It’s often said that those with money have it because they don’t spend it. They’re savvy frugaleers who know where every cent is spent and exactly how much they have squirreled away in savings. Then there’s those who are keen to save but still wonder where their wages have gone at the end of every month. If you are perplexed by month’s end, read on to find ways you can spend less, yet have more.
1. Use cash only (for a short time)
Before you go down the route of ‘get-rich-quick’ schemes, figure out how much you’re spending and where. The best way to do this is to use only cash for a few months to get a baseline of your expenditure.
First, work out how much you think you spend per week then withdraw that amount of cash on the same day every week and use it for all purchases (no sneaky Eftpos tapping). It’s hard to do if you’re not used to it, but the exercise is a great way of gauging what you’re really spending. All those cups of coffee and brunches add up over the week. Once you have an idea of your true spending habits you’ll be able to cut back where needed. It will also make you more mindful of how you use your cards once you reintroduce them.
To get a true reflection of what you’re spending, don’t cut back at this time. Spend like you normally do to get a realistic picture of your normal spending habits.
2. Budget Budget Budget
If you’ve been reading about ways to manage your personal finances for a while, you’ll see the ‘B’ word mentioned ad nauseum. That’s because budgets work. It’s sticking to them that’s the problem.
There are a number of online tools that can help you organise a budget, each vary according to the user’s needs. You may have to try a few tools before you land on one that works for you.
While it’s easy for some to be self-disciplined and follow their budget, we’re not all made equal. For some, it’s incredibly difficult. If you’re one of those people, have a goal in mind to help keep you motivated. Start with something small, it doesn’t need to be a holiday. It could be a new bed or bike…something attainable.
3. Track your spending
By tracking your expenditure you know where your money is going and can modify your habits as you go. A number of apps for Android and iPhones are available for download, through which you can nominate a spending limit, create sections that follow your frequent expenses, set reminders and view your spending history.
Be aware that some tracking tools may ask for your bank details, including passwords to access your accounts so they can use their tools.
If you decide to use a tracking app, it’s best to avoid using cash while tracking. Using card means you have an electronic record of all transactions so you don’t have to enter payments manually. However, you still need to be mindful of how much you spend. Research shows that people are likely to spend more if they use plastic cards. It’s much harder to part with the physical coinage.
4. Cut the luxuries
Ditching the luxuries takes a lot of discipline, but it can be done. Look at the things you’re buying regularly, then see what you can do without. You’ll be amazed how much money you’ll save without trying too hard.
Why not watch a vlogger, free documentary or movie on YouTube instead of going to the movies. Invite your mates around for homemade pizzas instead of eating out, brew your own coffee in place of takeaways and cancel your magazine subscriptions—go for the sustainable option and ask for your friend’s once they’re done.
5. Save a little
When drawing up a budget it’s important to factor in savings, too. Putting even a little money away each week or payday can add up. As Paul Kelly once said “From little things, big things grow.”
Start small, especially if you’re on a tight budget. Five dollars a week will give you enough for a good Christmas fund, twenty dollars a week means you may be able to get that holiday you’ve been yearning for.
If five dollars is still too much to part with, check out Raiz Invest (previously Acorns Australia). This handy, free app aims to make investing simple for everyone. They offer a range of ways to invest but one option, “Round-ups”, works by rounding all your bills to the nearest dollar and invests the money for you. This unique way of micro-investing allows even those on the tightest budget to make money.
6. Pay off your debts
Few people like having debts hanging over their head, especially if interest accrues month after month. When you’re drawing up your budget, include your credit card and loan repayments. It’s up to you how you want to play this. Either pay off your higher interest rate credit cards first and make sure payments are made on time to avoid unwanted charges. Or if you have multiple debts then pay off the smallest amount first before moving onto bigger debts to build up some momentum. It’s always a good idea to pay above the minimum amount owed, with the aim of paying the balance off every month.
If you’re having difficulty paying more than the minimum payment, think about transferring your balance over to a 0% interest card. Have a look at how long the interest-free period lasts and calculate how much you have to pay per month to have it cleared by the end of the offer’s term.
7. Do more for yourself
If you have a cleaner or gardener, it’s time to pull your sleeves up and get down with the commoners. Paying others to do your housework is a massive expense that you don’t need. If you’re time-poor and are prone to buying takeaways, grab a cookbook and have a go. Other things you could do yourself include: washing your car, filing your own taxes and doing your own laundry.
Budding chefs, try to plan your meals for the week, as this helps reduce costs in the long run. Cooking lasagnes, casseroles or stews allows you to freeze meals for later in the week.
This article was written for Credit Card Compare