Save money: 13 Tips for saving money
It’s National Savings month this July, and here at Meerkat we just love getting behind positive saving habits. So to help you on your way this month, here are our top 13 tips for saving money.
1. Prioritise yourself
This tip is always first on our agenda because it is so important to pay yourself first. What do we mean by this? We suggest that you aim to save at least 10% of your earnings before tax. It may not seem all that much, but that’s how it can become a sustainable habit. If you think of your savings like you would any other bill, you’ll ensure that saving becomes a solid habit which will enable you to start building that emergency fund.
Another good way to prioritise yourself in the saving process is to automate the process. We suggest setting up a direct debit so that a certain amount of money is moved directly from your income to a separate savings account at the start of each month.
2. Track how you spend your money
Do you ever near the end of the month and find you have just no idea where your money went? Well, you’re not alone, and the best way to start avoiding that is to keep a watchful eye on where you spend your money. It’s likely that you’ll start spending less when you realise just how much you spend on things you didn’t realise before.
Begin by noting how much money you spend daily and what debit orders you have in place, so you can determine your ‘current’/ day-to-day spending expenses. A way to do this, is to print last month's bank statements, take two coloured highlighters and highlight the money you spent on ‘needs’ and then the money you spent on ‘wants’.
Remember, your needs come first. Needs include food, water, housing, etc. etc.
If there’s extra money to spend after you’ve saved a predetermined amount, you can spend it on your wants, for example, luxury items like a watch etc.
3. Review your bank charges, insurance policies and medical aid
There is so much competition out there and options to choose from you may as well make sure that you are definitely getting the most for your money. You may be able to save thousands of rands a year by reviewing your
- medical aid,
- insurance policies
- bank charges annually and either negotiate better rates or shop around for better offers.
You can also reduce costs by avoiding other banks’ ATMs and, where possible, signing up for automatic bill paying, to avoid any late fees. These little penalties do add up, and when you automate your finances and are in full control of these little things you will certainly reap the rewards, one little saving at a time!
4. Reduce your phone costs
Take careful note of how much time you spend on your phone for a few days. Do this by tracking the phone calls you make and the data you use. Then investigate whether you’ve got the best possible package/plan for you. Like the tip above, there is a lot of competition in South Africa when it comes to cell phone providers and there are always deals out there that are aiming to be the best on the market.
Also remember that you do not always need to latest phone out there, often people fall into the trap of continuously getting an upgrade with their phone contract… this is not necessary!
Also, consider switching off your phone at certain periods of the day when you might need to focus and remove any apps that use data without you even knowing, sometimes when you download apps it’s in the Ts and C's that data runs even when the app is not being used. The savings could add up to hundreds of rand over the course of the year and this is an awesome way to keep your savings at an all-time max.
5. Manage your grocery spending carefully
Once you’ve figured out your monthly budget, you’ll know how much you can afford to spend on groceries. Stick to your budget by planning your meals in advance, listing what you need to buy and then buying everything in one trip (perhaps make it once a week).
Avoiding temptations and unnecessary spending by limiting the duration and number of shopping trips. Also, be both wary and aware of specials which you find in shops. They can be very useful when they’re on goods you’d buy anyway and actually need. However, they can also lead you into impulse buying, which is problematic if you truly don’t need the item.
6. Limit your car expenses
We get it, this is a sensitive topic right now. Petrol has shot through the roof! But consider other things such as regular maintenance of your car ensures it lasts longer and may help you avoid major costs three or four years down the line.
Currently, South Africans spend a majority share of their salaries on petrol compared to other countries. And while petrol prices seem to be hiking to a point of no return, you can still save petrol by:
- check your vehicle’s wheel alignment and keep your tyres at the optimal pressure to minimise resistance
- close your car windows when driving to reduce drag (yes it helps)
- reduce your car’s weight by clearing all unnecessary items
- keep your speed to a minimum to reduce wind resistance
- use the air conditioning sparingly!
- planning routes and combining tasks to minimise the number of trips
If it's possible for you to move so you can live closer to work, do it. It makes sense to invest what you can in a house, which is an appreciating asset, rather than spending your money on expenses like petrol and vehicle maintenance.
