TIPS & TRICKS: ON HOW TO SPEND LESS AND SAVE MORE
The arrival of spring is usually a time that marks the time for general “cleaning” and rearranging things. This awakens our desire to change something in our lives and to get rid of some bad habits or replace them with better ones. Thus, in this period, decisions are most often “made” to clean the space in which we live, change our wardrobe or start exercising, and change our attitude towards some things. But one of the less popular fields when it comes to changes is the financial one, that is, the question of saving and how to learn to save. It may require a general cleaning of your financial mindset, but it is extremely useful.
This is a great time to start over, to adopt some new habits that you will be ready to keep forever. Life flies by, and you don’t want to find yourself in a situation where you wake up one day and don’t know where all your monthly wages have gone. The most difficult thing is to start, but do not hesitate, decide today and start applying what you have learned.
AS SOON AS YOU GET PAID, SEPARATE 20 PERCENT TO THE SIDE
This is one of the most important things you can do for your savings. Immediately, as soon as you receive your salary or monthly fee, try to put 20 percent aside. Here, it is not only important to set aside 20 percent of the amount every month but to do it immediately after receiving the money, because otherwise that 20 percent of the amount often finds another purpose along the way, and we understand that this happens, it’s like that for everyone. But that’s exactly why, set aside the necessary, and then start with the distribution of expenses in that month.
From the total amount set aside, let 10 percent be savings “for the old days” that you will never touch, and 10 percent be savings for big life projects like buying an apartment or a car—something for which you know you will need a larger amount of money and for which it is good that you have at least part of it in a cash account. If your circumstances dictate, it will be great if you can set a goal to set aside more every month at the start, but of course, set a goal that you will be able to follow in the long term, even if it is less than 20 percent. You must reach a constant and set aside a part every month to achieve long-term savings.
OPEN A SAVINGS ACCOUNT THAT WILL BE SEPARATE
Once you have decided to start setting aside 20 percent of the monthly amount, it is necessary to carry out all the steps to the end. Namely, many of us fail at the steps later, when we have already set aside the amount, but perhaps not in the correct way. Because, if this money is “in front of your eyes” and you are constantly looking at the amount that is the sum of savings and current money in your current account, you could get the wrong idea about how much money you have available to spend. You can open another account, to which you will automatically transfer the savings money as soon as you receive your salary. This procedure can also be automated through a standing order if you want to make sure that you will do it every month.
WRITE DOWN YOUR EXPENSES FOR A MONTH
Ok, this is a slightly more laborious step, but it works! All you need to do is list everything you pay for a month, down to the smallest detail like coffee. At the end of the month, you will get a list of the things you spend on and you will be able to analyze whether you are spending too much on some part. Perhaps the result will surprise you when you realize how much you spend per month on, for example, food, how much on shopping, and how much, say, on socializing, the gym, beauty treatments, and all other activities. Once you have a clear overview, it will be easier to decide which part to pay attention to. There are also excellent applications for tracking monthly expenses that will help you with this, and one of them is AndroMoney, through which you will be able to directly record expenses according to categories and have a clear picture at the end of the month.
SAVINGS FOR SPECIAL PLEASURES
Of course, saving should not only be long-term. There are several instant pleasures that we want and love, but cannot afford on just one monthly salary. That’s why it’s best to create some kind of savings for them as well, which you will set aside for that special goal, whether it’s a trip, a certain piece of clothing, skiing, or something else. If you don’t feel like opening a new account to set aside money for some short-term goal, a good old piggy bank will also do the trick, in which you will put the surplus left at the end of the day. When you reach your goal, don’t be sorry to spend that money, because before that, of course, you have already set aside the necessary parts for savings, and you can spend them without remorse.
DISTRIBUTE THE BUDGET ACCORDING TO THE 50/20/30 MODEL
Economic experts suggest exactly this distribution of the budget when it comes to monthly expenses. This means that 50 percent of the income is allocated to constant monthly expenses such as loans, apartment rent, and other monthly expenses; 20 percent goes to savings for the future; and 30 percent goes to food and small joys of life such as going out, dinner with friends, going to the cinema, or shopping. Once you manage to redistribute the budget like this, you will know what your options are, and you should live according to them.
BUY SMART, NOT IMPULSIVE
It has happened to each of us that we decide that we will not spend a lot on clothes and unnecessary things, but cheap offers and affordable prices lead us to put something in the basket because it is cheap and will not “damage” our budget much. But such things accumulate over time, and something that was once a small expense grows into a respectable figure spent on shopping (which you will also easily see through an expense tracking application). Impulsive buying is the biggest enemy of keeping a budget, so it should be avoided. Instead, we suggest you make a list of the five items you need in the upcoming season and focus on buying only those. That way, money will not be wasted on unnecessary things, and you will be able to choose more specific and better-quality pieces that you will be able to wear for years.
Use your favorite store’s loyalty programs.
It can often seem like options like becoming a member of the loyalty club of the store where you buy groceries are just trying to get you to spend more, but they are a great solution for your wallet. Of course, this does not mean that you have to become a member of the loyalty club of every brand or store where you will ever buy anything, but it is not a bad idea to become a member and get a card with special benefits in the places where you shop most often.
For example, the store where you most often buy groceries, the store where you shop for household and hygiene items, but also the store where you prefer to look for shoes or clothes. That way, every purchase will be profitable in some way, through additional benefits and discounts that you wouldn’t otherwise get.
