Let’s get real about money saving tips. You probably don’t jump up and down with excitement over the idea of saving money just because you know you should.
\When it comes down to it, you are far more likely to put your cash towards a shiny new toy, an incredible overseas trip, or a night out with friends.
\Far more appealing than… say… saving your pennies for some abstract “sensible” goal that seems to far away in the distant future to worry about right now. And you know what? Maybe there’s nothing wrong with that.
We need some freedom to spend
What has been found time and time again in looking at human spending behavior, is that there needs to be a balance between enjoying life and investing your money in a smart way. You need to be able to feel content in your everyday life so that you can enjoy the process while you make progress those long-term goals as well.
What we also know is that there are only so many hours in the day and that if you spend too much time in one area of your life (like working) you will have to spend less time on another area of your life (like with your partner, family, and friends).
What you may have noticed yourself, is that when you dedicate the right amount of time and resources to all of the different important areas of your life, that this improves your performance in other areas.
When things get out of balance
Let’s look at the example of your relationships vs. work.
It has been found that men who are married not only live longer but are generally healthier. It’s fairly sensible to assume that if you are healthier, that you are likely to have fewer days off due to illness. It’s also possible that you could have the energy and stamina to work until later in life. Both of these could add up to a larger income earned over a lifetime, and possibly more savings.
Now let’s take a guess about the likelihood of you staying married if you take money-saving tips to the extreme. Working long hours, barely see your significant other, and refusing to take part in any kinds of social events or experiences that require spending…
This may be overly simplistic, but it does highlight the idea there needs to be a balance between all the different areas in our lives. Career, our finances, maintaining healthy and fulfilling relationships, our health, growing as a person and finding meaning in our lives. All worthy causes, all requiring resources.
The same idea applies to the allocation of your funds. Some will need to go to those inescapable bills, some to your financial future, and some to the costs associated with experiencing and enjoying life. So if your income is pretty set, how do you make sure that you get the right balance?
Money Saving Tip #1: Minimise bills
Take a good look at all your ongoing expenses. This is things like rent/mortgage payments, food, insurance, phone bills, car payments, internet bills etc. When is the last time you checked that you were getting the best deal?
It might not seem like much fun calling and getting quotes for better rates for your health insurance, but one of the best money saving tips we can suggest is to look for lots of small improvements in your recurring expenses. These work out to be big savings when you add them all up over a year, and that means more is available for spending.
Money Saving Tip #2: Automate saving
Don’t rely on your willpower or your memory. Set up an automatic transfer of a set amount of money to be put towards your saving/investment goals every week, preferably as soon as you get paid. You won’t have to make the decision on whether to move that $50 to your savings account… or get that new pair of jeans. It will be gone before you notice it was even there.
If a nice fat bank balance staring you in the face is too much of a temptation, consider setting up an outside online bank account (where the balance isn’t visible alongside your general transaction accounts). Perhaps even go a step further and choose one that requires a couple of days to process a transfer. Make it that one step harder to just withdraw a little bit for spending money.
Money Saving Tip #3: Plan for “fun money”
Congratulations! You’ve got your bills streamlined, you have a plan for your financial future, and you know how much to set aside (a rule of thumb is 20% of your income if you want to cheat on this one). Now you know exactly how much you have left for spending on whatever makes you happy!
Using the same logic used for generating savings, why not set up an automatic transfer of your spending money into a “spending” account? If you are a bit of a Scrooge one week (using all the money saving tips you have under your belt) you could have more to play with the next week. Or be a little more thrifty on an everyday basis, and watch your spending money build up for something you really want.
Having a set spending account gives you the option of seeing just how much you have to work with, and then making the very most of the amount you do have. Ten years of takeaway coffee… or a trip around the world. The ball is in your court.
Need extra help with your budget? Check out the ASIS Moneysmart Budget guide here.
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