HOW TO SAVE MONEY
In this article, I am going to explain how to save money so you can spend it on better things. This article will not go into ways to earn more money; it will explain what to do with the money you currently make.
I have been great at saving money ever since I was a kid. I was taught by my parents who are also very good savers of money.
My parents and grandparents taught me to how to save money so I will have more of it in the future. I remember my grand dad (who had a few investment properties and lived in a big house) telling me to put my money in a money tin so I can buy a house when I’m older.
Although his advice was save for a house, back then what I wanted to buy even more was a plane, I remember having $5 and thinking I needed to save around $200000 haha, I never bought that plane but I did develop a good mind set for saving money.
I always had different goals in mind of what I was saving for a kid. A car, a boat, a plane, a house, I was always thinking of what I wanted and was thinking of how much money I needed and how I was going to save that much.
I am fortunate to have parents who are great at saving money, when we were kids they gave me and my sisters $10 a month to put in our savings account, they also told us to hang on to it and don’t waste it so we can use it to buy our first car.
At the age of 15 I got my first after school job and naturally started saving as much as I could, by the time I was 17 I bought my first car in cash.
Over the next years I saved as much as I could and was able to pay for overseas holidays in cash.
Now at the age of 25, my next goal is to save for a deposit on a house.
I have never owned a credit card, actually that’s a lie, I have a zero annual fee platinum credit card that I never use unless I pay for flights in which case I get free travel insurance, I immediately pay it off in cash so I do not pay interest.
I’ve never had to take out credit cards or personal loans to buy something, if I don’t have the money I will wait and save it, it’s better in the long run.
I’ve gone months at a time without a job and had plenty of savings to support me without needing government assistance or an insurance payout.
Having savings gives you less stress in life, you are not always one extra cost away from being in debt! you have more flexibility, you can have and do more things!
I will now explain how to save money and make the most of what you earn.
Some things you can’t not spend on, I call these bills, for example
- Insurance like car, home/contents, health insurance
- Phone bill
- Rates, taxes
- Bank fees, interest
With these things you can’t do much, they are necessary and important, my best advice for these expenses is don’t go overboard, make sure what you are paying for is enough for you, shop around, see if you can get a better deal.
My gym membership is only $15 a week because I chose a gym that doesn’t have all the extra things like saunas, swimming pools and all sorts of fancy things because I just want to go and work out with weights at a gym.
My phone bill is around $80 a month but I need it because I was always going over my data before.
I live with parents so I don’t pay for some of the other expenses listed above, I’m undecided if I should get health insurance but I can tell you know I will make sure it’s enough for me and I don’t over pay.
Don’t borrow for things that go down in value, don’t get a credit card and overspend on consumables, don’t get a personal loan for something you can’t afford, you will spend more in the long run then if you just waited and saved. The exception is you need to take out a $5000 personal loan to buy a car that isn’t trash and that will cost you money in repairs or borrowing money for an emergency situation or something like that, but from what I have seen, most people who borrowed for things are just too weak to wait and save, they want it now! Don’t be like that.
So just to clarify, while “bills” are unavoidable, you can still save by not overpaying for something you don’t need.
Besides your bills, your other expenses are everything else, for example.
- Daily coffees
- Buying lunch instead of bringing from home
- Drugs (yes I’m aware that some people are spending half their weekly income on coke and weed habits)
- Cable, Foxtel, net flicks and other TV
- Car parts
- Clothes, shoes, accessories
- Fun, movies, clubbing, socialising, restaurants
- Events, concerts, music festivals
- And everything else..
One thing you need to know is, it all adds up, little purchases here and there and over the course of a year when you think about it you have spent a lot. Now times that by 5 years, 10 years, 20 years or more and you’ll be amazed at how much you have spent on little things.
For example, let’s say if you smoke a packet of cigarettes a day which is pretty normal for smokers, that’s about $20 a day (in Australia anyways), which is $140 a week, which is $7280 per year!!, IN 10 YEARS YOU HAVE WASTED $72800!! On something that offers no benefit to your life and is ruining your health.
Imagine what else you could spend that $72800 on? Something more substantial like a nicer car, multiple holidays, renovations on your home or use the extra money to upgrade to a better home, pay for your kids schooling or something else, or even just give the whole 72k to charity is a better fucking choice then wasting it on cigarettes.
But that’s not all, that was only 10 years, most full time smokers smoke well into their 50s and 60s (if they are still alive) so let’s assume you have been smoking a pack a day for 30 years, that’s $218400!! And that’s if you just kept the money in the back earning the same rate as inflation, that money could have grown in shares or property, imagine what else you could have spent that on? You could use that as seed capital on a business, you could have traveled the world, you could spend buy the car of your dreams, the choice of what you would do is up to you but I’m sure spending it on smokes isn’t what you would choose.
