Here are 10 tips on how to save money that will save you thousands! These are tried and tested tips that you can use on a daily basis to start saving money. Many of us are looking for ways to save money every month and these tips will help you do that. You will be able to save money to put towards your bills, your next holiday, or your emergency fund. Whatever it is you are looking to save towards, these tips can help you. These are my top 10 tips on how to save money that you can start using today!
1. Pay yourself first
This is my best money-saving tip because it really can save you so much money over time.
What does pay yourself first mean?
It means that you should pay yourself before you pay for other things. Or in other words, save first, spend later. When money comes in, you should make sure a portion of it is saved or put aside for yourself, before you start paying your bills or making purchases with it.
How can you put this into practice?
The best way to put this into practice is by setting up automatic payments from your checking (or current) account to your savings account, so that as soon as your salary comes in, a portion of it is automatically moved to savings. This automated process works well because you don’t have to think about it or remember to do it, plus you don’t really see the money in your checking account first, so you won’t be tempted to spend it before it is paid back to yourself. It is a win-win situation!
How much should you save?
A simple rule of thumb would be 20% of your income. If this is possible for you, then you should aim for this. You could use the 50/30/20 budgeting approach, which is recommended by many personal finance experts. This involves allocating 50% of your income towards needs, including bills and groceries, 30% of your income towards wants or fun money, and 20% of your income towards future you, specifically savings and investments.
If you use this technique to pay yourself first, you will surely see a significant increase in the amount of money you are able to save!
2. Track your spendinG
The second tip involves tracking your spending so that you become more aware of what you are spending money on. It is important to know what you are spending money on, and just how much money you are spending, so that you can identify areas to cut back on. The more conscious you are of what you are spending, the less likely you are to overspend. This happens simply because you are thinking about your money with intention.
There are several great apps that you can use to track your spending. Perhaps your personal banking app will offer some insights, but you can download a dedicated tracking app for more insights. Examples include Money Dashboard, Emma, and Moneyhub if you are based in the UK, or YNAB if you are based in the US. Once you download one of these apps and see just how much you are spending in each category every month, there is a good chance that you will want to cut it down and save money.
3. Make a budget
That brings us to tip number 3. If you have gone ahead and downloaded a personal finance tracking app and monitored what you are spending, it is time to make a budget. From tracking your finances, you will probably have identified areas where you could cut down your spending. Many people find that they spend a lot more on eating out or online purchases than they thought. Whatever it is for you, you can incorporate this into your budget.
To make a budget you will need to take some time to sit down and figure out your income and your outgoings. You should look at all of the ways that money is coming in, so all of your streams of income, and all of the ways that money is going out, so your spending on needs and wants. You can take a look back at the last three months of spending to get an idea of how much you typically spend. Once you have done this and figured out the areas you are overspending, be sure to factor this into your budget.
One of the best ways to make a budget, is by using a pre-set spreadsheet where you can just fill in your income and spending categories and the amounts. Check out my Simple Budget Tracker spreadsheet.
It is pre-set with categories for income, spending, and saving. The fields are prepopulated so they will autogenerate. It is really easy to do. It may take a little time for you to input your data but once you have, you will have a ready-made budget for the months and years to come. It is fully customizable if you want to customize it. But if not, you have a ready-made budget that you can change or update with the click of a button. This is more easily customizable and accessible than an app for a lot of people.
Once you have your budget ready to go, make sure it is realistic for your lifestyle. It is great if it challenges you a little, but you don’t want to make a budget that is impossible to stick to. Once you have created a realistic budget for yourself, try and stick to it. You will find that you will very likely succeed in sticking to your budget because you have invested time and thought into it and you have a purpose in mind, saving money. If you think of a specific goal that you are saving for, even better. That will make it even more likely that you stick to your budget.
4. Don't splurge on payday
Let’s be honest, we’ve all done it… got paid, and started spending like crazy. Even if you don’t go too wild, you probably choose to treat yourself when payday comes around. This is fine in moderation and you should absolutely spend money on things you have budgeted for. If you have budgeted for “fun” and you spend a little money buying something nice, then good for you. It is often the larger, impulse purchases, that can be problematic. When payday comes around, we frequently feel as though we have more to spend, when that is not really the case. The problem is that this kind of spending can really put a dent in our finances.
