Five ways to start saving money
Nearly everybody is aware that they should be trying to save more money daily, but it’s not always easy. So, if you’re struggling to save, read this guide and follow these five tips to start spending less and saving more.
Eliminate debt
Before you start trying to save money, you should aim to pay off any outstanding debt you have.
Debt accrues interest quickly, and in many cases, you’ll have to pay interest on the interest, meaning the amount you owe can quickly add up. Therefore, it makes more fiscal sense to pay off any and all debts before you start adding money to a savings pot – the interest you’ll earn on savings will never be as much as the interest you’ll have to pay on debt.
Start by trying to make small and manageable monthly payments to pay off your debt, or consider consolidating your repayments to reduce the amount of interest you have to pay. If you’re struggling to eliminate debt, talk to Strategic Consulting and see how they can help.
Open a savings account
Once you’ve paid off your debt, you should open a savings account. This is an easy way to start building a nest egg.
There are various types of savings accounts, so find one that works for you. You might prefer one with high interest, but these make it harder to make withdrawals if you need the money for an unexpected cost. Accounts with lower interest rates often make it easier for you to access your savings – but that could make you more likely to dip into your savings rather than… well, saving them.
Do some research and open an account that best suits your needs.
Create a budget
One of the most efficient ways to save money is to work out how much money you can afford to spend each month on day-to-day expenses and unexpected costs and stick to this budget.
To create a budget, start by looking at your past monthly expenses. How much do you spend on average on essentials (rent or mortgage payments, unavoidable bills, etc.)? How much do you spend on food and drink? Hobbies or clothes?
Work out an average and use this to set yourself a monthly spending target for various categories.
Automate Payments
Once you’ve figured out your monthly budget, it’s a good idea to set up automatic payments into your savings account to guarantee that you’ll put aside a particular amount of money each month. This will help you to think about your savings account as another bill to pay or another unavoidable outgoing expense.
Just make sure that you set the automated payment as an amount you can afford each month – don’t worry if it’s small to begin with, as it all adds up.
Cut costs
The final step is to cut costs wherever you can. There are numerous ways to do this, but it can depend on how much you’re already spending. If you spend $100 a month on food and drink, try buying in bulk to reduce that cost.
Look at where you’re spending large sums of money regularly and find ways to reduce those costs. Any money you save should go straight into your savings account to start earning interest.
