Overspending is an easy habit to get stuck in, and it's not doing any favours for your future, financially-secure self. Sometimes all it takes is a few small tweaks to your daily, weekly and monthly spending habits to start saving big bucks.
1. Create a financial vision for yourself and your family
Create a long-term goal for your financial future, and a few more easily achievable short-term goals that you can reach along the way. Assign numbers and dates to make these goals real. Create a vision board – having a visual reference to look back on will help you stay motivated when you're tempted to veer off your budgeting plan.
2. Set a monthly budget
Create a budget that will prevent you spending money you don't have, helping you to stick to your overall financial plan and reach your goals. Allocate amounts for each spending category, from eating out to paying off your bond, and make sure the sum of your budgeted categories doesn't exceed your monthly income. Find out about creating a basic budget.
3. Bring on the 50/20/30 plan
When you receive your monthly income, adopt the 50/20/30 rule. Budget 50% for necessities (rent, bond, groceries etc.), 20% for your savings (including retirement funds) and 30% for your lifestyle expenses (entertainment, clothes, holidays etc.). Knowing you have a budget within which to play – after you've paid your bills and put money aside – will give you a certain amount of financial freedom.
4. Give your savings account some distance
Keep a separate savings account and deposit your allocated monthly savings as soon as you receive your income. If that money is out of your cheque account, you won't be as tempted to spend it. If you need a stricter system, consider opening a savings account at a separate bank to make it more difficult for you to dip in.
7. Take a money minute to evaluate
Put aside a few minutes every morning and have a look at your balances and financial transactions to evaluate where you are financially. If your bank account is looking low that day, it might prevent you from making an impulse purchase you can't afford. You'll also get a good idea of your spending patterns so that you can identify areas where you can save.
8. Be a smart shopper
Whether you're shopping for groceries or clothes, shopping centres can be a trap for quick spenders, throwing your financial plans out the window. Make a list of the things you need before going on your trip, and go to the shops alone to avoid peer pressure. Evaluate the price of each item by the amount of times you'll use it (or hours spent enjoying it). Decide which items or experiences truly make you happy and leave out those that are unnecessary.
9. Pay off your debts timeously
Don't waste your hard-earned money paying interest on your debts. To get in the swing of repayments, start by paying back some of your smaller debts. Debts with higher interest rates will rack up the bill fastest, so tackle those first. In future, be sure to save up before a large purchase so that you can put down a decent deposit and speed up your repayments, saving you money.
10. Start saving for your retirement now, not tomorrow
Money that you start investing in your retirement fund now will have the maximum time to grow through compound interest. The sooner you start, the bigger your retirement fund will be. If you have a company retirement fund, make the maximum contribution, increasing it along with every salary increase.
The information contained in this article is for informational purposes only and does not constitute professional advice.