I don’t care how much money you make, if you don’t know how to save money then you will never see the financial success you want to achieve which is why in this article, I will share with you 5 practical ways to save more money!
Tip #1: Use the 30-day rule
One of the biggest deterrents in the quest to saving more money are impulse purchases. Nowadays, we are constantly being bombarded by ads which make us all the more likely to pull out our credit cards and spend. For instance, one moment you could be innocently scrolling through Facebook and the next minute you find yourself with a whole new outfit in your shopping cart. To avoid these impulse purchases and unnecessary purchases in general, whenever you find yourself wanting to buy something new, write it down along with the date it will be in 30 days.
Now here’s the challenging part, you have to wait at least 30 days before actually buying it. Doing this helps in a few ways. First of all as I previously mentioned, it helps you avoid falling victim to impulse purchases but more likely than not, having the time to mentally process the purchase will make you realize that you don’t want the item as much as you originally thought. Second, waiting allows you to analyze whether or not you actually have the funds to cover the purchase you are wanting to make. For instance, if you come across a TV that’s on sale and buy it right away you make realize that you don’t have the money in your bank to cover the charge which will cause your debt to accumulate when you do this one too many times.
In short, if you want to same more money, you need to ensure that it’s the logical side of your brain making your spending decisions and by giving yourself time to analyze your purchases you can ensure you waste less and save more.
Tip #2: Pay Yourself First
If I learned anything from reading the book “The Richest Man in Babylon” it was that paying yourself first is the key to building wealth. So many people make the mistake of paying others first when they receive their paycheck. Their first instinct is to pay their landlords, go buy a new watch or pay their bills leaving them with little to no money at months end and making saving impossible. This is why if you want to start making saving a serious part of your financial routine, you need to pay yourself at least 10% of your income every single month.
Now, when I started employing this strategy myself, I have to admit it was kind of a hassle. Moving money around in my bank account after each paycheck made me start to resent my savings efforts. Luckily, I learned how to make this process easier by using automatic deductions.
Essentially, this process involves routing part of your income into a special account that’s primary purpose is to accrue your savings. This way, whether you think of it or not, you will be saving money. This was huge for me personally because it was one less thing I had to think about every month and by sending part of my paycheck off into an account I never accessed, it also meant that I wouldn’t be tempted to spend it. So if you want to set up automatic deductions, talk to your employer and tell them how much you want taken off each paycheck then all you have to do is sit back and let your bank balance grow.
Now, if you’re really serious about saving, you should aim to increase your savings percentage over time. I gave the recommendation of paying yourself 10% of your income but as you know, the higher that percentage becomes, the more money you will save. One approach you may consider using is the 1% rule where you increase this savings percentage by 1% every 6 months. By doing so, you will learn to live off less while also saving more!
Tip #3 Preplan your shopping
Can I be honest with you? I hate shopping. Wandering around a store, searching for items that you’re being overcharged for and waiting in lines is not my definition of a good time. Luckily, there’s a much smarter way to shop that will not only save you money, but time as well. You see, I hated shopping mainly because I had only a vague idea what I was going to the store to buy. So when I got to the store, I spent a lot more time than I needed to looking for items. Not to mention, I was getting completely ripped off having to buy almost everything at regular price. After living with this frustration for years, I finally knocked some sense into myself and started to plan my shopping trips more carefully. What I did was write down exactly what I needed from each store I went to.
In my experience, doing this provides two main benefits. The first, is that with all the items you need written down, you will be much more likely to not buy anything you don’t need, avoiding unnecessary spending, ultimately saving you more money. The other benefit is the fact that you will be saving time. Like I said earlier, if you go shopping without a plan, you will be walking around without a clue what you need but with your shopping list in hand, you will be in and out of the store in record time. And if time is money then this pre-planning is just another way you are embracing the savings lifestyle!
Tip #4: Reassess your expenses
Let’s face it, life goes by pretty fast and often times this causes us to never really look at how we are spending our money. Every month, the bills roll in and we pay them without truly considering if they are necessary to our day to day lives or if they could be to cut allowing us to increase our saving efforts. For instance, most people are still paying for cable yet they spend most of their free time watching Netflix. Others will keep a gym membership active that they haven’t used in months just because they are too ashamed by their lacklustre efforts.
Every unnecessary expense is an opportunity to save more and build real wealth which is why I suggest that on a monthly or quarterly basis that you review your expenses and determine if each and every one of them are truly necessary. What I personally do every month, is scan through my prior months credit card statement and go line by line assessing every purchase. If I find myself spending on things that I get little to no value from, I make myself a note as a reminder not to spend money on that item going forward. Doing this has saved me thousands of dollars in the past few years so this easy money management technique can be quite powerful!
Tip #5: Change your mindset
Believe it or not, when it comes to saving money, your mindset is more important than any of the tips I have previously shared. Your mind dictates your actions and this can be a positive or a negative depending on how you see things. Take the example of an alcoholic. When these people overdrink, they blame their actions on the fact that they self-identify as having a drinking problem and people do the same with money. When people overspend, they excuse themselves by saying they aren’t good with money or that no one ever taught them money management techniques.
Luckily, this phenomenon can be used in the opposite way. If you tell yourself that you are frugal or are a saver then you will naturally find yourself identifying opportunities to save money allowing your wealth to grow much faster than if you saw saving money as something external to who you are.
Once you have this mindset instilled in you, the next step is to expand how you perceive saving. Most people think that saving more money equates to cutting costs but there is another side to this equation and its earning more income. You see, the problem with cutting expenses to save more money is that there will always be some expenses you have to cover. For instance, you need a roof over your head, food and need to get around which means paying for transportation. Given that these expenses will always exist, you have to again expand your mindset in order to progress financially.
For me personally, my financial life changed forever when I started to double down on finding ways to earn more money so that I could ultimately save and invest more. What worked for me was freelancing and starting online businesses but for you it may be picking up a second job or seeking a new job that will give you a significant raise in pay. Just imagine how much faster you could save, paying yourself 10%, if you were earning $10,000 a month versus just $3,000. The difference would be very noticeable.
Not to mention, by using the income maximization approach to save more money than simply minimizing expenses, it allows you to avoid cutting your expenses so low that your standard of living is negatively affected. Sure, saving money is important but you shouldn’t have to hate your life just do so it. In short, once you have good spending habits in place, earning more money will have your bank account growing faster than you ever thought possible!