Financial Management,
July 25, 2020

How to Save Money - A to Z Guide

Gregory Weiss
How to Save Money - A to Z Guide

Are you one of those who are struggling month after month to stretch their budget, pay their bills and don't have the remotest idea of how to save money easily and quickly?

Then you got to the right place, because here I am going to share several tips that personally have helped me a lot to save more than 60% of my monthly income.

ABOVE ALL, FOCUS ON ACHIEVING SIMPLE, SHORT-TERM SAVINGS GOALS.

There are many ways to save money, but if you've never done it before or if you're in a tight financial situation right now, I advise you to start with savings challenges that are easy to meet instead of setting a long-term savings goal (one that your mind may feel like something difficult to achieve and therefore you're going to put it aside).

APPLY THE 30-DAY RULE

If you have an important purchase in mind, it would be smart of you to consider giving yourself 30 days of reflection. In the meantime, find out alternatives, compare prices and above all, ask yourself if that purchase is really necessary.

If at the end of the 30 days you've convinced yourself that's what you really need, then buy it.

PRACTICE THE 24-HOUR RULE

If you think the purchase is urgent and you don't have 30 days to think about it, at least this other rule applies.

Personally, I was a compulsive shopper and this is one of the techniques that has served me the most since I began to live traveling and opted for a minimalist lifestyle.

Basically it consists of thinking well (in this case at least for 24 hours), before making any kind of purchase.

INCREASE YOUR INCOME. THIS IS ESSENTIAL!

Ahhhh....yes of course, as if it were so easy...! It's something you'll probably tell me, but I swear to you, if you stop thinking and instead decide to take action, multiplying your income is easier to achieve than you think.

And while it's true that reducing our expenses is part of the equation of how to save money quickly and easily, I assure you that, in order to reach the goal of achieving financial independence, the part of increasing my income has been the most important.

From experience I can tell you that the most radical and quickest way to achieve this is to start your own business. There are dozens of business ideas and home-based jobs that can be done with an investment of less than $100, but you can also start them today.

In my personal case, thanks to my different websites today I have several profitable businesses, by which I have been able to multiply my income to the point of generating my old salary of 1 year, in just 1 month, while working from the comfort of my home or from anywhere in the world.

GIVE YOURSELF A TASTE AND USE IT AS AN OPPORTUNITY TO SAVE MORE MONEY

The idea here is that for every dollar you spend, you save another.

For example, if you buy a McDonald's combo that costs $8 (instead of taking your homemade lunch, which would cost you a lot less), then you should also save $8.

Think of it this way: if you can't afford to save that kind of money, you shouldn't afford to spend it either.

FREEZE YOUR CREDIT

If you have trouble controlling the use of your credit card, but don't want to get rid of it, you may want to consider calling the bank and asking them to freeze your credit line until further notice.

CREATE A LIMIT FOR GIFTS

If you're like me and love to give gifts, do yourself a favor and create a limit on your budget, for all the gifts you think you're going to give in the next 12 months.

USE AS MUCH AS YOU CAN OF YOUR CREDIT CARDS FOR ALL PURCHASES.

But remember to pay them in full every month!

Yes, just as you read it: by using my credit cards to pay most of my expenses (90% or more), I earn a lot of money in miles (airplane and hotel) and also cash-back.

Basically, I've become a bank's worst customer: they give me money for the use of my cards, and I never pay interest.

CALCULATE THE MONEY YOU SPEND FOR HOURS WORKED

If you earn $5 an hour and want to buy a $50 dress, it means the dress will be costing you 10 hours of work.

Are you willing to work 10 hours for a dress, or do you think there are better things you could invest your time in?

PLAN YOUR KNOWN EXPENSES AHEAD OF TIME

If you do this, it will give you time to save the money you need during the months prior to buying, for example, a new cell phone, going on vacation or buying your best friend's wedding gift.

START SAVING FOR COLLEGE AS SOON AS YOUR BABY LEAVES THE HOSPITAL

Just like you read it! It's never too early to create a savings account for your son, grandson, or nephew and start saving money for his education, and this is something I consider with every birth of my family.

Generally, I consider the option of buying much more modest birthday or Christmas gifts and instead, I add the surplus from my gift budget to a savings account earmarked for my nephews' education.

ELIMINATE CABLE TV

With so many alternatives that exist today (such as Netflix, Youtube, etc.), do you really think it is necessary to pay, for example, triple play packages?

Call your cable company and find out if it is economically better to have only the internet package.

Among the tips I always give my family and friends to save money, eliminating unnecessary expenses is the main one of them.

MOVE TO A PLACE CLOSE TO YOUR JOB

This isn't always possible, but if you don't own your own home yet, live in a rented house, and work in a company where there's a good chance you'll be staying for at least another year, you might want to consider moving close to the company you work for, as you could save hundreds of dollars in transportation and time.

Have you calculated how much it costs you to live away from your job? In addition to the time you lose in moving, add the costs of gasoline or transportation, etc..

Living near your job has the benefit of being able to spend less time in traffic and use your car less, which translates into double savings. In addition, if you can walk or ride a bicycle, you maximize the advantages even more and add benefits to your health.

CONSIDER USING PUBLIC TRANSPORTATION

We agree that using your car can be more "comfortable", but it is also a huge expense and therefore a luxury.

