5 Simple Money Saving Tips

Hello again! Carly has kindly asked me to use my knowledge from ten years in the Finance industry towards some great, positive posts about Finance (and Heavens above knows we need more positive information about Finance!) In case you didn’t read my earlier post in the travel section, my name is Jade, I’m an Australian born, London resident and blogger over at lalalondon.net.

Today, I want to share some easy and simple money saving tips.  When I first moved out of home and started working full time, I was hopeless at saving money. I was in debt to my eyeballs and couldn’t afford to do much outside of keeping on top of my bills, making sure my car had petrol, getting to work and eating. It didn’t help matters much that I was on a very small salary!

Working in the finance industry, through both retail and investment banking, I’ve managed to pick up a lot of tips along the way to help keep my bank balance out of the red – now it’s my turn to pass them on to you!

1. Segregate your “bill” money from your “everyday” money

It’s easy enough to get paid every week, fortnight or month and accidentally overspend and worry about where the money is going to come from to pay those bills when they are due, so what I like to do is have a second account, called my “Spending” account. Each month when I get paid, I go through my bills and I leave enough money in my bank account to cover those bills and then I transfer the rest of my money into a second account.  I have even, in the past, taken the drastic option of cutting up my ATM card for my bills account so I can only access that money by transferring it through Internet Banking or by physically going into a bank and withdrawing cash over the counter – which I am far too lazy to do!

Note: I include my monthly savings as a “bill” to ensure that I put away money each month.

2. Have a weekly free-spend allowance and feel free to spend it!

When I was contracting, it was very easy to spend the extra money I was earning, simply because it was there in my “Spending” account. I was saving a nominal amount every week but in theory, I should have been using the free money as a top-up for an emergency fund. Needless to say, when I did run into some trouble financially, I didn’t have enough money in my savings to cover it and had to overextend myself with bank credit. Now, as part of my budget, I allow myself $10 per day (weekdays only) to spend as I please. What I usually do is withdraw the $50 on a Monday morning and once I run out, that’s it. Sometimes I might not spend all of my $50, so I can accumulate over a few weeks – at the moment, I am actually in advance of $15, so I know this week, if I feel like treating myself, I can. In fact, this week I am going to have a manicure!

3. If you have Credit Card debt, get rid of it!

With interest rates for saving at such low rates, there is not much point saving large amounts of money if you have debt. Of course, continue to save a small amount each pay cycle, but if you have enough cash in your savings to pay off your credit card or loan, it makes more sense to channel that money into paying off a higher-rate credit card than it is to save it and get a paltry 1% interest. On the other hand, if you don’t have enough cash to pay out your card, ensure you are paying more than your minimum balance – even just $10 or $20 a month makes a huge difference to interest costs over the term of your revolving credit agreement.

P.S. If you’re a card hopper – A lot of card issuers love to issue cards to new customers with 0% balance transfers for 6 months or so. Be careful with these, as sometimes the interest rates shoot up after the 0% honeymoon period ends.

4. Silver (and copper, if you have them) coins go in the coin jar

The easiest and simplest tip of the bunch. Every Friday I clean out my purse and anything under 50c goes in the coin jar. It usually takes me a few months to fill it up but last time I went to the bank with my coin jar, I had the equivalent of around $90 in there. Unbelievable, considering how many one and two pence coins I had in that jar.

5. Treat budgeting like a diet, sometimes it’s OK to break it

I’m not perfect. I overspend on my budget – especially when it comes to clothing and entertainment. I don’t beat myself up about it, because I know that I’m always saving a small bit each month, so it just means it might take me an extra month to reach my savings goal. We all know life isn’t meant to be rushed, don’t we?

Please note, these tips are just that, tips, and if you have any serious money concerns, you should make an appointment to see a financial planner and get qualified advice from them.