Here's Some Super Smart Ways to Save Money - For Families on a Budget
If you're looking to get started with saving money but are having a hard time finding the right place to start, then this guide will provide some insightful tips and tricks on how best to save your cash.
When you are trying to figure out how to save money, it can be really useful to have an idea of what your problem areas are.
This list provides quick and easy ways for you to identify where your money is going and how to adjust accordingly.
Note: Before we get into this article, we need to let you know this isn't financial advice and we are not financial experts.
If you do require financial advice, we recommend getting that from an authorised financial advisor.
Record Your Expenses
There are many different ways to save money, but you first need to figure out how much money you're spending on a monthly basis.
You can either make a note of all of your income and outcome by looking at your bank statement and then transfer it into a spreadsheet.
Alternatively, If you want another simple approach, use your bank account balances and transactions on a platform like Mint.com. This will allow you to see exactly where all of your money is going so that you can adjust accordingly.
There are also spending tracker tools on the App Store and Google Play that can help you keep track of your spending habits.
The most popular ones are Mvelopes, Moneyspire, and Wally.
You can also find a lot of them in the financial section on your phone's app store.
Budget for savings
Once you've figured out how much you're spending each month, you're going to need to figure out how much money needs to be allocated for savings.
To do this, take the amount of money you are saving and divide it by your monthly income (after taxes). This will tell you what percentage of your paycheck should go into a savings account each month.
Don't forget to include an emergency fund to cover the unexpected.
You should try and save at least 20 percent of your take-home pay for a rainy day.
Ideally, this would be in addition to any retirement savings if you can afford it.
If this amount is too much for you, try to save at least £100 a month.
This way when life happens, you will have the money and won't need to take on any more debt or use your credit card as an emergency fund.
You might want to get started with setting up automatic transfers from your personal account into this savings account so that it's less tempting to spend the money.
Find ways you can cut your spending
Here are a few ways:
Switch your cable provider - We all get sucked in by a fancy new TV offer, but that doesn't mean you need to get it or keep it. A lot of people aren't paying close attention to their monthly bill, but this is one thing that can really make a difference in your tight budget if it's overpriced.
Do some research online to see what the cheapest provider in your area is and switch over.
Get a cheaper phone plan - It might take time for this one to pay off, but if you're not using all of the data on your monthly package then this is a good place to start. You'll be surprised at how much you can save when you switch to a cheaper phone plan.
Cut back on eating out - This one is kind of a no-brainer, but it's worth mentioning because so many people don't do this. Spending just £20-£30 less per month will really add up over the course of a year.
Make use of coupons and discounts when shopping online - You can generally get hold of these for things like groceries and clothes, which are two of the priciest items in your budget.
Buy store brands - If you're not thinking about this as a serious option then it's time to start! You can save so much money by buying generic products rather than name-brand ones.
Find cheaper childcare - This is one of the harder ways to make a saving since most of us are limited by choice. But, if you do have a choice it may be worth considering.
Consider a cheaper car - If you're thinking about getting your hands on a new set of wheels then this could be the one for you if money is tight. Compared to some other big-ticket items like house loans and college funds, these are much easier to come by with fewer financial implications.
Cancel your gym membership - You can either start brisk walking or running to keep fit. You can also purchase your own sports equipment and work out at home. There are so many different types of equipment available that it's easy to get started.
Learn how to cook - Cooking isn't just an art, but a skill and is something you can learn with practice. If you're in the habit of eating out every night then this could be one way to save some money each month.
Barter your services for goods or favors - This won't be for everyone. However, whether you run your own business as a contractor or you sell goods, you could try bartering with others if you are looking for a way to save money.
Make a packed lunch instead of buying lunch each day from fast food places like McDonald's - This will save you more than you would believe. It's the same as Starbucks coffee. By making your own coffee and putting it into a flask, you can save upwards of £50 per month (£600 per year).
Buy Fewer clothes - If you're looking for a way to save money on clothes then the best thing that you can do is buy less.
You don't have to go out of your way and only wear one outfit, but if you find some great bargains in-store or online then it's worth holding off until they come around again.
Set Saving Goals
Step 1 – Name your goal.
Step 2 – Figure out how much to save over the course of a month and create an achievable monthly budget.
Step 3 – Set up a standing order to have bills, such as gas and electricity credited directly to your checking account. This will help you save money on monthly payments for these services.
Step 4 – Shop around to find the best place for your savings.
One of the best ways to save money on a budget is by establishing a savings goal.
Though there are countless things you might want to save up for, knowing what you specifically would like to save for can help make this process easier.
Pay off debt as soon as possible
The chances of you being able to earn more on your savings than you'll pay on your borrowing costs are pretty slim. Paying off debt should be one of the top priorities for most people, and that's because it has such a huge impact on your day-to-day life.
If you have quite a few debts to clear, try to clear the most expensive first. If you don't have any savings to cover the shortfall, that's when considering other options such as a debt consolidator loan or personal loans may be necessary.
