Ways To Save Money: A Beginner’s Guide to Wealth

Have you found it difficult to make ends meet or you’re living paycheck to paycheck, barely keeping afloat? It might be time to revise how you spend your money. Here are a few tips to start saving money.

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Revise Your Expenses

Revising your expenses will always be a good practice to help target areas of excessive spending and ongoing trends that you would otherwise overlook. This is especially true if you’re not making ends meet. Revise your account regularly or when your account balance becomes suspiciously low. This will help spot fraudulent charges and bank mistakes that often missed.

In my experience, someone had made a fraudulent charge to my checking account shortly after I made two bill payments. Had I not revised my checking account, I would of assumed that the drain came from the other bills I paid. Looking over your accounts is also a good habit to help you reach any financial goals that you want to set up in your life.

Break up Bank Activities Into Categories

A basic way to revise your expenses is to breakdown your monthly activity into categories. I recommend going back 3 or 4 months to find an average of what you spend on each category, monthly.

I print out my bank statements and sit down with a pen, some paper, and a calculator - it helps me sort things out in a detailed manner. If you'd rather use a computer, there are dozens of softwares and apps that can help you do the same thing. Some banks have tools to track these categories online, too. Start by dividing your monthly bank statements into these four categories:

Income

Start with your monthly earnings. For example, if you get paid $3,000 in one job and you have a side job that pays $500, put them both under income.

Bills

Gather all of your bills. This includes bill for, your phone, insurance, medical, credit cards, utilities, house, and car. Anything reoccurring that you receive a bill for should be listed under here.

Food

This is where your groceries, restaurant bills, and coffee runs belong.

Misc

Anything not related to bills, food, or income. This could be online purchases, gas, clothes, etc.

Once you’ve gathered the sum of all these categories, divide each category by the months that you’ve gathered. Example:

Food category: April $450 + May $425 + June $480 = $1355

Divide the sum of these numbers by the 3 months mentioned and you will get an average of $452.

Once you’ve gathered this data for each category, you can use it to estimate your expenditures in the future. This will also help you watch your progress of savings.

Eliminate Mindless Spending

Cut Entertainment

Entertainment is a broad topic, but it can be defined as anything that is not essential in your life. Good examples are buying the latest technology, paying a high cost for a cable package, or buying another pair of shoes.

A good indicator that you are buy in excess is the amount of items around your house that still have tags on them. If you’re chuckling of embarrassment, chances are, you’re overspending! A good rule of thumb is to avoid using more than ten percent of your income on entertainment. If you are spending more than ten percent on entertainment, you may want to sit down and start eliminate the higher expenses first, then continue eliminating expenses until you are using less than ten percent of your income.

Cut Down Food Waste

Eating out and buying too much groceries is something many are guilty of. In fact, an estimated 37.6 million tons of food waste was disposed in landfills and combustion facilities in 2015. To cut down on your food category, avoid weekend activities that require spending vast amounts of money on foods and drinks. Instead, try new activities that won’t drain your wallet.

Garbage trucks on top of landfill

To prevent overspending on groceries, prepare a list of items from recipes you’re going to make for the week. Shopping for recipes throughout the week will not only help you reduce your carbon print but it will help you save money and prevent you from the temptations of eating out during lunch and dinner.

Consider replacing some of your meat dishes with meatless dishes throughout the week. Meat is expensive and can rack up your grocery expenses, especially if it goes bad before you use it. Replacing meat protein with cheaper meatless alternatives such as beans, nuts, eggs, etc.

Refinance Your Car

If your credit now is better than when you first purchased your car, you may want to consider refinancing. Be sure to look at your contract with your current loan to see if you have a prepayment penalty clause; this is a penalty for paying off your contract before its time. Not all contracts have this penalty but it’s good to verify before you begin the process of refinancing. Credit Karma has a good calculator that help you choose from other banks that offers better payment options. You can also talk to the bank or lender who you are financing your car loan through and see if they can provide lower interest rates. Sometimes, if you’re a long term customer, they may have special incentives for refinancing with them.

Refinance Mortgage

This sounds like the most difficult thing to do but it’s doable! Refinancing your house can save you thousands down the road.

Couple closing a house deal

Financing at a lower interest rate will lower payments and can help pay off your mortgage with ease within the same allotted time. Keep in mind that the idea behind refinancing your home is to find a lower interest rate to pay off your mortgage in an equal or lesser time. If you extend your contract to lower your mortgage payment, you’re just paying more interest in the long run. Use a loan calculator to see if it’s feasible to refinance your house. Keep in mind that many closing fees may be applied to your next loan.

Live Below Your Means

Start a budget, one that fits your needs. Resist non-essential purchases and revise bills and loans to ensure you’re getting the best services for your money. Stay frugal!