Budgeting well can mean that you don’t run out of cash at the end of the month and feel the urge to spend when you see the money hit your account. Prioritize paying yourself first and paying for your needs, such as bills and groceries, then you will know that you have money left to spend on wants. Try to have a small budget for this every month, to keep you from splurging. This cash can be used to buy something nice, but will not derail your budget or affect your financial plan.
Believe it or not, setting aside a little "fun money" will actually save you money over time!
5. Become a smart saver
Shop around for high-interest savings accounts (HISA) or high-yield savings accounts (HYSA). These are accounts that you can use to save your money that will pay you a good interest rate. A great savings account is essential to your money-saving journey. It is a place to keep all of the savings that you have worked so hard to save, so shop around for the best one. Things to look out for are a high-interest rate, accessibility, and customer service. This will allow you to maximize your cash and get the most out of the money that you have sitting in a savings account. High yield savings accounts are a great place to keep your emergency fund as your money is readily available for deposit and withdrawal. You can also keep your savings in tax-efficient savings and investment accounts, such as ISAs in the UK and IRAs in the US.
6. Build an emergency fund
An emergency fund is money that you have saved up for an emergency situation that could cost you money. The kinds of emergencies that require you to dip into your savings, often have high costs, so one way to prepare for these is to build up an emergency fund. This will give you the peace of mind that should you face an emergency, such as loss of income or a large bill, you will be able to cover it.
An emergency fund is so important to save because if you run into an unexpected or emergency expense, that you otherwise would not be able to afford, this could derail your whole financial plan. It could cause you to take out debt to afford it, which is far from ideal. A well-stocked emergency fund will save you from borrowing on a credit card or taking out a loan. An emergency fund should really be the first thing that you save, not least because it will end up saving you money, but also because it will give you peace of mind that you would have something to fall back on.
You can start off by saving one month’s worth of expenses. Then, you can increase that to three to six months' worth of expenses over time. Some people even like to have twelve months' worth of expenses saved up. Choose whatever is comfortable for you. Even if you choose to just save towards one month’s worth of expenses, that could make a huge difference, if an emergency expense does come up. I think the ideal emergency fund is a six-month one, but this can take a lot of saving, so start off small and build from there.
7. Go Incognito
This relates to online shopping. When you shop online, you can open an incognito browser. This makes it more difficult for the website to track your browsing and search history. The effect of this, is that websites can’t track what you have been looking at, so they can’t put the prices up on your next visit. This can make a huge difference to the prices. You will notice this most, when buying high-ticket travel items, such as flights and hotels. The prices will often shoot up, the more you look at them on a normal browser window. It makes such a difference and most people don’t even realize. So try this tip to save money and see how much you can save.
8. Have a No Spend Day (Or Week!)
Try to have a no-spend day. This is a day where you do not spend anything additional to basic expenses that you automatically pay for, such as bills. You cannot spend money on food, takeaway coffee, transport, or any other things that you might spend money on in a day. It may seem difficult to achieve, but you could prepare for this day by getting some groceries in and making your lunch at home. You could make a coffee at home to take to work with you and cook at home in the evening. It may not be as unachievable as it may seem. You could try to have one no-spend day a week and see the difference in how much you save! Once you have mastered one no-spend day a week, you could increase this to two days or even more. You could also try a no-spend week. A no-spend week would take more planning, but it is possible, as long as you prepare ahead of time. This will save you even more money!
9. Cut your grocery bill
Another great way to save money is by cutting down your grocery bill. First of all, you will need to find out how much you spend on groceries each month. Next, you will need to set yourself a budget for how much you should be spending. Your grocery budget should be less than what you have been spending, but still realistic for your household. Then, you will need to find ways to achieve this goal. You can consider swapping to a different grocery store or try buying the store's own brand items that are cheaper. Own brand items are usually significantly cheaper and often, taste or function the same, or similarly. This will save you money on your grocery bills. Also, look for coupons, discounts, or cashback offers. Every little bit helps when saving money and it could make a big difference to your grocery costs.
10. Wait To Buy
This is a really good money-saving tip that we can all put into practice. When you are about to buy something, try to stop yourself and wait before you rush to the checkout. This can be difficult as we often have the impulse to buy something now, but this time can be beneficial as it allows us to think and reflect on the purchase and whether we really need it. Try waiting 24 hours before purchasing, and if you still decide that you need it, then buy it. This tip can help with impulsive spending. Even better than waiting 24 hours, try waiting a week between wanting the item and purchasing it. See how you feel after a week, you might still really want it, or more likely, you will have forgotten about it, or decided that you don't really need it after all.
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