Article #2 - Eight Step Guide on How to Save Money
Whether we admit it or not, we all know that we should regularly be putting some of our spare money into a Saving Account. There are lots of reasons why we should have a cash nest egg accumulating somewhere: maybe for a holiday, a new car, a house deposit or just for a rainy day.
Unfortunately, most of us would argue that there is no “spare” cash to save, in fact many of us spend our salary each month as well as dive into an overdraft or credit card for extra money.
We think everyone can manage their finances a little better and find room to start saving. Read on for our seven step guide on how to save money:
Step 1: Cut Out The Waste
No matter what your lifestyle, there is always something that you buy that you simply just don’t need. Take a close look at your lifestyle and be totally honest with yourself for each purchase and ask yourself “Do I really need this, and will it benefit me in the long terms?” This is a continual process of assessing your purchasing habits.
Step 2: Savings Goals
Whether your saving for a consumer gadget, a new car, holiday or your retirement, you need to work out how much money you need to save on a regular basis to achieve the sums of money required.
Step 3: Make a Budget
Once you’ve cut out the waste and know how much you need to try and save each month, you need to budget accordingly. One thing that can be helpful is to first assess your lifestyle. Over the course of a couple of months make a record of everything you sepnd your money on. Once you see it in black and white you’ll know exactly where your money is going. You’ll be surprised just how little people know about their money expenses.
Once you know where your money is going you can then budget accordingly. First assess the essential expenditure like mortgage repayments, rent, utility bills etc. These are the essential cost of living expenses. Then after being deducted from you monthly salary you can assess how much is left to spend on little luxuries like eating out, going to the cinema, buying new clothes, etc whilst leaving enough to make the necessary contribution to your savings.
Step 4: Balance the Budget
Once you established your budget requirement, you need to make sure the budget balances with your income. Ideally, you are aiming to ensure that your monthly income covers alll of your expenses as well as your savings needs without the need to use an overdraft facility, credit cards or loans.
This may sound like an impossible task for some, but there are always changes that can be made to your monthly expenditure. For example, look at your utility suppliers of electricity, gas, telephones and internet and look for cheaper suppliers. Your could easily make a 20% saving here with no effect on your lifestyle! The same is true of your mortgage provider. If you eat out at restraunts, then perhaps replace some of the occasions with a takeaway. If you have a few take aways a week, then perhaps replace by cooking at home – it all adds up.
Step 5: Stick to your Budget
It may sound obvious, but it’s easy to be distracted from your budget plans. Constantly remind yourself that you are on a budget and for good reason – to meet your savings goals.
Step 6: Open an interest bearing Saving Account.
You need to keep your savings money away from the rest of your money. This will not only help you keep track of your savings as they accumulate, but also give you the opportunity to earn interest. You need to make the right choice on the Saving Account. Some offer easy access to your money, while others are a little harder to get at. The difference being in the amount of interest earned. If you have budgeted properly, then you might be able to consider putting your money into a higher interest bearing account.
>>> Click here for Saving Account reviews
Step 7: Ged Rid of that Debt.
It should be your priority to eliminate debt as fast as possible. Debt repayments attract interest and that stops you form saving the maximum you can.
Step 8: Avoid Debt Balances on your Credit Card
Sounds abvious, but paying your credit card balance off in full each month will avoid unnecessary interest payments. You can also use your credit card to better effect – by using your credit card for all of your monthly purchases and expenses you can actually make money. Putting your salary into a savings accoutn each month means it accumulates interest while you spend on yoour credit card. At the end of the month take out exactly what you need to settle the credit card balance. Moreover, if you get a cash back and rewards credit card, you will also earn from you credit card. However, this does require a very strict regime and making sure you ALWAYS pay off your credit card balance at the end of each month.
>>> See other Credit Card Guide Articles
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