Published: 22/04/2022
Saving’s easier when you’ve a plan—to create one, follow these simple steps to save money.
Getting started is hardest thing about saving money. 1Plus1’s step-by-step guide can help you create a simple and realistic strategy, so you can save for all your short- and long-term goals.
The first step to start saving money is knowing how much you spend. Keep track of all your expenses—that means every coffee, household item and cash spend as well as regular monthly bills. Record expenses however it’s easiest for you—a pencil and paper, a simple spreadsheet or a free online spending tracker or app. Once you have this, organise by types of spend, such as petrol, groceries and mortgage. Total each amount. Check your credit card and bank statements to make sure everything is included.
Now you know what you’re spending monthly, you can begin to create a budget. This should show what your expenses are relative to your income, so that you can plan your spending and limit overspending. Factor in expenses that occur regularly but not every month, such as car maintenance. Include a savings category in your budget and aim to save an amount that initially feels comfortable to you. Longer term, plan on eventually increasing your savings by up to 15 to 20 percent of your income.
It might be time to cut back on expenses if you can’t save as much as you’d like. Identify non-essentials, such as entertainment and dining out, you can spend less on. Look for ways to save on your fixed monthly expenses, such as your car insurance or mobile phone contract as well. Other ideas for trimming everyday expenses include:
Setting a goal is one of the best ways to save money. Think about what you may want to save for—both short term (one to three years) and the long term (four or more years). Estimate how much money you’ll need and how long it might take you to save it.
After your income and expenses, your goals will likely have the biggest impact on how you allocate your savings. If you know you’re hoping to replace your car in the near future, you could start putting away money for one now. Be sure to remember long-term goals. It’s important that retirement planning doesn’t take a back seat to shorter-term needs. Prioritising your savings goals will give you a clear idea how to allocate your savings.
There are many savings and investment accounts suitable for short- and long-term goals. You don’t have to pick just one. Consider all options and consider minimum balance, interest rates and how soon you’ll need the money so you can choose the mix that will help you best save for your goals. For short-term goals if you’ll need the money soon or need to be able to access it quickly, consider an easy access savings account
Almost all banks offer automated transfers between your current and savings accounts. You can choose when, how much and where to transfer money or even split your direct deposit so that a portion of every salary goes directly into your savings account.
Review your budget and check your progress each month. It’ll help you not only stick to your personal savings plan, but also identify and fix problems quickly. Understanding how to save money may even inspire you to find more ways to save and hit your goals faster.