Showing posts with label how to save money. Show all posts
Showing posts with label how to save money. Show all posts

How to save cash money to grow your savings balance

Saturday, November 30, 2019
ways to save cash money

You need money and you need it now?


Tough.

Saving money is the best way to go when you need some cash and that takes time and patience.

Saving money means you are not borrowing money at a crazy interest rate or getting sucked into the trap which is Pay Day Lending.

And borrowing money costs you money, so leave those credit cards frozen in the freezer and have a read of these tips to learn to save money every month.

The first thing about saving money is that you have to want to do it.

Sure you may need to save money but it’s got to be a willing part of you - that way it’s habit-forming and you’ll have a higher chance of succeeding and achieving your savings goals.

What is your savings goal?


Is it short term for a ski trip?

Is it to pay school fees by the end of the term?

Is it more mid-range, say buying a car?

Perhaps you are trying to build a war chest or an emergency fund?

These are all good things to have. Write them down and stick them on the fridge so the concept crystallizes in your brain and you have a reminder about it every time you take milk out of the fridge.

Whatever your goal is, these tips to save money will help you achieve your goals.

Pay down and reduce your debt first


Owing money means you owe interest and it’s the interest that kills you when debt is compounding. 

In the current economic climate, with interest rates so historically low worldwide, any savings holdings you have will be unlikely to make you more than the interest rates you are paying to the bank - so reducing your debt as much as you can is to your economic benefit and you will save money in the long term.

It’s this reasoning why many mortgage holders try to pay off the mortgage as soon as they are able - making extra payments on top of the minimum repayment amount.

If you owe thousands of dollars in credit card debt or have many different bills, you might need a shorter-term goal.

Try paying down $1000 first. Or focus on paying off that large utility bill first.

One thing to consider is that if you have an emergency, you may need access to cash money in a hurry - so if you’ve paid off your credit card debt, you may wish to retain the card for this reason (though it can be easy to use the card once it’s paid off because what’s 50 bucks….). You know your circumstances better than anyone, so you make the judgment there!

Try and pay more than the minimum monthly repayment on the credit card.

The minimum repayment amount is just the least amount the bank expects you to pay back on your monthly bill.

In the immortal words of Admiral Ackbar in Return of the Jedi ‘It’s a trap!’.

If you only pay off the minimum amount, you will incur harsh interest costs on your credit card.

It’s hard to save money when you’re paying the bank more than you need right? So, if you are able, pay off your full credit card debt every month (some people have their salary paid directly to their credit card account to ensure this happens).

It should be obvious but we need to say it. If you are trying to save money, then do not spend money you do not have on your credit card. Extending yourself debt this way will increase your chances of being hooked into a long term cycle of credit card debt.

The sooner your credit card and any other debt are paid down, you’re in a great position to truly start saving money.

Keeping your savings separate from everyday spending money


If you have easy access to your savings say in an ‘every day’ banking or in cash in a cookie jar, then there is a higher chance that you will spend that money before you reach your savings goal. You could be tempted to get some Uber Eats or see Star Wars for the 501st time.

Try this savings tip.

Keep your savings in a separate bank account. 

And don’t have a spending / debit card attached to it. 

Even better make it an account that charges you a fee if you take out money.

And then make regular savings into it. Set up a automatic payment that goes out same day you get paid. Set and forget. 

If you’re anything like me - your salary comes in on Wednesday and all the bills are automatically paid on Thursday - which gives me comfort that I have accounted for those things when it comes to the crunch on the last Tuesday before payday - do I buy bread or noodles for dinner?

Joking aside, when you get paid is when you save. If you have set up that separate savings account a handy trick to set up an automatic payment that occurs shortly after pay day.

It becomes an ‘out of sight, out of mind’ activity - you will regularly save and what’s better is you will get used to the new amount you have in your pocket after bills and savings have been made.

Just pretend the government upped the tax rate or something.

You might be thinking, “the above is advice is good and all, but I’m really asking how do I SAVE money?”

