Chances are you fall into one of two categories: you can save money easily, or you can’t. We all need to save money to help us on a rainy day, for any emergencies that come up, in order to be able to afford big purchases and eventually for a house deposit. So the better you are at saving money, the easier the rest of your financial future will be. If you’re not sure how to get good at saving, here are some tips on how to save money wisely:
1. Measure It
If you don’t measure your savings then how will you make progress? I like to sit down and calculate how much I can realistically afford to save each month. This becomes my financial goal and I check in every month to see if I have made my target. Be ambitious with your goal – it makes it more fun if your target is a little challenging but still realistic.
2. Make a Budget
Before you make a budget, track your spending for a week or a month. it’s so important to find out what your big expenses are and where you could potentially save money. Include everything you spend money on from your pet’s expenses right down to how much you spend on takeaway coffees. Only once you really know how much you’re spending and on what, can you make an accurate budget. Be realistic with your budget, if you have to spend $50 a week on parking, you can’t try to minimize this unless you’re prepared to carpool or take public transport to work. I personally find having a budget makes it easy for me to see what money can be spent where, and what is left over for savings.
3. Reward Yourself
I think it’s important to reward yourself along the way. Set up goals like once you reach your first $1000 you will go out to dinner. After $5000 you can buy yourself that new camera you’ve been waiting for months. Be sure to ‘save’ the extra money for the reward, so it’s not affecting your savings. If you try to be too frugal for too long, at some point you will crash and burn and probably go on a spending spree. By adding in rewards along the way, you feel excited to keep saving and don’t get burnt out.
4. Have a Clear Goal in Mind
Saving for the sake of saving is hard, it means that you have to choose between something you want in the moment or a vague concept. Have a specific savings goal and change your saving account’s name to reflect that. For example, at the moment I am saving for a house deposit. I have named the saving account ‘house saving fund’ so every time I put money into it, I know that I’m saving for my house. Some people really benefit from vision boards too – having a clear visual representation of your goal can help it feel more attainable and keep you excited.
Saving can be hard, but with these four tips I know you’ll be saving money wisely. Let me know in the comments below if you have any tips for saving wisely.