About saving money

by Jun 22, 2018Life & Money Q&As

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What easy, little things can anyone do every day to save money?
Great question, and here’s what we thought…

Just for clarity, by ‘save money’ do you mean reduce your expenditure or increase your savings? The two often mean the same thing – you cut down on expenditure in order to add to your savings, but not always. You may wish to reduce expenditure in one area to spend in another (ie save for a long holiday).

Some thoughts:

What you cannot measure you cannot manage. You are in effect managing your money here so you need to measure it. Its worth finding some way to monitor your expenditure so you can see if you are actually making savings.

Money is a means to an end. Why do you want to save? There is little point in saving for the sake of saving, especially if it prohibits you from leading a fulfilled life today. Read my post on prudence versus passion at https://blog.living-money.com/financial-organisation/. Having a reason to save will also provide you with the motivation to achieve your goal.

Its a good idea to have a plan for your life, from which you can develop spending plans. These will indicate, emotionally, where you feel you should spend more or spend less (but this is a whole new question!)

I would caution against putting too much energy into making savings. Yes, pick some of the low hanging fruit I suggest below. However, bear in mind you can probably have a greater impact on your life by putting your energy into increasing your income. There are limits to how much you can reduce your expenditure. There are no limits on how much you can earn, save only those set by how you want to lead your life.

Living sustainably is a great place to start. If you try to live with the health of the environment in mind, as a steward of the environment, you should find yourself saving money at the same time. A sustainable house is a happy house!

At it simplest, taking positive steps such as switching out lights when not needed, turning the thermostat down a couple of degrees, using timers to run washing machines etc during the night on cheap rate electricity, planning meals and buying only what is necessary to avoid wasting food will all help.

You can be a bit more adventurous by, for instance, cycling or walking to work or the shops instead of driving or buying public transport.

Its usually a good idea to review your utility suppliers (gas, electricity, water, telecommunications etc) to see if you can find cheaper alternatives. This is an acceptable strategy for commodities, but can fall down for less utilitarian purchases: the old adage that if you pay peanuts you get monkeys usually holds true!

Finally you might want to consider, if you can, a bit of capital investment. If, for instance, your washing machine is old it is probably inefficient. Spending capital on a new machine should reduce your daily running costs. You would need to work out if the savings warrant the capital outlay by calculating how long it takes for the savings to repay the cost of a new machine.

A less capital intensive and probably more effective strategy is to switch old electric light bulbs (even strips) for new LED lights. These are more expensive than conventional bulbs. However, they use far less electricity (compare the heat coming off an old bulb to that from an LED) and last longer.

Finally, consider some of the new financial tech available. For example (in the UK), MoneyWiz can help you keep track of expenditure, develop expenditure plans and monitor actual against planned spending. Money Dashboard (and others) access your accounts to monitor your expenditure and report back on where your money is going. Apps like Chip go one further by automatically transferring cash not actually used against plans to a savings account. Please read my post on Open banking and the Payments Revolution.

Hope this helps, and good luck.

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