Strategies to Saving Money
You have probably heard the common refrain to ‘save money’, and may even have flirted with the idea once or twice yourself. Switch from struggling to get through the last few days of the month each month to being a confident owner of a regularly growing savings account. The following strategic tips will show you how.
The fact is we all spend money in different ways. By first understanding what causes you to spend money, you can then create strategies to help you control spending.
Consider the following scenarios:
- Do you spend money to ‘stock up’? We think that if we spend a little more now to buy in bulk what we will eventually use later, we are creating savings for the future. However, a dollar spent today is still a dollar spent today; it does not create a dollar to be saved tomorrow. Instead, buy only what you need. Staying within your budget is the key to growing your savings.
- Do you spend money to feel good? This is where things can get very subtle. It is much easier to spend small amounts – and that’s where the danger lies. Twenty dollars here and thirty dollars there may not seem like much, but put them all together and you may be surprised at how much it all adds up to. See for yourself: Each time you indulge, take a photo of each restaurant meal, cup of coffee, box of chocolates, bottle of wine, etc. – anything that you don’t really need but have a habit of buying. At the end of the week, look through all the photos and do a rough calculation of how much these ‘small treats’ have cost you. Multiply the amount by four, and then 12, to get a yearly figure. Then think about how much more enjoyable it would be to spend that amount on a holiday instead.
- Do you spend money without planning to? Unplanned spending is the most common way we ambush our savings account, and it is almost always heralded by every vendor’s favourite tool – the discount. If you have ever felt pressured to make a purchase because of an offer that screams ‘XX% off’, stop, take a breath and realise that you are being coerced into spending money. Learn to use discounts to your advantage. Decide when you will buy, and at what price. Plan your purchases around seasonal sales and trade shows. And most importantly, buy only what you have set out to buy – any surplus in your budget should be recycled back into your budget for the next purchase.
- Do you pay yourself first? People who have trouble saving are those that cannot hold on to money; we literally don’t know what to do with the cash in hand. Avoid this problem by paying a set amount into your savings account with every paycheck. Treat your savings as another bill to be paid regularly and promptly. However, it is important to let yourself enjoy your hard-earned money too. Set aside a small amount, say 10% of your take-home pay, which you can spend on anything you choose.
Accept that not everyone can save money on an automatic basis. Some of us need to learn skill-sets and cultivate habits in order to maintain and grow a savings account. With the right perspectives and strategies, you will stand a much higher chance of attaining a credible savings account and the sense of confidence and security that comes with it.