Evaluate how much you actually spend when you use your car, taking into account that it's not just gasoline, but the normal wear and tear of a car. A quick calculation can be $0.34 US cents per kilometer traveled.

It means that (for example), if you travel 20 kms. daily to and from work, the cost of transportation will be $6.80 dollars a day, not even including the depreciation of your vehicle.

Now tell me: How much would it cost you to take the bus/metro and how much money could you save if you did? Yes, I know...it's amazing, isn't it?

DON'T BUY CHEAP CLOTHES

I learned this after deciding that in the future I would live with less than 100 things, since not having as many clothes as before and seeing myself in the need to wash the pieces more frequently, I have been able to notice how the pieces of good quality last me a lot longer (I have pieces of clothes that have something more than 2 years with me and that I wash almost every week).

It may seem crazy, but I assure you that buying good quality pieces of clothing, even though these are more expensive, is a very good strategy to save money, with the "plus" that you look better dressed.

RENT A ROOM FROM YOUR APARTMENT OR HOUSE

Probably the fact that you live close to your job could be more expensive. In that case you can try to lower your rent or mortgage costs, or even earn some extra money, if you rent a room.

PREPARE YOUR LUNCH AT HOME AND TAKE IT TO WORK

If you're one of those who always goes to restaurants at lunchtime, assess the expense you're incurring. Consider bringing your homemade lunch to work, as you'd be surprised how much you can save quickly.

CANCEL UNNECESSARY SUBSCRIPTIONS

I'm sure we all have some subscription that we use little or never.

Do you have a gym subscription, but do you go again and again a month? It would be better to cancel it and when you can go to a park to walk, run or exercise. Have you been subscribed for months to a celebrity magazine that you almost never read? Then cancel it.

These money-saving tips may seem irrelevant, but I assure you they will make a big difference in the long run.

EXCHANGE ITEMS OR MAKE A YARD SALE

Gather a group of people (either family, friends, neighbors or co-workers) who are interested in saving and agree to exchange items in good condition.

You can also organize a yard sale to get rid of those things you no longer use and save, or use that money to finance other things you really need to buy.

In the case of an exchange, depending on the items the person offers, he or she may also be able to carry things of similar value. For example, if someone carries 1 set of trays to serve in good condition, they could take in exchange 1 set of pots carried by another person.

DOWNGRADE YOUR CELL PHONE PLAN

Do you really need that unlimited data plan? Currently, in most public places we have access to free WiFi, so with a little planning you'll probably only need a 1 or 2 GB plan.

MAKE A MARKET LIST BEFORE YOU LEAVE HOME

Many times we go to the supermarket to look for just a couple of things we need and end up buying much more than we originally needed. Make a list before you go out, and stay true to it.

EVERY MONTH, PAY WITHOUT FAIL AND IN FULL YOUR CREDIT CARD BALANCE

If you have a balance on your credit card, make this your number one priority and eliminate that debt as soon as possible. Interest on credit cards is sky-high and will quickly eat up any savings capacity you have.

RADICALLY REDUCES YOUR OUTINGS TO EAT

Eating at home is much cheaper, healthier, helps you save and can be fun. Organize a meal at home with family or friends where everyone brings something, and you'll spend time with the people you love, economically.

ONLINE STUDY

Do you think you need a master's degree to advance professionally? Or do you just want to train yourself to do your current job better? If so, consider taking online courses.

Today we don't need to spend hundreds or even thousands of dollars to get training, as online platforms such as Coursera or Edx allow us to take courses for free.

We can also get certificates from the most prestigious universities in the world at a fraction of the cost, if we choose to study virtually.

For example: Do you need an MBA to advance in your career? Coursera has a completely online MBA, at a fraction of what it would cost you to attend almost any university in person, which translates into an excellent savings strategy and professional growth at the same time.

In addition to applying these ideas to save more quickly, remember...

THE 2 BASIC POINTS FOR MANAGING YOUR PERSONAL FINANCES

START MONITORING YOUR EXPENSES

The first step to saving money is to know where we are spending it. You can use a simple Excel sheet or one of the thousand applications that exist to keep track of your expenses.

I personally use YNAB, since from there I can import my bank statements and then categorize each one of my expenses.

To make this action more productive I try to pay the least amount of cash expenses, since we often forget what we spend our money on when we pay cash and it is more difficult to keep track.

Do it for a couple of months in a row and you'll see where your money is going.

CREATE A BUDGET

Once you have an idea of where your money is going, the next step is to make a budget. Keep in mind that you must include irregular expenses, such as a trip to the movies, a vacation, etc.

Be sure to create a category for savings and ideally you should budget at least 10% to 20% of your salary there. I know it won't be easy at first, but as you discover new ways to save, you'll increase this percentage.

During the month, frequently monitor your budget and make adjustments as needed. At the end of each month make an evaluation and reassign priorities.

AND WHEN CAN WE AFFORD TO SPEND, RATHER THAN SAVE?

As my financial advisor explained to me, we can spend when our basic needs are met and we don't have to go into debt to maintain our current lifestyle.

We can afford to spend when we have a business capable of generating extra money, as well as an emergency fund with a sum of at least 6 months of our monthly income, and when on top of that we have a secure retirement fund.

Then, that extra money can be used to live experiences that are memorable, depending on each one. Those who stay with us for the rest of our lives, such as....travel.

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