You will see a lot of posts like this on personal finance blogs – “Learn how to save money right now!”. It’s fairly generic but saving money is a big part of personal finance so it’s something I wanted to cover. Too often we look at how we can earn more money but you can have more money available simply by spending less. Someone who earns £3,000 a month but spends it all is poorer than someone who earns £2,000 but saves 10% of it each month.
Quite often the first step for anyone wanting to improve their financial situation will be to try to make changes to save money. Here are 5 changes you can make right now to boost your coffers:
1. Carry out a review of your bank statements:
When you talk about entrepreneurship most people want to here terms like “side hustle” and “empire building”. Who’s to say that bank statements can’t be just as exciting though? Okay, they can’t BUT if all you’re interested in is throwing around exciting buzz words then you’re not actually going to do much empire building. An emperor needs to know where their money is going. The introduction of contactless payment has made it easy to spend freely. In order to keep yourself in check you need to review your bank statements and see where your money is going. Go through your bank statement line by line and you may be surprised just how much of your money is wasted. As a starting point, try going through the last 3 months and adding up how much you spent in certain areas (travel, eating out, clothes, nights out). Once you know you can try to implement a budget to bring your spending under control.
2. Pay yourself first
When our salary comes in each month most of us will take care of the bills first. After that we will will usually make our way through the month basing our spending decisions on how much we have left in our account. Once we get to the end of the month we may then save what’s left over (or treat ourselves). If you really want to build your savings you need to make a habit of paying yourself first. When you receive your salary put a realistic amount aside into your savings account before you do anything else. Next take care of the household bills etc. Once that’s taken care of the rest is yours to do as you please with. If it feels like you have nothing left then it will challenge you to be more creative. How can you make more? Where can you cut back? Making yourself “poorer” in the short term will make you much better off in the long run.
3. Make your own meals
How much do you spend on food each day whilst at work? I used to spend around £5 a day until I started taking lunch with me but I know people who would spend double that on lunch and coffee. That’s £200-250 a month just to feed yourself at work. When my fiance and I moved in together we started making lunch the night before, often just cooking larger portions of what we were having for dinner and taking the extra for lunch the next day. Not only does it mean we save money but instead of a boring Tesco meal deal for lunch we are having tasty, home cooked meals. Taking our own lunches easily saves us £150 a month between us, maybe more. That’s enough to pay for a holiday each year!
4. Have a clear-out
How much of the stuff in your house do you use or need? I recently moved out and I had boxes and boxes of things I didn’t need. Some of the stuff I threw and the rest I sold and I can honestly say that I don’t miss one thing that I got rid off. Unless it’s sentimental you will forget all about it very quickly, so be ruthless. Clear your house out and make some money in the process. Items that you originally paid good money for may have a decent resell value on eBay (designer clothes, collectibles, electrical goods). Anything that you don’t sell on eBay pack up and take to a car boot sale.
5. Have a purpose for saving
Saving shouldn’t be boring. After all, it’s the foundation for building your “empire”. Not so long ago I had nothing invested and very little in the bank. Just a few years on I have two investment properties and a small stock portfolio and it’s all because I started saving. I decided that every month I would save X amount and I wouldn’t touch it. It didn’t take long for it to build up and put me in a position where I could invest it. When I say have a purpose for saving I mean an entrepreneurial purpose. Saving for a wedding or a new car doesn’t count because once you save it you’re spending it, then you are back to square one. By all means save for those things too but you should also have a separate fund for your personal financial growth. Money which will work for you and generate returns in the future.
Saving money is one of the cornerstones of personal finance. It’s not the most exciting part but it can have a huge impact on your future financial position. When you really look at where your money goes you may surprise yourself with just how much is wasted. Most of the time it only takes small changes to put this right. Think about the position you are in now and where you would like to be in 5 or 10 years time. Once you have a vision you can start working towards it.