PERSONAL FINANCE

The Art of Saving Money

5 Tips for always having money in the bank

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Photo credit: Pixabay

1. Pay Yourself First

If you have a regular income, set an automatic transfer to a separate savings account so you never touch it.

If your work pays you irregularly, set aside a percentage of that amount and transfer that amount to your special savings account right away.

Only then do you budget for the amount in your regular savings account. You’ll be surprised how you can manage with the lesser amount.

2. Record all your spending

Choose a method so seamless, you will actually use it. There are two ways to do this but the key thing is that it is fast and easy to do.

  • Use an app and make sure it loads quickly. When you’re carrying bags of groceries or have a long queue waiting behind you, you don’t want to spend 10 seconds waiting for the app to load. If it takes too long, you won’t use it. There are many free ones to try out on the app stores.
  • Use a notebook and pen. Make sure it is easily accessible so you can log down your purchases immediately. My sleight of hand is slow now so notebooks don’t work so well for me. But my Dad lived by that little blue 555 notebook in his shirt pocket and his Parker pen.

3. Categorize every purchase

Put in categories like Rent, Utilities, Groceries, Deliveries, Eating Out, Self-Care, Education, for example, so you can tell where most of your money goes. See where you can cut back and where it is a priority. Your app or notebook should have a section to quickly add this.

Include an Anomaly section for a rare occurrence such as Winning the Lottery or Emergency Surgery for Cat who Escaped from Home and Fought Neighbourhood Cats and Almost Lost an Ear (True story! See this essay below).

This is to separate that occurrence temporarily to get a better read of what your general spending is monthly.

4. Ask yourself if it is necessary

Keep this up. Soon it will become a habit.

I confess I used to just add things to the grocery basket then have a shock at the total during checkout. This is despite me noting the prices when I consider them and being so happy I remembered the price. Things add up quickly.

Now I ask myself if I need an item before buying it. Otherwise, it’ll be another item I have to give away or throw in the future.

5. Pay your credit card bill in full

In other words, don’t owe the bank any money.

The interest rate for credit cards is 24% per annum in my country and it grows like a snowball pummelling down a hill every month.

Plus, it is super easy to charge everything and not feel the pinch.

If you feel you can’t manage the card, take out cash, and use that exclusively. It’s startling how quickly money goes. And then we head back to 4.

Remember, it is almost impossible for most people to make 24% interest in a year. Don’t be the one paying it.

What app I use (and nope, I don’t get a commission for this):

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Photo credit: Kanahei

After trying a bunch on the app store, my favourite app is Kanahei Household Account Book which is free on the Apple App Store and on Google Play.

It’s cute with a large interface and it loads super fast! Plus it makes me a little less grumpy to have to log yet another purchase.

After I pay for something, I open the app and type in the amount, click the category, write a note about the purchase, and save. That’s it.

No watching ads or waiting 10 seconds for the app to load while the people in the queue glare impatiently at me while I hastily grab my groceries with one hand.

Later, I can check the total amount I’ve spent and my total income to date, really helpful for freelancers, and if I’m in the red or black at all times.

There is a handy pie chart that gives you an overview of where you are spending your money. Most of my money goes to rent, then food!

After a few months, go back and review your spending trends and adjust them accordingly. You may be pleasantly surprised or terribly shocked. Either way, the app will make you a little less grumpy.

I hope this helps. Happy saving!

Written by

Poet, artist, essayist, animal activist, mama | Author of Bram Stoker Award winner A Collection of Nightmares | christinasng.com

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