So everyone tells you about how important it is to save. But, like diet, you may have tried many times, but fallen back into your old ways that lead to living paycheck to paycheck. So what can you do to make sure your next attempt at saving is more successful?
You need a plan that sets you on the right path, keep you accountable and help you identify and eliminate bad habits. Even when you think that there is nothing to save, an in-depth look at your spending can help you find and reduce your spending successfully. It won’t be easy, but doable. Here are four steps to get you to a better financial situation where you can save.
Cut your expenses
It is a no-brainer. If you don’t have an extra source of income and you live paycheck to paycheck, the only way to save is to reduce your expenses. Make some tough lifestyle choices, like moving to a cheaper accommodation or reducing the frequency of dining out. It all depends on how much savings you are aiming for and what can be cut.
At the first sight, you answer may be nothing. But a closer look at your lifestyle can find many running bills that are easily higher than they need to be or utterly unnecessary. Being with these bills even if the savings are minimal, because running bills add up quickly and eliminating them will immediately create a known amount of savings.
Purge your bad habits
Pick one or two of your bad spending habits and stop them. Is retail therapy your go-to solution when you’re stressed out or depressed? Find an alternative now or plan for how you will avoid doing so in the future. Do you tend to spend more if you’re using credit cards? Switch to debit cards or even cash — if that helps you live within your means.
Treating yourself occasionally is different from adopting a bad habit that hurts your budget. Because impulsive shopping or uncontrollable spending are not treats, know how you will want to reward yourself as you go along the path of savings and achieve your goals. Set rewards for yourself along the way.
Negotiate with your providers
Have a clear idea of what you pay for various services. Then call around and get cheaper options. Do you want a television and internet package? Call you provider and get the cheapest option that can work for you. Ask your insurance agent if you can get some savings by changing coverage or being eligible for discounts. Even you can look for cheaper options in terms of house cleaning or maintenance, if that is something you’d typically do.
If you don’t like what you provider or vendor offers, ask yourself if you can do it yourself. You may not be able to provide your internet, but you may be able to learn how to do minor repairs around the house, paint, etc. With the accessibility of information online, you can probably surprise yourself with how much you can do — and save in the process.
Keep track of your progress
It is easy to think you’re doing better, because you’ve skipped a meal out or didn’t go shopping this week. The truth is this won’t help you save unless you are committed to do it consistently. What you really need to do is to have some method of tracking your savings, which can be as easy as committing to saving a certain amount of money every month and saving this amount transferred to a separate account. As long as you don’t accumulate debt on your credit cards, you can consider this a success.
In a more elaborate way, you can use a money management software to track and analyse your savings and help you find areas that can be tweaked. Doing so will enable you to stay ahead of the curve and spot saving opportunities quickly. In addition, you will be able to track and assess your new spending habits.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
How to adopt good saving habits
Trim your expenses
Give up bad spending habits
Downgrade services or negotiate prices
Learn to do things yourself