Top Five Tips on How to Save Money

Top Five Tips on How to Save Money - Ratewise
by Nicole

Saving money starts by making a conscious decision to stop spending it. How to save money is simple, right? If it were really that easy, millions would be pros at learning how to save money.

Saving takes patience, and a willingness to understand your weak points with consumerism. Don’t beat yourself up if you don’t know how to save money. Get right back to normal savings by following the tips below.

5. Stop buying stuff you don’t need

There are plenty of things to spend your money on. Marketing does not discriminate and targets people regardless of income. The same advertisements seen by the rich are also seen by the poor, and it makes it hard to learn how to save money.

When you are constantly bombarded to buy stuff, there is an actual dopamine rush right up to the point of purchase. As mechanical as this entire process is, keep in mind that it only lasts for a short while.

A game system is pretty useless unless you buy more games. And a grill needs fuel to get the fire started. No matter what you buy, there is an additional upsell to make the original investment worth it. You can’t learn how to save money by buying stuff that isn’t needed.

When you no longer buy the small things, then there is no use to keep the original investment around. It will either get sold at a bargain price or end up collecting dust in your home long before you learn how to save money.

All of this is assuming that you even used the original item. Some people don’t make it past the first week of use before getting bored. This type of rapid buying will create a giant hole in your wallet.

Try to limit products and services that you don’t need when you want to learn how to save money. There is nothing wrong with buying a few things, but there has to be a hard limit.

Before you go off the rails, that limit will prevent you from draining potential savings. How you save money starts with intelligent buying and management of funds.

4. Separate your accounts

This is the hardest thing to do, yet necessary to enforce a saving mentality. Set up a dedicated savings, billing, spending money and emergency account to learn the benefits of how to save money. They should all be separate from one another, and each one should have a specific purpose.

The savings account is where you put a set amount of money in at intervals of your choosing or based on a percentage of the money you earn every month.

You can have it automatically deposited every time you get paid. Another option is to put in a small percentage of every income source. Make sure that the percentage route doesn’t get in the way of the other accounts.

With the billing account, you should know exactly how much is required to be in it at all times. Bills don’t have wildly varying amounts, even if it is based on utilities.

When something like your smartphone bill gets out of hand, it is still predictable enough to prevent an overdraft. Contact your phone company and set the plan up so that it never goes over a certain amount.

If that option isn’t available, switch to a plan that charges a set amount each month. Until you match your smartphone habits with the current plan, the overages will be a danger to your billing account.

Your bills should be a set amount every time, with a combined estimation of no more than one hundred over per month.

An emergency account is the hardest to set up since it requires a large initial investment before you learn how to save money. Unlike the savings account, you don’t have to keep adding to the emergency fund.

An emergency fund should realistically cover two to three months’ worth of bills. For a lot of people, this isn’t an option. Try to shoot for something within your means if a three-month emergency fund is out of the question.

Having an amount that covers a large expense (car damage, rent) is more than enough. It’s not about the amount in the fund, it’s about having something to depend on if all of your other financial sources fail.

In addition to the fund, you can get a credit card with a limit that covers a month of expenses.

This is a little bit trickier to manage and may activate your need to shop. To keep the card active and free of fees, fill your car up with fuel and then pay off the amount before the bill arrives. Having a credit card requires control and should not be taken lightly.

Spending money is the best part about having separate accounts and will be a new lesson altogether. Running up a tab at the bar works a little differently when you have a limit to adhere to.

Your spending money should be what is left over after adding to your savings, emergency, and bill accounts. Sometimes the amount will be so small that it discourages buying anything.

Never take from the other accounts to pad out your spending money. Once you start taking from the other accounts, the entire process becomes compromised.

3. Invest

Money that is invested wisely can’t be spent on things you don’t need. There is also a chance that an investment can turn into more money.

By telling someone that investing will save them money, it doesn’t translate to a free pass for playing the stock market. Put your money in quality investments that don’t require upkeep.

It can be land, stocks, a business, or anything that isn’t volatile. If it is an investment that doesn’t require personal time, then consider it a good move.

Like a credit card, investments are something that can get out of hand. Consumerism is worse with investments, and it has more ties to gambling addiction.

Everyone thinks they’re smarter than the house, even when their wins become losses. Handle your time like money, and investing will never become a stain on your finances. When your savings become stable, revisit investments as a larger role in your life.

2. Brand friendly vs. budget-friendly

Apple and Samsung are two of the greatest smartphone makers in the industry. Their products are terrific, and their brand names drive fans to the checkout line.

They know how to save money without making an inferior product. In order to boost your potential savings, it may be time to look beyond big brands.

Great brands have products you want, but they won’t always be budget friendly. For every product or service, there is always a cheaper alternative. The hardest part about making the switch is pride, so don’t get bogged down with the mental part of it.

Making the move to budget friendly can be a disaster without proper planning. Some products and services are mandatory, and in employment cases, have no alternatives.

Replace what you can with a cheaper alternative, but don’t turn it into a huge hassle. Even if you can’t get away from your iPhone, there will always be other ways to save money.

1. Record your expenses

Having a visual indicator of your finances is important. It provides a clear way to show where the money is going. When you’re bleeding hundreds of dollars into certain expenditures, seeing it on paper will make it ‘real’.

Swiping a card and buying things online have no weight, and the amount of time it takes to spend a full paycheque is trivial. Even paper money spends effortlessly, especially with smaller bills.

There is a reason people still balance their checkbooks, and they’re usually the people that are good with money.

Balancing your checkbook isn’t required to get the most out of learning how to save money. However, a paper or digital way to track money spent should always be a priority.

There are plenty of apps that accomplish this function, and a few of them can even integrate with your calendar.

Wrap up

No one is perfect, and even the wealthy have made bad financial decisions. They still know how to save money, they’re just human like the rest of the world.

It is never too late to save money when you have the right mindset. Instead of spending money on the wrong things, put it to better use with a savings account.

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Tips on how to save money FAQs

What is the best way to save money in the UK?

There are plenty of ways to save money in the UK. Take the challenge to save £520 a year by setting aside £10 each week.

Save change in one place and deposit it into your bank account once you have a lot. Open a savings account to keep your money from being spent. Try meal prepping to make leftovers last more than one meal.

What is the 30-day rule?

The 30-day rule is an easy way for you to keep your unneeded spending as low as possible. To use the 30-day rule, try delaying buying items that you want but don’t need by 30 days. This can help you from splurging in the moment and help you only buy things you will enjoy for the long term.

How can I save money in 2020?

You can save money in 2020 by keeping non-essential spending low and having a budget or goal to adhere to.

To help you stick to your plan, share your goal with others and write it down. You could even get a money saving buddy to make a goal with and keep each other accountable.

What is the best way to save money?

The best way to save money is to put money away before it gets spent on wants and needs. To cut down your expenses, you can eat out less, use public transportation, and stop unnecessary spending. Be sure to put aside money for your savings as soon as you get your pay cheque before it goes to other things.