As we all know, sometimes the hardest thing about saving money is just getting started. All it takes is that first step in the right direction to get things moving in your favor. Therefore I felt the need to write about strategies and suggestions on how to save more money.
According to EuroStat, the household saving rate is down to 12.0% in the euro area*. In my personal opinion this rate should be at least 30%. Therefore increasing the money to invest in companies, bonds, a savings account, emergency fund, and so on. Unfortunately this rate has been steady declining since 2009 where it was 14.5%. (Eurozone)
*Euro Area = Consists of 19 members / countries.
In the US the Personal savings rate is about 3%. Very low value, in my humble opinion.
So use these money-saving tips to generate ideas about the best ways to save money in your day-to-day life. And by the way, feel free to leave some of your own on the comment section. So we can later update this post.
12 Great Tips to Start Saving Now
1- Record Your Expenses
Keep track of all your expenses—that means every coffee, snack or newspaper. Today you can do it easily on an app or with a simple spreadsheet. If you want to know where to cut, you need to have a detailed report of your spending. Once you have all the information, don’t forget to organize it by categories, such as mortgage, electricity, groceries, coffee and so on. Consider using your receipts and bank statements do more easily execute the task. Information is power.
2- Eliminate Your Debt
If you calculate the interest on your debt, for all the duration of the credit you will see a great place where you can save a lot of money. Look for a Loan Calculator and see how much you will pay in interest on a 40 year loan paying a 4% interest rate. Yes that’s it…if you ask for $100k, at the end of the 40 years you will have paid $200k ($100k of the principal, and another $100k of interest). Brutal.
3- Follow the 30-day Rule
Try to wait 30 days to decide on a purchase, particularly if the purchase isn’t an important one. Waiting some time can give you a different perspective on the real need to buy some item. Often after one month, the urge to buy has passed. If that happens, you have just saved some money. Easy.
4- Annualize Your Spending
Sometimes small costs like 1 or 2 coffees per day can sound a too small expense to even consider. Well it isn’t. For those of you who have some difficulty to understand the long term impact of a small expense, consider annualize it like this: If I drink 2 coffees per day, each one costing 2$, at the end of the year I will have spent $1460 on coffees ($2 x 2 x 365). Now do this for all the daily small expenses. That’s…well…Massive.
5- Invest to Save
One of the most overlooked ways of saving money is, spending money. Easy to understand why: we want to keep more $$. Not lose more of it. The problem is that often the best way of giving two steps forward, is first give one step back. Examples: Install new high-efficiency appliances, when your old ones stop working. Or invest in a new more efficient vehicle for your transportation. Or even make easy improvements to your house to improve the insulation, such as sealing windows and doors. Therefore saving on heating. Sometimes investing is the best path.
6- Practice Price Comparison
With everything that you buy, do some price comparison first. Select what you want to buy, write down all the features, and then look for every price that you can find on that item. You will be amazed with the range price that you sometimes get for the exact same thing. In the end you will save money in one of two ways: Or you find the most cheap price after the comparison; or if the price is the same you can try to negotiate with the different sellers. Often they may offer a 5% discount just to keep you as a customer. Be proactive.
7- If you can don’t Buy New
One good way of saving money, is to buy used rather than new. It’s not that hard finding a used car or motorcycle with 1 year in good condition for 25% or 30% discount of the original price. That means several thousands of dollars of saved money. To play on the safe side some pay a mechanic to check up the vehicle before buying. Some items depreciate in value sharply after we buy them (new). So if you don’t mind if it’s new or not, consider buying used. Do your research.
8- Try Generic Brands
For all the items on your supermarket, always consider and try the generic or store brand. If the quality is similar, you save some money. The more you buy of that item, the more you save. In my personal case, I would say that at least 60% of my items are from generic or store brands. And with all the money that I’ve save, I couldn’t be more happy. Generic can be Valuable.
9- Be Careful With Subscriptions
Subscriptions for services or products can be tricky. For example your gym could charge you $10 per day if you want make some exercise. And then offer an option to sell you a $80 per month subscription for you to use it all month. Free pass all days included. Although tempting, think really hard if you are going a number of times that justify that value. If you are going 4 to 6 times a month to the gym, then you can save money by NOT going to the subscription model. Also cancel any magazines or newspapers subscriptions that you don’t read. Do the math.
10- Check Out Free Events and Places in Town
One thing that caught my attention when I was visiting London, is the number of events and places that we can visit free of charge. British Museum, National Gallery, Old Royal Naval College, and so on. World class places and exhibitions that can be visited totally free. Amazing. From that moment on I always focus with extra attention on events and places that I can visit without paying nothing. You will be surprised, believe me.
11- Buy a Smaller House
All things equal, a smaller house means a smaller investment/rent. Normally with less space you pay less taxes (of course there are other things to take into consideration). A smaller house also means less heating needs, and the possibility of a better – more central location – saving on transportation for example. Think small, save big.
12- Turn Off the Television
Less money buying this appliance – you can see your favorite shows on the computer/tablet. You save on the electric bill. Also you can cancel or downgrade your channel subscription. Multiple ways of saving money by only switching off. Couldn’t be more simple.
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Have a nice day.
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