These are the most common examples:
- Credit cards
- Car loans
- Home loan (mortgage) interest rates and repayments
- Catalogue shopping
- Pay-day loans
When to start saving?
In general, it's fine to save and have debt as long as:
- You're able to pay the minimum repayments on your debts
- The interest rates are below 20% (if not, you could be paying a lot of money unnecessarily)
- You have emergency savings account with a balance that would cover three months' living expenses.
- You're earning more than you're spending
- Your debt is manageable and not growing too quickly
- You are making high-interest repayments on your debt
Often, people tend to neglect to save and end up with only one source of income.
This is quite risky as it means you may not be able to cope if you lose that job or something happens in your life which results in a sudden expense.
Get rid of any credit cards you don't use
By getting rid of credit cards you don't use, you'll reduce your monthly debt repayments and the interest that they charge.
Here are a few other ways to manage your credit cards:
- Maintain a balance that is lower than the credit limit
- Stay within your budget (you can use an online calculator for this)
- You could put a limit on your card. This means you can only spend up to the set limit and it will be automatically declined when you try to use it for anything more
- Maintaining a balance of $0 is always better than accumulating debt by paying interest.
- Monitor your credit card statements and pay off any balances you have at the end of each month.
- Avoid making new purchases on your cards unless they are absolutely necessary. This will help to avoid carrying debt from one month into another or accumulating high-interest rates.
- Maintain a credit card only for emergencies
- Set up your account so you can't make any more charges without contacting the company first
If you want to know how much debt is too much, take stock of what your monthly repayments are. This should be less than 35% of your income and not exceed 36 months in repayment.
Use cash instead of credit or debit cards whenever possible
Use cash rather than cards and ATM machines, to avoid overdraft fees. This is a great way to stay in control of your finances.
The same principle can be applied to coupons: use them whenever you have them, but resist the urge to purchase items just because they are on sale or a bargain.
You may end up spending more than would if you simply bought what you normally buy when it's not on clearance.
Sell Unwanted Goods & Save The Money
Doing this will provide a quick injection of cash into your budget and you could make a lot of money if you have something rare.
It's easy to get carried away with buying new things, but before doing so ask yourself whether there are any items in your home that can be sold or given away first.
Remember: 'one person's trash is another person's treasure'.
You can sell them on websites like eBay or even sell them by posting an advert in the classifieds section of your local paper.
What about paying off your mortgage early?
Granted, this might not be for everyone, but it could be a great way to free up some cash for other priorities.
Consider what might happen if you were to make an extra payment every month towards your mortgage, or even pay off the rest of your loan in one go: not only would you have more money on hand today, but also there may be financial benefits associated with paying your mortgage off early.
You may have come into some cash or been left money by a relative.
Whatever the reason, there are many ways to use this money that will make it go further and have a greater impact on your life than just getting some new clothes or eating out.
Reduce Your Tax Bill
There are several different tax relief benefits that can reduce the amount of tax you pay.
Here are a few examples:
Working Tax Credit - You may be able to get Working Tax Credit if you work and have a low income, or no children.
Childcare vouchers – The childcare voucher scheme allows parents who work and pay towards their child's nursery fees to claim against those
Personal Tax Allowance - This is a tax-free amount given to each person in the country, and maybe more than you realise.
Maternity Allowance - If you are pregnant or have a new baby and live in the UK, this is paid for up to 39 weeks.
Tax credits can be claimed from week one of your pregnancy - You can claim Child Benefit, even if you’re not working but your partner is earning over a certain amount.
Maternity or Paternity Pay - If you earn less than £11,500 per year, and if one of the parents is expecting a baby (or has just had a child), then they could be eligible for Maternity/Paternity pay.
This can provide up to 18 weeks off work with 90% of their normal wages paid.
Tax relief on contributions to a pension fund - This is available for those who are not already building up entitlement under their employer's scheme.
The tax relief can also be claimed by the surviving spouse or civil partner of someone with unused contribution entitlements.
Annual investment allowance (AIA) - This is the amount you can invest into your business each year without paying any capital gains tax.
Personal savings allowance - Starting from 2016-17, everyone has an allowance of £500 to earn interest without paying tax.
Lifetime limit on pension contributions - This is the maximum amount you can contribute to your pension fund over your working life.
As you can see, there are several ways you can save money, even if your budget is tight.
The vast majority of these tips may not apply to you, but if they do, you should consider implementing them.
We hope you found this blog post helpful and informative.
Saving money is a topic that many people struggle with, but luckily there are plenty of tricks of the trade to help make the process easier.
Don't forget to record your expenses so that you can understand where your money goes each month.
If you want even more savings, try budgeting for them or finding ways to cut back on spending. Perhaps most importantly, pay off debt as soon as possible; it will save you tons in interest charges over time!
Let us know how these tips have helped you out - we're always happy to hear from our readers!
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