Sometimes, the most difficult part about saving money is knowing how and getting started. This article will go through how to save money using simple and realistic strategies, with the idea being you can then achieve all your short and long-term goals.
1. Look at Your Income and Expenses
The first step towards saving money is figuring out what you are spending versus what you are bringing in. You should start keeping track of all your expenses – everything from energy bills, food shopping to non-essentials. Start by going through your bank statements to make sure that you do not forget anything.
You should immediately be able to identify the areas where you are overspending and could easily cut back on.
It is not too important to include non-essential purchases, such as takeaways here. For the time being. As the main goal here is to see what your savings could be with all the expenditures that you must pay.
Tip: input your expenses and income into a spreadsheet or cashbook, whichever you find easiest. Some people find it helpful to carry a cashbook around with them so that they can jot down everything as they go. Others will find it easier to sit down at the end of the week and input their outgoings into a spreadsheet.
2. Identify Where You Can Save Money
On first look, you should be able to see exactly what things you can cut out straightaway. However, there may be areas where you can save that may not be so clear until you look further. If your expenses are still too high that you are unable to save as much as you would like or need, it may be time to cut back on a few extra things.
Remove any expenses such as:
• Subscription services you no longer use/would be happy to cancel
• Cancel your gym membership (if you are not utilising it frequently)
• All the non-essentials like takeaway coffees that are adding up
• Entertainment such as days out
• Dining out
• Quit smoking
Quitting a smoking habit can have big health benefits, but not only that, but it can also save you a lot of money. If you can quit the habit, you could be saving a significant amount of money towards your saving goal. The average smoker will spend £3,300 a year on cigarettes. More if they are buying premium brands. While it may not seem like much per week, imagine what that could be used towards if that extra cash were spared and allowed to build up in your savings.
Here are some tips and easy swaps you could make:
• Look for fun, free local days out
• Treat yourself to eating a meal out once a month
• Do not be afraid to buy own-brand items
• Walk or cycle where possible
• Tempted to buy a non-essential item? Give yourself a couple of days to think about it first
Are you someone who usually only buys branded items when shopping? Next time you go food shopping, try buying a few items of your own branded food. Buying supermarket own brands can allow you to save a significant amount. Often, the quality can be very similar, so it does not mean compromising on the taste. In fact, in many blind tests, people cannot tell the difference! Purchasing own brand food items can give you huge savings per year while not losing out on taste or quality.
Another tip for food shopping is to consider shopping in bulk. It may be a good idea to start buying a lot of frozen foods in bulk, which could last a few extra weeks or even up to a month in meals. A simple way to save is to buy larger packs of food that is cheaper per KG. This may not offer savings per week, but it will soon amount up to a significant saving.
3. Use Comparison Websites
You should now be left with all the expenses that are either essential or that you can afford. Although it is beneficial to look into these areas and see if you can get some better deals. Price comparison websites let you compare hundreds of products to make sure that you are getting the best deal possible. It is always worth browsing for cheaper deals for:
• Car Insurance
• Broadband & Landline
• Television Subscriptions
• Mobile Phone
• Home Insurance
When it comes to your mobile phone, if you have a phone on contract, consider whether this is beneficial for you to renew. For instance, consider keeping your phone and not swapping for an upgrade when your contract ends. Think about keeping your phone and either getting a SIM-only contract or pay-as-you-go SIM. A SIM-only contract can often be as cheap as £5-£10 per month, depending on your usage allowance.
If you are upgrading and keeping your phone on contract, you should take a couple of minutes to check your bills to make sure that your call, text, and data are what you expect. For example, if you are continuously using way below your usage allowance, this shows that you could get a much cheaper deal with fewer calls, texts, or data.
4. Know Your Priorities
Of course, we all like to treat ourselves. But when we need to save money, it is important to focus on what is important. While that one takeaway coffee does not cost much, if you repeatedly treat yourself to non-essentials, it all adds up to large amounts very quickly.
Reduce the number of times that you treat yourself so that while you are saving money, it is not all hard work and no play.
5. Set Yourself Goals
Generally, saving money is made a lot easier if you set yourself some goals. Not only that, but you may find that you are motivated if there is a goal to focus on. You may have short-term goals or long-term goals to look forward to, such as:
• Saving for a wedding
• Saving for your retirement
• House deposit
• Car deposit
• Emergency or rainy day fund
By setting yourself goals, you will be able to figure out how much money you need to save and how long it may take you to save it. This will make the saving process and cutting back on non-essentials more manageable.
6. Save on Energy Usage
Your energy usage can be costing you more money than you may think. By following a few of our helpful tips, you should be able to save a significant amount of money each month. Here are some of our tips for saving money each month on your energy:
Do Not Heat Unused Rooms
Do you have a spare bedroom that is very rarely used? If so, turn down its radiator to the lowest setting. It is important to keep the radiator running instead of turning it off completely. This way, the pipework will keep running through and keep the radiator running smoothly without interruption. Before you use the room, simply turn the heating back up to warm it before use.
Seek Expert Advice for Your Energy Use
If you are not sure where you can be saving money or how energy efficient your home is, you can carry out a free check on your home energy on the Energy Saving Trust website. [enerysavingtrust.org.uk]
Do you have any pesky draughts in your home? Tackle your draughts by filling in any gaps you can find around door frames, window frames, or pipework. Achieve this by using draught excluder strips and expanding foam. You should also make sure that your attic hatch is insulated so that no warm air is escaping.
Control Extractor Fan Use
Are you always using your extractor fan in the bathroom and kitchen? Did you know that they burn a lot of energy if they are left turned on much longer than is required? If you do not need to turn the extractor fan on, opt for opening a window where possible instead. Start turning them on and off manually to keep in control of the extractor fan use.
Make Sure Your Boiler is Efficient
How long has it been since your boiler was checked? Your boiler could be costing you an awful lot of cash. By installing a far more efficient boiler, you could lower your overall heating costs. This particularly happens if you switch to a condensing boiler. A condensing boiler may help to save you around £300 a year. However, it is important to be aware that a condensing boiler may cost more to install.
Turn Your Heating Down
Are you walking around in just a t-shirt during the winter and colder months? Consider turning the heat down a little and adding an extra layer instead. If you are able to layer up a bit more than you are currently, you could save extra cash. This is an effective way of cutting your costs on energy bills each month. Reducing your room temperatures by just 1°C could help to reduce your energy bills by a whopping 10%.
Another great tip is to turn the heating on only two times during the day. Once shortly before you wake in the morning and again in the evening. Generally, there is no need to have your heating turned on throughout the day.