7. Reduce your electricity consumption
Eskom’s electricity prices and supply is also a touchy subject (much like petrol as above). But what’s more, to consider is the fact that you can actually spend less on electricity by being a more conscious electricity consumer.
Reduce your electricity costs with these tips:
- Limit how often you boil the kettle and make sure you’re boiling the real amount you want and only when you need to!
- Switch to energy-efficient bulbs, LED lights are also effective in saving electricity.
- When your old appliances eventually pack up, invest in appliances with high energy efficiency ratings.
- Switch off your TV, home appliances and lights when not using them, even at the plug!
- Insulate your home properly – this can save dramatically on heating and cooling costs. It’s no surprise that people often spend more during winter just trying to get the house warm!
- Always run full loads of laundry in the washing machine and dishwasher to maximise that use of electricity, and use cold water where possible- heating up water in those appliances can be very costly!
8. Make saving money a priority
We don’t want to sound like a broken record, but to actually save a considerable amount, you’re going to have to be self-disciplined. It is easy to want to use disposable income to spoil yourself or your family on some ‘wants’, but you must try to resist these urges and stay motivated.
Rather make saving a priority in your financial mindset. Set saving goals so you have something to work towards throughout the year, both long-term goals and short-term goals are great!
If you’re saving for a deposit on a home or putting away funds for your children's education one day, do something that will help you remember why it is that you are saving. It’s those little reminders of motivation that will be the ultimate key to your success.
9. Pay off your credit card debt- it’s expensive!
Owning a credit card can at times be a blessing and a curse, but what we will say is debt can be really taxing on your mental health. We'd suggest really trying to halt your credit card spending and focus on paying off debt, one card at a time. A productive way to do this is to organise your cards in terms of their interest rates, from highest to lowest, and pay off the card with the highest rate first. Of course, after that, work your way through them until you're able to check them all off.
Pay as much as you can every month (while still saving). Also, see if you can make a dent in your debt by paying more than the minimum balance each month with that little extra change left over. This will reduce the interest you have to pay in the long run, which is great for your healthy and prosperous financial future!
10. Home owners with a loan: pay in extra when you can!
This may not be applicable to everyone, however perhaps in the future you will own a home and this will be of use. Essentially, paying even a few hundred rand extra per month towards your bond can significantly reduce the total interest you pay on the bond overall and also shorten your bond repayment period entirely.
Of course, in practice, you will need to check the specifics of your home loan agreements, but the benefits of paying a little extra each month are phenomenal.
11. Create a realistic budget
This tip stems from what we've said before but is extremely important: Once you have set your financial goals you need to create a detailed, clear and realistic budget to follow every month. Design the budget in such a way that you can edit and adapt it easily as needs may change from month to month, because as your salary changes so will your budget.
If you're looking for detailed advice on how to start a budget plan check out our blog.
Start with your regular expenses (electricity, car payments, insurance, rent, etc,.), and then factor in additional costs that have a way of cropping up (such as contact lenses every three months or vitamins and non-essential medications). Then see what you actually have left.
Think long and hard about what you want to do with this ‘leftover’ money because budgeting is really about prioritising. Again, put your future financial goals first, the satisfaction of reaching a financial goal will certainly outweigh the instant gratification of an impulse purchase.
12. Automate your monthly savings
We’ve said it before and we have no problem saying it again! Once you have worked out your budget and have decided how much you want to save every month, set up an automated monthly transfer. With this in place, you won’t have to remember to make the monthly transfers to your savings account and your money will start earning interest from the moment you earn it.
You’d also get used to seeing slightly less money in your current account and get used to working with a limited budget because of this automation. But the key to this really is also removing your savings from your current account, be it a little pocket in your bank account or another account entirely.
13. Optimise your savings
We can appreciate that you do work very hard for your money. But we suggest that you make your money work very hard for you! Do this by being very focused on your savings efforts early on, so that you can speed yourself towards your savings goal. To understand how this strategy works familiarise yourself with the amazing benefits of compound interest!
All in all, it's clear that saving is important, and what’s more, there are genuinely tangible things you can do to boost these savings every single month! We would love to hear about how your savings journey is going and any other tips and tricks you may have to keep your saving goals a priority!