What about alcohol? I’m not sure what the culture is like in other countries but in Australia a lot of people drink daily, they may drink a few beers after work or some wine daily, I don’t, and if you are drinking any more than one drink a day and you need to, don’t kid yourself, you are an alcoholic.
So let’s assume you go through a carton (24 beers) of beer a week, the price of a carton varies but for this example we’ll say its $40.
Do the math; $40 a week is $2080 a year which is $20800 in 10 years which is $62400 IN 30 YEARS!!
And if you are weak enough to be addicted to alcohol you are probably addicted to cigarettes as well so in total you have spent $280800! YAYYYYYYYYY
Another thing that adds up over time is buying lunches and coffees, $10 for lunch, $4 for coffee, do the math, it adds up.
For three years I bought my lunch every day at work, let’s assume I spent $10 a day 5 days a week, that’s $7800 on overvalued lunches I bought every day, and those 3 years went by pretty quick, I now try to bring my lunch to work from home now and have saved a lot in the last year already, plus it can be healthier and more satisfying to bring lunch from home.
Look I’m not saying you have to be a peasant and don’t enjoy yourself, if you want something from the food court every once in a while go get it, but every day.. it adds up, and I know it can be hard sometimes with co-workers all buying coffee and lunches together. All I’m saying is try.
Hobbies you need to decide for yourself, some can be pretty expensive, but if it adds value to your life and you really enjoy it, that’s a choice you are going to have to make.
For example my uncle is really into his cars, he has bought and spent thousands over the years on cars and car parts, but he loves it, his not interested in travelling or other hobbies or other things, and he is not in debt, he has a house and is not in financial trouble.
That is a good point, you can enjoy your hobbies and spend on them as long as it is not putting yourself into a negative financial situation, if my uncle was up to his nose in debts and couldn’t take care of his family because of spending money on cars then that’s a different story.
I don’t personally watch much TV, net flicks is what’s popular at the moment but I don’t really care, it’s up to you if you want to spend money on TV every month and watch TV for a few hours every night.
Entertainment like going out with your friends to bars, clubs, restaurants, concerts, festivals the movies and all that is a tough one, I know how these can all add up, but you don’t want to stay home and be a loser just so you can save money, don’t cut yourself short, you only live once, go out and socialise with your friends if you want to, like I said before, if you don’t have enough money to pay for the necessities then don’t go out!
Going out to night clubs in probably the most expensive, you have drinks which are around $10 each, then you have entry fee, then you have taxi to and from, a night out can cost over $100 or more! Now I have definitely had many big nights out and let my money slip out of my hands (its worst when you’re drunk) but I also had fun and I don’t regret it.
But saying that you can still go out and have fun without spending too much, you don’t need to get drunk, you can go out and buy a few drinks and that’s enough, don’t go shouting people or being too generous, try to share a cab with someone else.
One thing I use to do was put only the money I was going to spend that night in my wallet, say like $60, this meant I couldn’t go over board and waste $100 or more.
A lot of people spend a lot of money on clothes and shoes, they always buy the newest stuff full price, and they may go to the shop every week and spend on something new.
Everyone needs to buy clothes and shoes but you don’t have to spend huge amounts on this, buy something when you need it, if you have been thrashing the same t-shirts for years then yes go buy some new t-shirts, jeans you can get away with wearing the same jeans with different t shirts, but if they are faded it’s time to get new ones, look in the sale items, clothes are hugely overpriced, it’s just some cheap material made into clothes cheaply in china then sold back to you for $60 a t-shirt, in the sale rack you can pick things up for $20 a t-shirt, shoes can be $90 instead of $150 etc.
Personally I buy what I like, I will look in the sales items but if I have to pay full price for something I like and fits well I will buy it, I will probably wear it quite a few times so even if a t shirt cost like $60, if you divide that cost by the number of times I wear it, it’s not that bad, plus I don’t want to compromise style for being cheap, but don’t go racking up credit cards with your shopping habits.
So that’s it guys, regardless of how much you make, you can save money out of that, soon enough you can spend the money you saved on something more meaningful. To me that means a house, a car that I want, holidays, investing and maybe seed capital for a business.
This may not be what you want, the choice is up to you on what you want to spend your savings on, the main thing is that you understand that the little insignificant things add up and also make sure that you can pay your bills first before you start spending on the extras.
Don’t cut yourself short, I know people who are so tight with their money that it affects their life in a negative way, you don’t want to be like this, you only live once, its ok to go out with friends on the weekend or spend on a hobby or go to restaurants etc., the point is don’t go over board and try to save what you can for more significant things.
I hope you liked my article how to save money! Good luck!