Do not save what is left after spending. But spend what is left after saving.
One of the main objections from people who I speak to about beginning their saving and investing journey is the lack of disposable income they have available.
Most people live hand to mouth, pay cheque to pay cheque and when something like job loss occurs in their life their whole world comes crashing down, they scramble to find the next available job, not even considering if this is the right job for them.
I can imagine what you’re thinking right now, “that’s easy for you to say” or “easier said than done, when you don’t have a back-up” An Emergency Fund can help you with this, please check out the blog post: What Is An Emergency Fund and Why Everyone Needs One & 9 Ways To Help Create An Emergency Fund With No Money.
A few minor changes to your lifestyle will help you save over £7,000 per year if not more (depending on your lifestyle)
So you ask “how do I save an extra £7,000 per year without increasing my earnings?” … simple. I have created a table below of basic items you can cut down on and how much you are likely to save per month.
|40 Cigarettes (2 packs of 20)||£20.80|
|Lunches bought at work (x5 days a week)||£25.00|
|1 Night Out Per Week||£69.00|
|Starbucks Grande Caffe Latte/Cappuccino x5 days||£13.00|
|TOTAL PER WEEK||£137.80|
£137.80 x 52 weeks = £7,165.60 per annum (£597.13 per month)
According to an article published on the BBC website on 18th March 2019 “People spend £69 on average on a UK night out, 15.5% up from a year ago.” That alone works out at £299.00 per month. I am a UK citizen and even this amount baffles me. Spending almost £300.00 on alcohol, meals out/takeaways and taxis home, it’s just like flushing £300.00 down the toilet with nothing to show but feeling rubbish the next day.
WOWZERS! You haven’t had to get a second job, you haven’t had to start a part time business and you haven’t had to ask for a pay increase. You have started exactly where you are right now but made some slight changes to your lifestyle.
Maybe you’re not at the point where you can stop smoking completely so how about halving how much you smoke or, maybe you’re not a smoker at all so you don’t need to include that in your lifestyle analysis. But you get the idea. Have a look at what you spend and how much you spend on them each week. Make a note of everything on your phone as you go about your day then review and analyse your purchases, as I am almost certain that there will be at least 2 things to can cut out or cut down.
Until next time …