Saving money can sound quite simple in theory but ask anyone who has tried, and you will find it was often never as easy as they had thought it was going to be.
Some people find it easy to press on through and somehow make it work, most however put it in the ‘Too hard’ basket and give up.
The following 5 tips will help you get it right if you asking the question of How can I manage my money better.
- Start small
You have probably heard the saying “Save First” referring to the first thing you should do when you get paid is put aside savings, then live off the rest.
I talk to a lot of people who attempt this and say it doesn’t work and the most common reason for this is they have simply set themselves an amount too high to remain sustainable.
As a result they shortly after give up because they can’t maintain any consistency.
Starting small and then adding to it as you go provides a greater opportunity for success than aiming too high and not being able to maintain that same level.
Starting small then making incremental increases over time also positively reinforces your ability to save and this reinforcement and success helps reshape and improve your money habits.
The ‘Minimum Savings Calculator’ is a simple tool to help you calculate a starting point to get you in the habit of saving consistently. Try it out.
- Don’t use every spare cent to pay off debt.
Now this might sound contrary to a lot of advice out there but believe me when I say clients I have worked with pay off their short-term debts a while lot faster once they stop doing this.
I’m not suggesting you stay in debt forever, I’m simply pointing out that this good intention often keeps most people in debt longer and here’s why.
When you put every cent you have into extra payments you leave nothing for the unexpected.
Then when an expense arises that you weren’t prepared for arises you borrow again, either on your credit card or a new HP or Easy-Pay payment.
Your debt balance goes up and down like a yoyo and it isn’t long before you start to feel defeated.
I recommend my clients split any extra money between both saving and extra debt payments. This means they still enjoy a progressive reduction in their debt balance, but they also become less reliant on needing new debt for the unexpected.
The 1/3rd Rule is a really practical way to do achieve both, extra payments on your debt and increased savings. For an explanation of how this works click here.
- Avoid budgets
Yes you read it correctly, avoid budgets. There is a much better way to manage your money and it’s called a plan.
Budgets trigger for a lot of people a sense of restriction and the need to go without.
And whilst there is some truth to this, the way you approach it often determines your success.
Instead of an approach that sends you the message of being restricted, adopt an approach which gives you a sense of empowerment and control.
Create a plan, something intentional. A plan says this is what I intend to do with my money and has a greater sense of purpose and achievement.
As time progresses this greater sense of achievement reinforces your discipline to both monitor and adjust your plan as you go and you move from being reactive to proactive.
A plan should focus on the next 30 to 90 days (preferably the whole year ahead) not just until you are paid next.
What anticipated expenses do you see ahead that you could start planning towards now instead of being reactive to once they are immediately in front of you?
What techniques or strategies could you incorporate to be saving more on the weeks with less expenses (normally this is when we get excited because there’s money left over and spend it).
Doing this helps with cashflow on the weeks where income doesn’t quite go the distance?
If planning seems a little foreign to you or you’re not sure where to start you can always enlist my help by scheduling a FREE 30-Minute Discovery Call.
You don’t need to figure it out on your own and I do this every day with people.
- Avoid Easy-Pay and After-Pay facilities
These might seem like your only option and really convenient but what most people don’t know is the continued use of these facilities can dramatically reduce your credit score.
Continued or regular use of these facilities can at some later point when you really want an approval for maybe a home loan or some other more important item work against you.
Major lenders see regular use of these facilities as an indication that you continually use debt and even though it might be used simply for convenience and budgeting purposes, they don’t like it.
If you are currently using these facilities for non-essentials like that latest addition clothing item or similar then consider instead putting aside the money each week and buying it in 4 weeks’ time.
Chances are you will end up buying something else you preferred or the item you wanted is now on the sale rack as retailers rotate their stock and you get it cheaper.
And if it’s no longer there does it really matter? You can now buy the latest fashion with your cash then repeat the savings process for your next item.
If you need to use these facilities for essentials like food then I recommend you seek assistance from a budget advisory service so they can help you get back on track.
- Trash equals cash
Have you ever heard the saying “One mans trash is another mans treasure”
You will be surprised what you can get for those items that simply sit there collecting dust or taking up space in the bottom of a cupboard somewhere.
Have a look around and do a bit of a declutter. Hold a garage sale or use the likes of Facebook’s Marketplace and boost your savings balance every once and awhile.
There’s a method I refer to as ‘The Trade Up Elevator’ when I am coaching clients. It’s a bit too long to explain here but feel free to ask me if you ever engage in my services.
Our dining room currently boasts a $5,000 suite (including a buffet) that costs us less than $1,000 to achieve using the elevator method.
For other helpful tips and ideas check out other articles and services available through this website.