Doing it the smart way, creating a budget is the cornerstone of successful living on less.
Be mindful of everyday expenses and find smart strategies for cutting expenses and saving.
1. Pay Your Bills on Time
Paying bills on time is essential to saving money. It can be easy to miss payments for mortgage, car, insurance and streaming services among other expenses like phone and utility bills.
Make sure you have an effective system in place to help keep track of all your payments, be it an app, spending tracker or old fashioned pen and paper. Finding one that suits you is key.
Start using cash only for purchases you desire (such as entertainment) rather than necessities such as housing and food. Doing this will force you to keep track of how you’re spending and help create a savings plan, plus save extra costs associated with paying with plastic.
2. Make a Budget
To save money, it is vital to track your spending habits and create a budget. A spreadsheet, budgeting app or envelope budgeting method can be an excellent way of tracking expenses in real-time and keeping yourself accountable.
Once you have an accurate understanding of your income and expenses, you can identify where savings opportunities lie. The key is developing healthy money habits that prioritize future needs over present wants; even small changes such as packing your lunch instead of purchasing it, or making coffee at home instead of stopping by Starbucks can add up over time to significant savings. Cutting unnecessary expenses such as entertainment or dining out also offers more savings opportunities; calculate purchases according to how many hours worked can also put yourself in a better position for further savings.
3. Set Goals
Budgeting allows you to keep track of every penny that enters and exits your accounts, including monthly bills and any other spending. A budget is particularly useful if you live paycheck-to-paycheck; using one will ensure your income surpasses expenses every month.
Start by tracking all of your expenses using a spreadsheet, envelope budgeting method or free online or mobile app. Be sure to include every dollar – even those small expenses like coffees and cash tips!
Next, set goals for what you wish to save for, making sure the goals are SMART (Specific Measurable Achievable Relevant and Timely). Finally, commit to paying yourself first by setting up direct deposits from your chequing account into a savings account every payday.
4. Make a List
One of the best ways to save money is to create and adhere to a shopping list. This is especially important when using credit or debit cards as it’s easy for purchases to slip through unnoticed. Comparing prices across stores and brands is also helpful in saving money.
If you find yourself drawn towards buying something not on your list, try writing down all the items already present in your pantry or kitchen in order to avoid purchasing duplicates. Furthermore, rounding up all your cart contents to determine exactly how much money is being spent.
One strategy to help reduce expenses and save money is planning meals ahead. Though this may take more time, doing this will allow you to stay within your budget.
5. Do Your Research
Understanding your spending habits is key to becoming a smarter saver. A budgeting app can be an invaluable asset here; helping you cut expenses and identify savings opportunities. Or you could manually track it with bank or credit card statements featuring spending reports. Help your children save by setting manageable goals like how much money they need saved for new video game purchases.