We all know that in today's economic climate, it's getting harder and harder to hold onto our money. On one hand, we want to live life to the full but on the other, we don't want to eat beans on toast every night. It's hard not to feel our finances are spread too thinly already, so are there really ways that you can cut back on spending? Absolutely!
How small savings make a big financial difference
It's actually often the smaller things that take up most of our funds without even realising. So here are five tips to help you on your way to becoming spending savvy.
1. Take a look at how much you honestly spend at the moment
Sit down with a notebook, pen, calculator and your bank statements and sift through them adding up the total for different areas of your spending. This will be different for everyone depending on circumstances, but here are a few ideas:
- Eating out
- Nights out
Add up each transaction in each section over the last 3 months and take a look at the pattern. You'll probably be surprised at just how much money goes on eating out or bills. Sometimes just the realisation is enough to shock you into thinking before you make a purchase.
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The thing with take-out food, on-the-go coffee and other small purchases is that they are soon forgotten about. It's like 'hidden expenditure' meaning you forget you've spent £15 on a take-out curry on Saturday when buying your third takeaway cappuccino of the day.
Not keeping track of your spending will catch up with you. The key to saving more and spending less is really knowing what you are spending your hard earned cash on.
2. Set yourself a realistic budget and targets
When your salary arrives in your account each month, you need to follow the same routine:
- Pay the bills - always start by making sure all your bills are covered
- Save - it doesn't have to be a huge amount but slipping £10 into your saving account each month, for example, is a great way to build a little pot for a rainy day.
- What you have left - you may not have loads of money left over to play with but when you you know how much disposable income (the money you have left over after paying bills and putting a big in your savings account), you know how much money you have to play with.
Having a goal or something to save for is useful as a motivational tool. By working out how much you would like to put aside each month into your savings account, you'll know how long it will take to save the required amount.
Be realistic about your savings and spending goals. In the moment it's easy to feel super motivated when it comes to savings, but if you deny yourself too much in terms of money in your pocket, it can leave you feeling deflated and quite frankly, miserable.
3. Identify where you need to cut back
Once you've identified a spending pattern, you need to research how you can cut back on the big money-sucking activities in your life.
Photo by Sylvie Tittel on Unsplash
If you spend way too much on groceries, for example, take a look online for tips on how to save money on food. You'll find loads of info on how to save your cash, such as using coupon codes that you find in magazines or online, and without starving yourself. Buying 'unbranded' food products and drinks can save so much cash and they rarely taste any different from the 'real' thing.
If you overspend on eating out, why not try making more of an effort to buy ingredients and cook, replacing one or two of your take outs? You may find that your biggest drain is buying lunch every day so invest in a lunch box and take your own every day - you'll soon notice the difference!
4. Stay on track using a budgeting app
The Loot app helps you to manage, prioritise and save money, and it'll help you not to overspend too.
With your own separate Loot card to use, you won't need to worry about feeling tempted to spend more than your allocated budget for the month. You also get to break down your savings goal and track your progress. Normally, it helps when we can see a visual representation of edging nearer to our goal.
You can change your budget easily and quickly each month too, to reflect changes in your income or circumstances. You're not tied down to anything and your money is protected too.
5. Sweat the small stuff
We all have different spending habits with many different factors contributing to your financial outlook. including age.
It may only be coffee but is it one take out coffee every now and then, or is it a daily purchase?
Photo by Ali Yahya on Unsplash
If you spend £4.50 a day of coffee before work 5 days a week, you'll be spending £22.50 a week on take-out lattes and mochas. Working an average of 253 days a year, if you keep on with this habit, you'll have spent £1,138.50 on your fave extra-hot, double-shot latte.
Now imagine what else you could spend that money on. It could be an all-inclusive holiday in the sun AND spending money.
We get it - you can't possible function without coffee - and there is nothing wrong with the occasional take-out latte, ready meal or meal out with friends. But if your money is under pressure, you know you need to save more and spend less. What choices will you make?