Review your contracts
On average, individuals spend a large portion of their money paying out contracts that enable them to live. From phone contracts and car leases to water and electric tariffs. It is important here to also review what you are currently paying, and take away what is unnecessary as one of the simplest strategies for saving money.
This task can be more tricky, so the next best thing is to shop around for new deals to ensure you are always getting the best and lowest price and value you possibly can. Check out new deals on phone contracts as you can usually find flexible and free sim cards with better deals, look for fixed-price energy tariffs which usually knock off a large amount for committing to a specific term, insurance policies, TV packages and if there is nothing you can reduce, why not consider your appliances?
Are they running as energy efficiently as they can, or would it be more cost-efficient to replace them? This can be anything from washing machines and dryers, fridge freezers and electric sockets, to your vehicles.
#3 Shift your mindset
Your mindset will play the biggest role in saving money. While there are items you have to inevitably need to pay for, with others it is important to separate wants from needs. This can be extremely difficult at first, but the more awareness you bring to your spending habits (writing it down to see it all visually can be a huge help), the easier it will become.
Don’t get stuck on where you have spent your money in the past. Instead, focus on where you are now and what actions you can take. Make sure you are considering your happiness and goals, rather than just saving as much as you can. Think about why you want to be saving money and what your motivation is behind it, as this will help you stay on track when things get difficult.
And lastly, your money mindset will be hugely informed by the knowledge that you hold. Educate yourself about money, like the way you feel about money will directly impact your actions.
#4 Set up a regular payment to your savings account
Setting up a regular payment to your savings account is a great way to save money. You will gradually get used to this money leaving your account, and over time it will become just as important as the other direct debits that are essential.
It is much better to set up a scheduled payment, as opposed to doing it yourself, as it is easy to forget or put off until another day. Unfortunately, in most cases, that becomes more days and eventually, gets spent on something unnecessary. A scheduled payment can take it out when money comes in, so you don’t even realize it is missing.
If you have particular goals in mind, such as new equipment, a holiday or a wedding, then it might be a good idea to set up different accounts for different purposes. Just make sure you name them accordingly.
#5 Put your money to work
Saving money is the first step. But learning how to invest your money can help you reach your bigger financial goals and life plans. Investing money is risky, but with the right knowledge, expertise, trial and error, and consistency, you will be able to earn a higher rate of return than a savings account will give you.
You will be able to go from saving money to making money, and who doesn’t want that? Investing your money is not something you should just jump into blindly, but you should also not leave it too late, as you could be missing out. For most people, investing usually means putting money into the stock market, however, there are many things you can invest in, for example, funds, bonds, shares, property, art, wine, vintage cars, and many more.
It is important to conduct thorough research to learn about the different ways you can invest your money, and which ways are the best suited for you and your goals. Just remember, there are no guarantees, which is why research and knowledge are key to getting started. You could also consider a financial adviser to help you get started.
Summary
Saving money is important if you want to live a full, prosperous life. It can be difficult to get started, but once you have the right tools and knowledge, you can get started and empower yourself to live fully and achieve your goals.
