Income vs Expense
Despite what many people may believe, saving money is actually a lot easier than you think. The reality is that most people are simply spending far more than they need to, but have become so complacent with their situation that they don’t realise what they could be saving.
The two main elements involved in saving money are:
In order to save money of any kind, you will initially need some sort of income. This can be in the form of a salary from your job, profits from your own company, or any other kind of payments you receive, like benefits or support.
Most people will receive a set amount of money monthly, but even if you don’t you should be able to calculate the total average income you receive by dividing your last year’s income by twelve (quick mafs!).
Once you know your average monthly income, all you need to do is adjust your monthly expenses to be lower than your income.
No matter how little or how much you earn, you can always save something.
Ways to Save
Budget, Budget, Budget
Creating a realistic and comprehensive budget is the number one element required in an effective saving plan. Even if you only do one thing on this list, do this one.
Being able to see in clear numbers your exact monthly expenditure is key to knowing where you are overspending and where you can save. Bills such as rent, utilities and debt payments are often unavoidable, but everything else such as groceries and entertainment can be curtailed to provide you with savings.
Download a budget app to help you.
Get a Savings Account
Leaving all your money in your current account is a sure-fire way to burn through it every month. Most banks provide a savings account included in your normal account, but if yours doesn’t, inquire about what options they have for you.
At the beginning of each month, pay your required bills and rent and then move all your remaining income to your savings account. This will encourage you to save because you will be aware of exactly how much you are moving back to your current account each time you use your card. If possible, automate this procedure with your online banking portal.
Pay off your Credit Card in Full
Always ensure you pay off your credit card every month, in full. Credit cards are dangerous if not properly managed, but can also be incredibly useful in building a credit score and ensuring you can get loan approvals in future, should you wish to buy a house or similar.
Any debt left on your credit card means you are simply throwing money away in interest fees. Never spend more on your card than the monthly amount you have left after rent and bills.
Stop Eating and Drinking Out
This may seem like an obvious one, but it’s easier said than done. Friends, family commitments, business meetings, dates – they can all add up.
To avoid eating out too often you need to be militant with yourself. Prioritise your monthly engagements and ensure only to attend those that are entirely unavoidable. Invite friends round to your home, or agree to meet them at theirs, for drinks and other social meetings.
When eating out, avoid alcohol as it’s generally the most marked-up item and can double the cost of a meal. It can also lead to other “unnecessary” expenses…
Check your Utilities and Insurance on Comparison Websites
Many people are paying far more than they need to in gas, electricity, phone and insurance bills. The recent popularity of Online Price Comparison websites has forced rip-off companies to bring down their prices to compete with competitors.
Often you won’t even need to change providers – simply inform your current provider you can get a better deal with someone else and they will almost always agree to match the price in order to keep you on as a customer.
Take on a Second Job
If you have tried everything else and can’t find any way to reduce your expenses, then the only other option is to increase your income. These days earning additional income online is more popular than ever, and almost everybody will find something that fits their skill set.
Examples of online jobs that require little or no experience include ad-clickers, data entry, website testing and even online jury duty.
Find out more about all things saving, budgeting and travelling: Travel Tips