We all want to save more money. The question is, how?
The good news is you don’t have to be wealthy to save money. What you do need is a good plan. Although saving money successfully requires effort and sacrifice, making a habit out of this will help with living your best life.
To this effect, consider adopting these 6 ways to save money- from adjusting daily habits to cutting monthly bills, and making long-term changes.
Set up a monthly budget and follow it
A budget is all about being intentional and willing to succeed with your money. It helps you create a plan so you can see where your money is going and find out how much you can save and/or invest each month.
Once you have an idea of how much you spend in a month, you should record your expenses into a budget and plan your spending. Also, remember to include a savings category.
Here at InvestNaija, we believe the 50:30:20 budget rule is the best way to manage your money.
- 50% of your money should go to things you need,
- 30% to things you want, and
- 20% to savings.
If one of your allocations is more than these percentages, consider making some adjustments to fit the formula as best as possible.
Automate your saving
Automating your savings is one of the best ways to reach your financial goals. Once you have drawn your budget and figured out how much you want to save monthly (aim to save 10- 15% of your income), set up an auto-debit from your salary account to your savings account each payday. When you pay yourself first, you save without even thinking about it.
Almost all banks offer this automated transfer service, you simply have to choose when, how much, and where to transfer the money to. You can even choose to have it sent to multiple savings accounts
Control your emotions and avoid impulse buying
Nothing wrecks a budget faster than impulse buying. Any time you purchase something you weren’t planning to, that’s impulse buying.
We all know buying things on impulse feels exciting, but allowing your emotions to rule you and succumbing to impulse buying is never a wise decision.
So the next time you’re walking through the mall, avoid stores where you tend to impulse buy. You should also unsubscribe from email newsletters and catalogs that prompt you to take advantage of new arrivals or sales.
Another helpful tip is to go shopping with a list and only buy items on your list. Here’s a simple rule to live by - “If it’s not budgeted for, don’t spend the money”.
Save money received unexpectedly
If you’re lucky enough to receive a large amount of money unexpectedly, you must put it to good use. You should certainly avoid rushing to spend any unexpected money such as a work bonus or inheritance. It may be tempting to go on a vacation, go shopping, or spend on other luxuries, but you must resist the urge to splurge and give yourself time to think.
This lump sum is most likely a one-off so it shouldn’t make you change your spending habits. You can use the money to set up an emergency fund or pay off your debt. The act of spending unexpected money carelessly is the major reason most lottery winners burn through their winnings quickly.
Cancel automatic subscriptions and memberships
If you have multiple subscriptions, it’s time to cancel any one you don’t use on the regular- especially if they renew automatically. Make sure you turn off “auto-renew” when you make a purchase, you can always subscribe again if you feel that it is required. Consider splitting the costs of subscriptions like Netflix that allow multiple users with your friends and family.
Cut down on your expenses
Living on a budget may not seem like fun. It takes a little effort to figure out how to reduce your expenses and identify non-essentials that you can spend less on, such as entertainment and dining out. If you eat out often or buy lunch a few times a week, you may need to consider preparing your meals instead.
It might seem like a small expense at the moment, but it will put a dent in your pocket in the long run. So, prepare your meals at home and watch your savings pile up. When tempted by a non-essential purchase, wait a few days and be certain you need the item before spending on it.
