7 Budgeting Tips to Help You Save Money
Unfortunately, our smartphone-connected economy makes blowing money on nonessentials all too easy. This is often the case even if you’re normally something of a stickler for adhering to a well-prepared spending plan.
For a multitude of reasons, budgeting and saving money don’t come easily to most people. Saving money takes effort. This happens only when you have a plan in place. Many people erroneously believe it’s impossible to stick to a budget day after day, month after month. And yet many people do it regularly — and quite successfully, too.
Invest in yourself! Take time to create a budget, reorganize your finances, manage debts, and prioritize your spending. Doing so will give you a clear picture you can use to plan your budget and achieve long-term financial goals. Start with one or more of these practical and eminently doable budgeting tips to help you get started saving money.
1. Start by meticulously tracking your spending.
It’s a common mistake to think that we get into tight financial situations primarily because of big, unplanned expenses. Far more often, we get into trouble because the little things we buy end up costing us more over time than we think. Obsessively tracking your spending, at least for a while, will serve as an eye-opener and help you avoid living beyond your income.
Your bank statement or debit card statement should provide a clear picture of the money going into your account. If you avoid using cash, your statement will also tell you how much went out for a specific period, and for what. Compare that with your budget. Check to see if you’re on track. This will also help you identify areas where you can cut expenses.
2. Create a budget.
No saving plan will get very far without the aid of a monthly budget. A well-planned budget helps you prioritize your expenditures. You can strike a much-needed balance between spending and saving across an entire year or start off with one month and tweak as needed.
Sift through all your expense statements, including credit card statements, bank statements, bills, and receipts. Adopting this level of discipline will help you get a clear, accurate picture of your regular and extra expenses. Now deduct total expenses from your income.
If your spending is more than your earnings, identify areas where you can cut costs. This is a much-needed step to improve savings and cash flow. Create a detailed list of things you can’t do without — housing, food, gas, clothes — and the extras you can avoid.
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Revisit and update your budget at least once every six months or whenever there’s a change in your circumstances. Significant changes that will impact your budget include starting a new job, an addition to your family, and so on.
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3. Pay off your credit card balance(s).
Credit card interest rates are notoriously high. If you have monthly high-dollar credit card payments, this can deal a death blow to even the best saving plan. Paying off your credit card balance in full should take top priority.
Paying off unsecured debt helps you save on hefty interest charges and late fees. If it’s not possible to pay your debts off in full, make sure you pay more than the minimum payment. Look into securing a low-interest loan to consolidate debts. Otherwise, you will be spending a significant portion of your income on credit card interest payments.
4. Keep a sharp eye on recurring expenses.
Every effort to save money takes you one step closer to financial wellness. One thing that would help is if you also kept an eye on your large recurring expenses. Go through your bank statement and list out the things that cost you the most money during the year. Can you curtail or even eliminate any of those recurring expenses? Is moving to a less expensive apartment or paying in full for a reliable (though far less glamorous) vehicle off the table?
For homeowners struggling with a burdensome mortgage, look into home loan refinancing options. This can lower interest rates and save your family money every month. You can apply the same approach to insurance payments, fuel spending, and so on. You can literally save thousands of dollars every year if you take a more mindful approach to expenditures.
5. Steer clear of impulse spending.
If you carry multiple credit cards and sign up for multiple “member discounts” you are far more likely to spend impulsively. Online shopping makes it even easier for people to spend money on things they don’t really need. Many people are unable to resist the temptations unleashed by advertisers. They end up adding to their mounting debt of frivolous expenses.
Impulse spending can create a big hole in your budget, especially when you do it repeatedly. Develop stronger willpower by becoming accountable to another person. Overcome this ruinous habit ASAP as it will put your financial goals out of reach that much longer.
6. Plan your meals in advance.
One of the easiest ways to save money is to plan your meals. If you know in advance what you’ll serve your family for the next week, shop accordingly. Any extra trips will result in additional costs. You’ll also end up spending extra by picking up a random item or two.
Buy all your staple items at lower prices from a budget grocery store. Doing so can save you money, save fuel costs by avoiding frequent trips, and help you stay within your budget.
7. Avoid being a brand loyalist.
Brands love product loyalists, but healthy budgets do not. Companies go to great lengths to encourage more affinity for their products. Have you already become a brand loyalist? Raising self-awareness is Step One.
Your vendor or supplier is well aware that you’ll tend to stick to brands and become less sensitive to pricing. They often take advantage of brand loyalty and can even take you for granted through the use of clever pricing methods.
Don’t allow your emotional connection to a brand to lead you where you don’t want to go. Avoid being a brand loyalist if you suspect your emotions are being used to fill vendor coffers. As vendors see customers move away, they return to market-value pricing. They understand that retaining existing customers is a cheaper option than winning new ones.
Saving is much like a diet, both simple and difficult.
The tips listed above are all practical budgeting tips that anyone can apply to their situation and start saving money right away. The trick is to consciously work against ingrained habits.
Make sure you review your budget frequently. At a minimum, check your progress once a month. Doing so will help you stick to your savings plan. It will also help you recognize and fix problems quickly.
Understanding how to save money is an indispensable aspect of overall financial wellness. Once you learn the ropes and stifle a few bad habits, it might even inspire you to find more ways to save more money. “Snowballing” your finances in this way will help you achieve your financial goals that much faster.