Top tips on how to save money

The economy has been struggling of late, and consumers have been badly affected by the financial crunch. Everything seems to be more expensive, from petrol to food to entertainment, and it is becoming harder and harder just to get by on our salaries. In these tough times, the only viable solution is to work out ways to save money and cut costs wherever and whenever you can.

Here are some handy tips on how to save money:

Make a budget

The first step towards financial relief and independence is setting out clear limits for yourself regarding what you spend each month. As such, it is of vital importance to devise a budget and then adhere strictly to that budget. In order to achieve this goal, you should start by working out what you spend each month, and organise your recorded expenses into a workable budget. This budget must outline exactly how your expenses measure up to your income, which will allow you to limit overspending. When putting together your budget, it is also important to consider expenses that can occasionally occur such as car maintenance.

Put money aside

No matter how tight things are, it’s always advisable to put away between 10% and 15% of your income as savings. Should your expenses be so high that you find it difficult to save that much, then you might need to reconsider your budget and try to cut back on unnecessary expenses such as entertainment and eating out.  If you bracket savings as an expense in the same way that you consider groceries to be an expense, you will reinforce good saving habits. To ensure that you stick to a plan that factors in savings, you can set up an automated transfer to a savings account. In this way, you won’t think twice about saving and won’t be tempted to rather spend the money.

Set a goal of something to save for

As you are putting savings away for future use, it can sometimes be tempting to not want to commit to this practice, as you won’t receive immediate rewards from doing this.  It is therefore essential to set a specific goal in mind when saving – whether you are saving for a TV, a car, a holiday or a home. Having an end goal in mind will help motivate you and focus your efforts.

Consider a smart investment

While it may seem against your best interests to add an expense on to your expenses, putting some money into a reputable investment could reap great financial rewards in both the short and long term. While investing presents a certain risk and could result in you losing money, it also creates the chance to gain compounded returns, and help create financial relief as well as a retirement nest egg.  It is best to speak to a qualified financial advisor about this option

Be smarter with your service providers

Not every service provider is equal in terms of their price. Shop around and find a service provider that can offer you a lower price while still offering quality service. For example, Drive and Save can provide you vehicle theft insurance for only R9.99 a month (terms and conditions apply ).