So you have decided that you need to start saving money. It’s a good idea to save your money rather than spend it. In this article I will write about tips that you can implement to start saving money right away.
You have probably heard the old expression, “save it for a rainy day”. The concept of saving money has been around for millennia. It’s pretty obvious why you should have some money saved up. Financial experts recommend having an emergency fund of at least 3-6 months worth of expenses in case something unforeseen happens. You might lose your job, your car could break down, or an unexpected medical emergency may arise. It’s always a good idea to have some savings in your bank account to protect you in case of difficult times.
How to start saving money
In order to save money, it first helps to pay off any outstanding debts that you might have. The first type of debt that you should try to eliminate as soon as possible is credit card debt. Credit card companies charge around 20% annual interest on any outstanding amounts that you do not pay off of your credit card balance. That is a very high interest rate considering that the interest rate on many mortgages is 2-3% and the interest on student loan debt in Canada is approximately 6%. In order to save money you should try to pay off any high interest debt that you might have first.
Be mindful of spending
Many times we buy items that we do not really need in hopes that these items will either help us to succeed or make us happy. After the thrill of purchasing a new item is gone, these items generally sit somewhere in our houses and collect dust. Being a musician I have been somewhat guilty of this trap myself. Over the years I have acquired certain pieces of musical equipment that I currently use rarely, if ever. When you purchase an item, try to think, will I be able to use this item in 5-10 years or longer? Try to avoid buying things that will have very limited usage in your life, for example a video game that you might play twice.
Become a home chef
I love eating out a restaurants. It’s one of my favorite things to do. However, if you are looking to save some serious money, try limiting the amount of times you eat out. It’s incredible how much money can be saved by cooking all of your own meals at home. Yes, it can be time consuming. If you’re a busy billionaire, it might not even make economic sense to cook all your own food at home. For those of us who actually have to worry about cash, cooking at home can save a lot of money.
Restaurant food will almost always be more expensive than food you cook at home because those workers need to be paid and those businesses have other expenses as well. Treat eating out as a luxury that you engage in only a few times a month and you’ll start saving big. Do not use food delivery services all the time either. Think how much money you are paying in delivery fees each time.
Do not drive a car
If you do not need a car, do not own one. Even a multi-millionaire like Kevin O’Leary from Shark Tank, says that he hates cars and argues that you shouldn’t own one. Think about all the expenses involved with owning a car. The initial car purchase, insurance, gas, maintenance, repairs, and more. Cars are designed to make car companies money, not you. Unless you use the car for business and absolutely need it, I would recommend not owning one. As soon as you buy a new car, it loses value the moment you drive it off the lot. That doesn’t seem like a great investment to me.
Learn for free online
Do not always think you have to pay a school, company, or business to learn something. A lot of people think they need to spend money to go back to school to upgrade their education in hopes of better career opportunities. I would never suggest that someone skip going to school if they are passionate about it. Just remember, higher education can be very expensive these days and sometimes the value of it is questionable.
With so much information available on the internet these days, be careful of what you spend your hard earned money on in terms of education. A library is always a free source information on many topics. The internet is a also an immensely vast resource of info. Much can be learned on your own so think carefully before you invest precious time and money in education. Remember, someone else is making money off of you in the process. Don’t make yourself poor so a professor or institution can profit.
There are many ways to start saving money. This article has only covered some of them. Essentially, you need to be very mindful of your spending. Think about where each dollar is going. Remember that there is a whole wide world of businesses trying to get you to part with your money. Corporations and companies need revenues and they want you to spend. There’s nothing wrong with buying things you like. Just remember, don’t spend so much that you go broke while corporate profits soar. Save some money for a rainy day instead.
©2020 – Richard Gillespie