When I ask people the #1 problem that they face with money, often the reply is “I don’t know how to save more?”. Or “I don’t have enough money to invest!”. No matter how hard they try they are never able to save enough to start investing. The paycheck comes in at the beginning of the month and as soon as the month end approaches, it is almost finished. Net savings as a result is zero!
This seems to be a common problem for majority of people across the globe. Your investment journey can begin only when you start saving money on a regular basis. This is very important for your financial health. Also, in case you are a FIRE practitioner and want to achieve financial independence early then consistent savings is a must. There is no other alternative. As a thumb rule, we should target to save minimum 25% of our monthly income. And target to increase this amount gradually with time.
Knowing how to save is equally important as the intention to save. There are various hacks that we can use on a day-to-day basis that can help us to save more for our future. Be it while traveling to office, going out for a movie, eating out with friends/family etc. there are small adjustments that we can do daily that can help to increase our savings.
Below I have shared a list of all the savings hacks that I personally have used and benefitted from. Hope that it helps you as well to get started on your journey towards financial independence.
- Automate your savings. You can set a Standing Instruction (SI) to your bank to automatically debit your salary account on a particular date and move it to a liquid or a debt fund. You can transfer the money to another account as well. This will be your savings for that month. My advice will be to set the debit instruction to your bank at the start of the month as soon as the salary hits the account.
- Make a monthly budget and stick to it. Learn to differentiate between things that are absolutely necessary to be purchased vs those that can wait
- Instead of going out for movies, you can become a Netflix or a Prime member. This way you can enjoy the movie from the comfort of your home. Also, you will have access to a large catalogue of movies. If you want purchase a pair of speakers for even better movie experience
- Whenever possible purchase online rather than buying stuff from a local store. You will get more discounts and cashbacks that can add up a good amount to your savings
- While purchasing online, look out for coupons/offers that can be availed. Digital wallets like Amazon Pay offer great discounts on multiple merchants
- Cut back on smoking/drinking habits. Given the rising costs of cigarettes/alcohol, you can save yourself a fortune if you stay away from them. Plus, your health will thank you a lot in your later age
- Students can save a lot of money by purchasing their school stationaries during back-to-school sales that are usually held twice a year
- Study well for a great future, excel in your class and get scholarships offered by your school or some external source. They help your parents save on fees and other expenses
- Avail student discounts on government run bus services, trains, state-owned and private airlines
- Opt for group travel whenever possible. Booking airline, bus and rail tickets for student groups helps you save as much as 50 percent fare
- You can either ride on your friend’s motorbike or care or simply take them on yours. Sharing fuel costs is a great way to save money
- Be on the lookout for sales and other promotions announced by stores. Buy items from stores during these sale events and save a ton
- Subscribe to loyalty programs offered by stores where you shop and banks where you hold an account. You get reward points for shopping which can be later redeemed for groceries and other gifts
- Whenever possible invite your neighbors/friends/relatives and go out for shopping in bulk
- Ensure all appliances, electronics and lights in your house are switched off while not in use
- All service providers charge a penalty for paying bills late. Paying immediately helps to avoid this fine, gives you a better credit score with the provider and avoids undue disconnection and reconnection charges
- Buy travel passes for public transport such as buses/railways for longer durations such as 3 months. They offer a discount of minimum 20-25% over monthly passes
- Monitor the household bills every month for any error that could have caused you to be charged more. It is fairly common for electricity, piped gas, mobile services and landline providers to charge more due to flaws in their billing system or wrong readings
- Sometimes, we are forced to take one or more liabilities on board, in form of loans and credit for home, vehicle or other purposes. Clear these liabilities at the earliest, by stepping up installments, if possible
- Avoid using credit cards as much as possible. The unpaid amount on credit cards attracts huge interest that can go up to 28-30% per annum every year
- Online retailers as well as physical stores offer discount vouchers for spending a particular amount. Avail these discount vouchers and cashback coupons to use for future shopping
- Invest in products that can help you to get tax rebates. If in doubt consult a certified tax planner regarding the best tax saving investments
- Buy adequate health insurance. This is a must especially with the rising medical costs every year. This has the potential to burn a hole in your pocket if you are not prepared for it
- Follow the 5% rule. For every new purchase that you make, put away 5% of the transaction amount into a savings account. For example, if you buy a new shirt say for $100 then put away $5 as savings
- Pack food for lunch while going to office. You can save some money plus it will be good for your health
- Exercise regularly and maintain a healthy diet. This can help save you a lot of dollars later on in your life especially when you turn 40
- Make a list before visiting shops/ grocery stores. This way you can prevent yourself from buying stuff that you don’t need
- While booking cabs for transport, opt for shared rides rather than private ones. The shared ones are always 10-20% cheaper than the private ones
- Plan your travels well in advance and purchase flight tickets when they are still cheap
- Plan your travels on weekdays to get even cheaper flight/train tickets
- Prepare delicious food at home and enjoy with your family rather than going out to expensive restaurants every now and then. It will be lighter on your pocket as well as your health
- Look for combo offers while purchasing groceries or shopping for other household items
- Send mails to big companies that you usually purchase from them and are a regular customer. But you are disappointed with a recent purchase. Free stuff will start rolling in!