Building up your savings account and adjusting your spending habits can be challenging, and thanks to the ongoing coronavirus pandemic and high rates of unemployment, saving is more important than ever. Regardless of your situation, here are five ways to save money in 2020 that can help you work toward financial stability.
Set financial goals.
Setting goals is one of the best ways to change your spending habits. Start by figuring out what you want to save for—maybe you’re buying a house, planning a weekend getaway, or getting married soon. Next, figure out how much money you’ll need to and how long it’ll take to save it.
If you’re not sure how to get started, set a small, achievable short-term goal for something on your wishlist, such as a new phone or a pair of shoes. Reaching short-term goals—and enjoying the reward you’ve saved for—can motivate you to keep saving.
Track all non-essential spending.
Tracking your spending can help you figure out where your money is going and adjust your spending habits. To start tracking your spending, review what you spent within the last month, grouping essentials and non-essentials into different categories. Essentials are relatively fixed costs, such as rent and bills, while non-essentials are costs that change from month to month, such as concert tickets and shopping.
If tracking your spending seems too overwhelming, there are several apps that can automatically track your spending using information from your credit card and bank statements.
Find ways to cut your spending.
If your expenses are so high that you can’t build up your savings account, it’s time to cut back. Start by identifying non-essentials that you could spend less on. For example, if you’re spending $300 a month on takeout, try cutting your spending by $100. This might mean cooking from home more often, or opting for less expensive restaurants.
Additionally, look for ways to save on your fixed monthly expenses, like your electricity bill. Free and independent price comparison websites like MoneyGains make it easy to save money and find the best deals on the market by comparing electricity tariffs and plans from different suppliers. Opting for online/paperless billing, paying by preferred payment method, and choosing a supplier with a welcome promotion can further help you reduce your electricity bill. To find the best deal for your budget, visit moneygains.co.uk.
When adjusting your spending habits, aim to save 10% to 20% of your monthly income. Depending on your financial situation, you might adopt the 50-30-20 rule, which involves spending 50% of your income on essentials, 30% on non-essentials, and saving 20%.
Stick to the 24-hour rule.
Most people spend more online than at a store, and it can be tempting to visit your favorite online store and shop the latest inventory. Even if you’re not actively shopping, it can be challenging to save money if you’re constantly being bombarded by ads on Instagram and Facebook.
To avoid impulse buys, wait 24 hours before hitting the “purchase” button after placing items in your cart. In most cases, you’ll decide you don’t need whatever was in your cart after all.
Shop around for savings.
If you’re saving for a larger purchase, consider shopping around to find the best deals. In some cases, shopping around before committing to a significant purchase can help you save hundreds of dollars.
For example, if you’re interested in buying a new smartphone (which can cost you over $1,000), consider shopping for refurbished cell phones. Although some people think refurbished electronics are iffy investments, it’s very possible to find great discounts on phones in original condition if you do your homework and work with reputable companies like The Store which sell refurbished electronics. You can save up to 70% on the latest tech (including iPhones and Android phones). The Store guarantees super sanitized products, a 1-year warranty, free returns, and free shipping. Plus, the company personally hand-tunes and certifies all of their products. Before heading to the store for a new phone, see if you can get the newest phone of your dreams — just refurbished.
Your wallet—and the environment—will thank you.
Saving isn’t easy. Whether you’re planning for a vacation or struggling to make ends meet, it’s important to review your spending and check your progress every month to stick to your savings plan and identify potential problems.