I wonder how many people have said, when I start earning more money I will start budgeting or start saving? I can imagine quite a few people to be honest.
I’m going to share my 10 easy ways to save money using your current paycheck.
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Remember even the janitor can leave the rat race and become financially free in Robert Kiyosaki’s Cashflow board game, so there’s no reason why you can’t. It’s just about following some simple strategies:
- Budget; Work out all your incoming and outgoing expenses.
- Create saving goals
- Decide what your ‘necessities’ and ‘nice to haves’ are.
- Review and re-evaluate all your outgoings
- Open several check and savings accounts
- Pay yourself first
- Review your Annual Calendar
- Set yourself No Spend Days or Weeks
- Use Cashback, Voucher and Money Saving Apps and Websites
- Observe your behaviour
I have gone into further detail below, so continue reading for some fantastic life and saving hacks.
Workout what money you have coming in and what money you have coming out.
Download our Annual Budget Template to help you with this step. You can start using a spreadsheet but if you are more comfortable with a pen and a piece of paper then use that. There is no right or wrong way of doing it. I prefer using the spreadsheet as I can play around with the figures and the spreadsheet will instantly update the total amount as I go. You can also use a YNAB or Every Dollar.
Create Savings Goals
What do you want to achieve, financially? Do you want to save £20,000 over the next 5 years to save up for a deposit for a house? Do you want to save some money to take your family to Disney World?
Once you have figured out your why, you can then break that goal down into bite sized pieces; so you will need to save £333.33 per month for the next 5 years to hit your £20,000 goal. It doesn’t sound so bad when you put it like that, does it?
Decide What Your ‘Necessities’ and ‘Nice To Haves’ Are
In an ideal world, we could afford to live the best lifestyle possible and we don’t have to worry about budgeting, but as it currently stands, we are not million or billionaires, we must live within our means, which means, we sometimes have to decide what we really need from what we really want. Like we don’t NEED to buy a new outfit every week, or we don’t need to order a takeaway every Friday night, but what we must do is pay for things like rent or mortgage, gas and electric bills, council tax, home insurance and any debt repayments, the ‘necessities.. Anything in the flexible lifestyle category is a ‘nice to have’.
Review and Re-evaluate All Your Outgoings
If you only earn £2,500 per month but your current outgoings/savings etc are £3,000 then you must start cutting things down or out. Do you use that gym membership you have been paying for, for the past 6 months? Can you cut down how much you dine out? Can you switch your £40.00 per month phone contract to a SIM ONLY £20.00 per month tariff? Continue reviewing every expense going out until you are within budget.
Check out Look After My Bills, successfully featured on Dragons Den (the UK version of Shark Tank), they offer a free auto switching service on your energy bills .. forever! They make the switching super easy for you, you can sign up, even if your current deal hasn’t ended. Once your deal has ended, they will automatically find the best deal for you. You’ll never have to think about switching ever again, it’s brilliant.
Open Several Checking and Savings Accounts
This is something a lot of people on their financial independence journey does. Jordan Page from Fun Cheap or Free recommends having at least 7 different bank accounts… yes that’s at least 7!
For the best currents account deals visit moneysupermarket.com.
Gone are the days were banks give you money for switching but most banks offer incentives for switching. There are so many banks that will reward you for using their bank.
Set Up Standing Orders To Savings and Investing Accounts
This is also known as paying yourself first.
As soon as your paycheck hits your bank, a standing order of 5-15% of that paycheck needs to automatically be sent to your saving and investing accounts. This way you can guarantee you hit your saving and investing goals.
Review Your Annual Calendar
A great way to get ahead is to review your calendar. Write down all social occasions, people’s birthdays, when you car insurance, MOT, car tax etc is due. Don’t forget to include Christmas. These are all called sinking funds.
Set up standing orders to cover your sinking funds and like your savings and investing account(s) you also need another bank account.
Here is a great calendar for you to plan your weeks and months of occasions and bills coming up.
Set Yourself No Spend Days or Weeks (or years)
Setting yourself no spend days is a great way to save some extra cash. At the beginning of each week review your calendar and decide which days of the week you are going to have a no spend day. Start with a no spend day for guaranteed success, then you can work up to a no spend week or even month. There are thousands of people who do no spend years … I am not one of those people, I could do a no spend week but not a year. It’s too extreme in my opinion.
Use Cashback, Voucher and Money Saving Apps and Websites
Gosh, there are countless cashback, voucher and saving apps and websites available. Refuse to pay for anything in full, unless you really have to.
Quidco and Topcashback offer a percentage of your money back via cashback for any of your online purchases. Can you also do it with most of your utility bills and car insurance. I received £25.00 cashback on an annual car insurance policy via Quidco.
Another great hack is to use company referral programs when possible. I switched energy suppliers when I moved house a few months ago, my dad recommended me to So Energy and we both received £40.00 credit in our accounts. I was going to go with So Energy anyway as they had the best deal on the market and the fact that I could receive money for signing up was simply a delightful bonus.
I could dedicate a whole article on this topic alone.
Observe Your Behaviour
Figure out what triggers you into emotionally spending money and tackle it head on.
Is your Achilles heel shopping online after a very stressful day at work, or do you order a takeaway after a long hard week? Once you know your triggers you can prepare and plan for when it happens again.
We often aren’t aware of our triggers until we put our focus and attention onto our actions.
A Little Bonus Tip
A great way to manage your money is by using Dave Ramsey’s Cash Envelope System.
Each envelope represents a category in your budget, for example, you will have grocery, fuel, beauty and a ‘fun money’ envelopes. This is a very basic but effective way of tracking your spending.
So there you have it, my 10 ways to easily save money using your current paycheck.