There comes a time in many of our lives when we have to tighten our financial belts. Perhaps we’ve been spending too much, we’re trying to save, or we’ve encountered an unexpected expense. Cutting back can be difficult at the best of times, let alone when you’re struggling to balance the books or find a way out of a tricky situation. If you’re trying to spend less and put more money aside, hopefully, this guide will prove useful.
Tips to help you save
Are you saving up for a vacation, a new car or some home improvements? Are you hoping to get a foot on the property ladder or are you planning a wedding? Are you keen to put money aside for your retirement or are you planning ahead for when your kids go off to college? Whatever your reason for saving, there are ways to try and reduce spending, and often, making minor changes at home is a great place to start.
Saving money at home
If you added up the total cost of household bills, groceries, and home maintenance, you might be shocked at just how much is going out of your bank account every month. Some costs, such as rent or mortgage payments, are non-negotiable. But often, there are simple ways of bringing other costs down.
Energy bills can eat into your disposable income. The good news is that it is almost always possible to reduce these bills. The first thing to do is to shop around for the best prices. You probably assume that you’re getting the best deal from your supplier. But if you have the option to switch, this could save you a significant sum. Look out for introductory offers, and choose a rate, which suits your energy usage patterns. If you tend to use a lot of electricity in the evenings, for example, choose a tariff that offers lower prices at night. Once you’ve switched, you can think about how to get a handle on your energy usage. Do you leave lights on all the time or does your home seem to lose heat very quickly? In the winter months, most of us spend more on heating, and our bills can rise dramatically. Try and make your home more efficient by plugging gaps in walls and door frames, and using draught excluders. Keep internal doors closed, and look into insulating the attic if you haven’t already done this. You’ll have an up-front expense to pay, but it will save you a fortune in the long-run. You could also consider swapping to renewable energy. Some authorities offer discounts for installing solar panels, for example. Once you’ve paid for installation, your energy bills will fall significantly straight away.
Another effective way of saving money is to evaluate what you spend on your TV, broadband, and cell phone contracts. Just like you did with your energy supplier, it’s well worth picking up the phone or going on the Internet to see if there are better deals out there. This is particularly relevant if you’ve been with the same companies for a long time. You can also compare prices on insurance policies, such as health, home, and car insurance.
Families tend to spend hundreds of dollars on groceries every month. If you’re a self-confessed over-spender at the store, you should find that being a little more disciplined saves you a huge amount. Write a list, and don’t put anything that isn’t on it in your cart. Offers may seem like they’re there to save you money, but actually, they usually cause you to spend money on items you don’t need. If you buy too much food, this will eat into your budget, and you may end up wasting it. Buy only what you need, and try and set yourself a weekly total for your shopping. Shopping online can help you to do this, as the website will give you a running total. If you want to spend less, you can simply take non-essential items out of your basket.
Dealing with debt
Only 20 percent of people living in the US are completely debt-free. If you have debts, there’s always a risk that they can spiral out of control. Making a couple of payments on a credit card can quickly turn into thousands of dollars of debt. If you are in debt, the best thing to do is have a clear picture of your financial situation. Many people run into trouble because they don’t realize what they owe or what’s coming in or going out of their accounts. Once you know how much you owe and who you owe, you can work on a debt management plan, which will enable you to regain control of your finances. Sit down with a pen, paper, and a calculator, and write down every single debt you have.
If you have savings, it’s advisable to use them to cover your debts. When you have outstanding payments, or you’ve taken out a loan or a credit card, you’ll be paying interest every month. If you can, it’s best to clear debts before you start trying to save.
If you don’t have money available to cover payments, and you’re tumbling further into debt, seek financial advice as a priority. The longer you leave it, the more you’ll owe. In some cases, when you owe several creditors, it’s possible to consider debt consolidation, which enables you to take out a loan to cover all your existing debts. This means you start again with just one loan to pay off. You make a single payment every month, and you don’t have to worry about debt collectors chasing you or trying to cover late or missed payment penalties.
Getting to grips with budgeting
Whether you’re trying to save or you’re making an effort to get out of the red, it’s enormously beneficial to get to grips with budgeting. Check your account balances on a regular basis, so you know exactly where you stand, and make a budget every month. If you do this, you’ll know exactly how much money you can either save, spend, or put towards clearing a debt. It’s always good to have figures in mind, as this will help you prevent overspending and ensure you don’t get any nasty surprises when you open bank or credit card statements. If you don’t know how to budget, there are some really useful guides online, or you can use apps to track spending. Alternatively, you can stick to the traditional method, grab a pen and paper, and write down everything that’s coming in and every payment that’s going out. When you work out the difference, this will give you a figure you can use to plan your saving, spending or debt management strategies.
Tightening your belt can be difficult, especially if you’re used to spending freely. Most of us go through patches when we have to make a concerted effort to spend less. Try and cut back on luxury items, but don’t underestimate the importance of employing simple saving measures as well. Making a few phone calls, changing the way you shop and comparing prices online could help you to save hundreds of dollars over the course of the year. If you’re in debt, don’t ignore it. The sooner you can start bringing the amount you owe down, the better. If you can’t seem to find a way out, don’t hesitate to ask for advice. There are options out there, so don’t resign yourself to a life in debt.