Easier said than done. With all the modern-day pressures to keep up with the Jones’, temptations to indulge and satisfy your immediate needs, living below your means is a skill that takes a long time to master.
The fact is this, most of the time when people look up tips on how to save money the most common piece of advice is this: make sure you make your savings before spending and save for a goal.
But, saving money isn’t about not buying that $5 Starbucks latte that has been a long time thirst, it’s actually spending from the rightly budgeted funds for fun-spending which is all about building long term habits that allow you to earn more and spend less.
So how do you actually live a financially balanced life without being frugal?
Here we have it, a breakdown of the 6 most-effective practices that will help you master your personal finances and cultivate a safe-spending attitude without necessarily being frugal.
Tip #1: Don’t Spend From A Yet-to-come Funds
Looking forward to a paycheque at the end of a month, or expecting money from a source leaves you with a sense of financial safety, but most of the time this is a trap.
Once you’re trapped in the habit of borrowing to spend, being in debt, and footing the debt right from your paycheque, you have ceased to live within your earning. Cutting off this habit would mean, allocating funds for emergencies and sticking to your monthly expenses – no impulse buying.
Tip #2: Automate Your Savings Right In Time
Automating your savings is a second rule to a fundamental practice, but rule number one in making this an effective strategy is this, avoid automating your savings a day after earning.
Here’s the trick, if you earn $5,000/month and your saving plan is a 40% savings every month, automating the 40% of $5,000 would leave you at a $3,000 balance right on the first day of your credit alert.
The next trick is this, sort out monthly expenses right on the spot, no excuses, no procrastination.
Making payment for your utilities and other expenses would further slim your funds down from $3,000 pegging it at where your mind would balance to work with the leftover funds.
With the left-over funds, you can cut out cash-at-hand emergency funds, plan your fun buying and monthly indulgences, all within the range of your left-over cash.
Tip #3: Plan Ahead, Not On Payday
Here’s a common financial mistake most people make, planning right on the day of getting your paycheque. This is an ineffective money-saving strategy that won’t let you plan purposefully.
Not only that at this point your mind is clouded with lots of needs and wants with available funds staring you right in the face, but you also become less conscious of needs and unable to discern between needs and mere wants.
On planning on what to spend your earnings on, Elizabeth Warren’s 50/20/30 budget rule could save you the stress in planning on how to allocate your funds based on different needs.
Here, 50% of your post-tax earnings go to needs, 20% heads to your “want” account, while 30% is put away for savings.
But the equation doesn’t stop at this top-level saving strategy. So to further detail what your needs and wants are, place your needs within your “must-have” and your wants within your “less-essentials”.
One cardinal rule to pick out your wants (less-essentials) is to find an alternative to things outside your needs.
For instance, instead of buying a ticket to a game, an alternative could be to watch the game right in your home, on a TV. While registering for gym sessions could be great health-wise, an alternative to this is to work out at home with less expensive gym equipment.
After drawing a thick line between your needs and wants, and making sure you stay right on the budget as planned, next is to write out these allocations using a budget planner or a notepad.
Tip #4: Negotiate Your Bills
How possible is it to negotiate your bills when these services have fixed rates? The simple strategy is to use coupons and sites that offer pricing plans for a budget.
The internet is a great place for looking up for coupons or slashed prices on popular services and end-user products, and even when you don’t find coupons for items you want, you can earn points that can be converted to cash when needed.
Also in negotiating your bills, another strategy to pay less for some recurring services is to place a call to the company and request for a slash on price.
Here are a few reasons why your request could be granted:
- Because you’re a regular customer to a shop or a brand
- You have a culture of auto-renewing your bills on or before the due date
- You’re on a premium package
- You have a record of successful referrals to the brand
- Because you asked on a festive season
Right before you make a new purchase, or before your subscription is due, you can place a call or write to the company, negotiating your bills and pointing out any of the highlighted reasons above.
Stating that you’re cash-strapped and might be terminating your subscription, not renewing your plan, or even requesting to be moved to a smaller plan can trigger the management to grant your wish.
Tip #5: Reduce The Urge To Buy Online
The old saying “don’t take all your money to the mall, you might come home broke” is defeated once you have your debit card, an eCommerce site, and the internet.
Think about it this way, while life without the internet would require you to make offline purchases where you can take the exactly needed funds to the mall, the internet will defeat that purpose by making you spend right from your desk, with your debit card loaded with funds set aside for another particular need.
Instead of being less conscious of this pitfall, make sure your debit card is funded with the exactly needed funds to avoid frivolous spending.
In a study conducted by Consumer reports, Priya Raghubir, professor of marketing at New York University backed up the idea behind the pain of payment by stating this, “There’s just something painful about taking money out of your wallet”. – Detailing this statement, there’s less attention paid to safe-saving and minimized consciousness to how we spend money with debit cards.
Tip #6: Buy During Seasonal Events
In times like Black Friday and Cyber Monday sales, you could find yourself some amazing deals that would have been sold for a higher price in the offseason, so saving up for non-immediate needs and making purchases when there are better deals is a way to slim your expenses and save.
Note: during these shopping holidays, there’s a tendency to buy frivolously, this is where planning your expenses ahead of time, and keeping other safe-spending practices right in mind.
One of the free services designed by top sites that offer holiday sales is giving you the option to sign up on their email list to get notified once there are available deals. Best practice, sign up to get emails on their best deals.
So now, you have your savings culture figured out. This is only a path to a bigger and more organized lifestyle because, if you can’t save the little you earn, you can’t handle bigger earnings.
Now, aside from having these savings cultures figured out, you need to pay attention to this essential part of the equation.
- Stay consistent. Your automated savings can be turned off and you can easily slip off track and go back to wasteful ways, but writing down your financial goals or putting up a vision board right where you can see it will help you remember why you started a savings culture
- Reward yourself for a milestone well achieved. If you set a goal to hit $10,000 in savings by mid-year, reward yourself to stay motivated and consistent
- Don’t save to spend on mere wants, save to spend on bigger wins like advancing your education, starting a business, buying a house, having a wedding, etc.