Saving money has never been more important for the average household than it is at the present moment. Sky-high costs in supermarkets and on utilities bills have devastated many families’ financial plans in the past year, and illustrated well the importance of financial literacy to keep things running even at the worst of times. But saving is a hard thing to do at the best of times. If you’re attempting to turn over a new leaf in 2023, where should you start on your new savings journey?
Make a Monthly Budget – and Keep it Updated
The key to addressing your spending and saving habits equitably is, unsurprisingly enough, budgeting. Budgeting is an ongoing process, but one that begins with establishing your ‘status quo’, or your financial situation as it stands. This would ideally be done in spreadsheet software, in order to keep everything in one place and editable.
Start with the basic things you already know: how much money you earn each month, and how much goes out to essential costs like rent or mortgage payments and utilities bills. This gives you a ballpark idea of how much expendable income you have available each month. From here you can build out a more detailed picture of your spending habits, logging your purchases regularly to help you in the following suggestions.
Even without knowing your monthly expenditure down to the penny, you will have a strong idea of how much money you have ‘spare’ each month. You should make a habit of actively putting this money to one side, to start incorporating the act of saving as a routine. You should open a separate account specifically for your savings to remove any money you set aside from immediate access. Choosing one with a good interest rate means your savings also accrue value passively, working in your favour over time.
Cut Down on “Outsource” Spending
Your objective at this point should be to increase the value of money you set aside for your savings each month, whether building towards a specific savings goal or just aiming for a more comfortable situation overall. Short of doubling your income with a new career, your best bet for this is to curb your expenditure.
Your first port of call should be “outsource” spending – that is, expenditure on items or services you could otherwise provide for yourself. The most prevalent example would be takeaway or restaurant food, where cooking for yourself at home is demonstrably cheaper. Do you eat takeaways often? Are there other expenditures you could bring “in-house” to save?
Lastly, a point that might seem obvious to start: your shopping should not only be mindful, but careful. This doesn’t just mean thinking twice before buying a luxury item, or even choosing cheaper own-brand versions over premium brands; it also means checking in with yourself on your state of mind, affording yourself care in the management of your money. Are your impulse purchases being motivated by emotion? Are you spending as a force of habit to cheer yourself up? And what might benefit you more in the long term?