Money Mantra: Savings is by far the most difficult habit to cultivate in the present-day circumstances. The fast-paced lifestyle has increased the living costs notably housing, thus saving money is more difficult than ever.
Indeed, saving probably seems like a dream to those of us struggling to make ends meet. But it’s not impossible and roughly three-quarters of citizens over the world are finding means to settle.
They’re are giving it a go, according to research carried out in 2014.
Here are the 6 thumb rules that can do to boost your chances of successfully saving money.
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#1. Smart Money
At the heart of any savings plan is a budget. Budgeting helps prioritise the expenditure and find a balance between spending & saving.
- By checking your credit card statements, bills, banks statements and receipts, you can work out all your regular expenses, such as your rent or home loan, transport, insurance and electricity
- You then deduct these expenses from your income – your full- or part-time job or casual work, pension, government benefits, child-support payments, investments, etc.
- If our spends are more than what we earn, ask yourself what we could cut out or cut back.
- It’s absolutely recommended to keep a tab and stay updated on the budget at least once a year. Or more frequently if the circumstances change significantly (e.g. getting or losing a job, having a baby).
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#2. Tailgate it!
We can fall into the trap of thinking spending on big things is what gets us into trouble when often it’s the little things that end up costing us more.
- That’s why it’s important to keep track of our day-to-day spending so that we don’t live beyond your means.
- Our bank statements will tell you how much money is going into our bank account and how much is going out.
Just the thought of having to track our spending can ward off impulse purchases.
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#3. Pay off your credit card
With credit-card interest rates is as high as 25 per cent or more, it’s easy to see how the rash use of a credit card can undermine even the most modest of savings goals.
Paying our credit card in full and on time is the best way to avoid interest charges and even late-payment fees.
Andrew Schrage, co-owner of Money Crasher Personal Finance, reckons one creative way to save money is to use your credit card more.
But on one condition: “This tip only applies to those who pay off their balance on time and in full every month,” Andrew says.
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#4. Can reduce taxes. How?
Savings account by large can offer more interest rate than just a basic transaction account.
A savings account is somewhere we can put some or all of the discretionary income.
After paying for personal necessities and tax – and any windfalls (e.g. tax refund), we can ward off the temptation to spend.
The discretionary money is safest if saved by setting up automatic, scheduled transfers from your main account (transaction account) to your savings account.
Kylie Travers, the CEO of Occasio Enterprises, which owns and operates several personal finance websites, says rounding down your transaction account balance is a way to glean extra money for your savings account.
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#5. Focus on recurring expenses
While every little bit helps, it’s the large, recurring expenses that provide the most fertile ground for boosting those savings, says the team at The Thrifty Issue.
“Scan the bank statements and look at all the things you have spent money on over the past year.
- Reanalysing the bills and cross-bank statements can help us understand the misspends and the means to cut down on the unnecessary.
- “Spend a day going over it all and you can save thousands.”
- The law of choices while shopping for good quality products that lasts longer and for a reasonable price can help build the economy.
- Shop for a cheaper energy retailer and this could cut your energy bill by almost half;
- Insurance costs can run into several thousand a year, so a saving of 10% could equate to hundreds saved.
- Even if you’re happy with your mobile and internet service providers, ask them if they have a cheaper plan. This is information they don’t always volunteer to exist the customers.
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#6. Sharpen your impulses
The lesser the impulses are the better. The better the choice of impulses, the greater is the life and the returns.
- Credit cards, ATMs and online shopping make it easier than ever to spend money. Of course, in the e-commerce world, we cannot resist the last eye on the things we want more than what we need.
- The extent to which we give in to temptation typically boils down to our willpower. Studies have shown that self-control is a bit like a muscle that tires out with use.
- “It’s not that the poor have less willpower than the rich,” says the Psychological Association.
- “Rather, for people living in poverty, every decision – even whether to buy soap – requires self-control and dips into their limited willpower pool.”
- If you see something you want, says Canstar, wait at least a day before you buy it – 30 days if it’s a non-necessary big purchase.
- You might find the urge passes. Another way of short-circuiting your impulse to buy is to work out how many hours of work the purchase price represents; chances are you’ll think the item’s not worth it.