A healthy financial life requires a money saving strategy. There are different ways to save money, some are a little painful that may require lifestyle changes and then there are other painless strategies to save money.
You may have heard, ‘Pay yourself first’. This means transferring a certain amount or percentage of your paycheck directly into your savings account. The idea is simple, you will only spend the amount you deposit in your checking account, so by transferring a portion of paycheck directly to your savings account you eliminate the temptation to spend it. This is an easy process; you simply ask your bank to set-up an automatic transfer and they will do the rest.
You may have inconsistent paychecks which could lead to inconsistent savings. The best practice is to budget conservatively, so build your budget on the lowest amount of income you expect. Don’t try to save a fixed dollar amount, try to save a percentage of your paycheck. This way you are not committing too much of your income to savings during the months your income is lower.
This is a great way to save if you have financial discipline. Use credit cards that provide cash back on every transaction. While the amount of cash back you earn on a single transaction may be small, the amount adds up over months. Depending on the amount you charge on your credit card, the amount could be significant by the end of the year. This strategy is for those who have the discipline to use their credit cards responsibly and pay off the balance in full each month.
Improve your Credit Score
Your credit score impacts the interest rate you get on your loans. A good credit score could potentially save you a significant amount on interest payments. This is a painless way to save as you just have to make sure you use your credit responsibly and make regular debt payments.
Little Savings Add Up
Here is a list of some ideas to find little savings in everyday activities:
- Eat in more often, this is a good way to save a little money without making too much effort.
- Take lunch to work. Take your leftovers to work, you will save some money and eat healthy.
- Stick to your grocery list. It is easy to get distracted in the supermarket with so much choice. Never go grocery shopping on an empty stomach, it is easy to go off shopping list on an empty stomach.
- Make coffee at home instead of buying it from a coffee shop.
- Join a discount store like Costco. You can unlock savings by buying in bulk. Don’t buy things you don’t need just because they are cheaper in bulk.
Buy What You Need
Stick to your budget. A budget is only useful if you follow through with it. Budgeting is an essential tool to take control of your finances and find savings. By following your budget, you are more likely to spend on things you planned on and not on things you don’t need.