And if you’re asking that question, you’re really asking “how do I stop spending money?”

And here’s the word that people hate when it comes to thinking about money.

Here it is. Are you ready?

Budget.

There, I said it.

You need to develop manage a budget if you wish to stop spending money so you can save it.

If it’s a matter of cutting back, then so be it. So now then, it’s time to analyze your spending habits.

Open up your everyday banking account and check out your monthly spending.

What do you see?

3 trips to McDonald's

2 Taco Bell purchases?

Repeated trips to the 7-11?

Several rounds of beer at after-work drinks?

Whatever it is - you’ll need to be honest with yourself and cut back on some of those spending practices. Instead of work drinks every Friday, perhaps skip out an occasion or get yourself home earlier. 

Maybe instead of going to the movies every Saturday night, make it only twice a month. And don't buy popcorn.

Either way, as much as you hate it, you’ll need to cut back.

Don’t cut it all back though as you’ll never get on board with the changes you make and you’ll slip into old habits very easily.

Yep, saving money is a habit and to make it a habit, you’ll need to change your other habits.

Again, whatever you decide to do, write it down. 

People who write down a savings plan are vastly more likely to succeed than those who do not.

Remember too, there is treating yourself and treating y’self. You’ll know the difference.

Calculate purchases by hours worked not by price

If you need help with justifying a purchase (or need to be talked out of it) there’s a great mental game you can play.

You simply look at the purchase price of an item or ‘thing’ and ask yourself:

How many hours must I work to pay for this?

That might quickly sheet home to you how you actually value your purchase.

Ask yourself, is this pair of jeans worth the eleven hours I need to work to pay for them worth it to me? Some days it will be and some it won’t.

Some other great ideas to save money (we may have to teach you to suck eggs here)

  • Delete any apps from your phone which you like to buy things from. Big Amazon user? Get rid of it. Often buying strange things on eBay? Get rid of the app.
  • Unsubscribe from all the mailers and email lists you are on. Avoid temptation from marketing emails by not getting them in the first place. Many countries now have laws where you can unsubscribe from a mailing list with a single click. Do it now. Do them all!
  • If using your ATM card at a different bank - try not to as you will get charged a bank fee which can often be a couple of dollars. Why pay two bucks to get out twenty? If you can use your own bank’s ATM then do so. Let’s keep the chat about using ATMs while overseas for another day eh?
  • Use your library. Have you ever read Dune? Maybe read more and go out less?
  • Buy second hand. Instead of putting a new couch on the credit card or other form of financing, honestly as yourself, can you find a nice second hand one? There’s a lot of second hand furniture that looks good in most homes. Indeed, there’s plenty of stuff that’s had an owner or two before which is fantastic when rehomed. Sports equipment and bikes for kids is an area I really focus on. Why spend 400 bucks on a brand new bike when my 5 year old will outgrow it in 18 months?
  • This next savings tip is a classic. STOP BUYING YOUR LUNCH EVERY DAY AT WORK. It seems sensible eh? How much do you spend on lunch at work every week? This is a simple area to cut back on. If you can do it, make some sandwiches. Some of the lads at work run a pool of money and group buy their sandwich supplies at the supermarket to save their money.
  • Gambler? Maybe save the lottery ticket purchases for when the big one’s gonna happen. Or just don’t throw your money away.
  • Big drinker? You gotta cut back, if not for your wallet, your health. That one’s going to be hard if you have a habit (not an addiction...). Instead of buying a twelve-pack of beer on Friday night, try a six pack? Or you can brew your beer! Those hoppy kit lagers are easy to make!
  • If you need medicine, can you buy the generic paracetamol rather than the big brand name product? They are the same drug, you’re only paying for the name in such cases.
  • Teach your children to save their pocket money - this will help you keep on track, as by setting the example, you'll stick to your monthly savings goal. It's a great chance to have a good conversation with your child as well - teaching children financial literacy is hugely beneficial to them long term.  
  • Never ever ever ever get a Pay Day loan. It will cause you more harm than it's worth. 
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