You know the importance of a proper budget, and you know the importance of saving, but it’s also important to have a bit of money set aside for any unexpected expenses. It is hard to save money when money is tight, but there are a few places you can look to help loosen it.
Analyse your spending
Taking a look at your budget should always be the first thing you do when trying to spend less or save more. Take a look at each separate item, and each individual part of that item. Even if your goal is just to cut out a dollar or two from each part, the results will stack up. Cutting $5 from your weekly food budget is still an extra $5 you weren’t saving before.
Don’t forget to remind yourself if this is a temporary adjustment too. If your goal is just to reach a specific savings goal, then knowing how long it will take to get there will make any sacrifices easier to stick to.
Price check your utilities
The majority of expenses for almost every household are the rent/mortgage, utilities, and car bills, but the utilities can sometimes be tough to wrap your head around. Always consider contract length when taking into account overall cost and monthly bills, and try to trim as much excess off as you can.
Check with your phone and internet providers: do you really need that landline? If not they might offer naked broadband which is always cheaper. Do you know that another service provider has lower prices? Check to see if your current one will price match, or if the new one will cover any contract cancellation fees
Switch to cash where possible
For everyday expenses like groceries or petrol this can literally change your life. Having a hard limit to your spending, and having your money as a real tangible thing you hold in your hands makes every purchase just a bit more real in your mind.
You might end up deciding to put some things back at the supermarket, making some tough decisions about what you really need, but it also might mean you stop yourself from making those impulse buys like that extra coffee at the gas station on the way home (and at the end of the week you can put aside anything you haven’t spent for extra savings!)
Building savings vs paying off debts
Simple, common sense maths says it’s always better to pay off debt before trying to save money: paying interest for a longer period of time means you are paying more money, full stop. But we all know personal finance is never that simple.
If you’ve got no emergency fund, then a surprise bill or really any emergency where you need to spend money is going to put you more in debt. It’s a balancing act, but depending on what kind of debt it is (and of course how much is left to pay off) you could consider paying less each week towards your debts to save up money in the short term.
Remember, any budget should always be re-examined regularly, so making a temporary change to give yourself a bit more stability is ok.
Balancing budgeting and savings can seem like a daunting task, but it’s essential for most people. If you feel like you need help navigating such a complex subject, talk with one of our financial mentors
Phone: 0800 345 123
Live chat: www.moneytalks.co.nz
We are available to help Monday to Friday 8am to 8pm, and on Saturdays 10am to 2pm. We are here to help you.