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Taking control of your finances is the best way to save money and live better. Building strong saving habits is not easy. It takes practice and determination to rebel against spending! Below we discuss how to save money, habits to live better financially and ways to raise your income.
How to Save Money Live Better
Saving money is a skill set you build over time. Like many things in life, with extensive practice your skills will improve. Understand and implement the principles below to start to building your savings muscle!
What is Saving Money
The first step in learning how to save money is understanding how money moves through your life. Luckily for us, there are only two ways money comes and goes. When we earn money, we can either save that money or spend that money. Now to many that can sound like a simplistic view but its true. When money comes to you there is a decision to either keep that money or give it away. It is that easy! With such a simple model, why wouldn’t everyone be sitting on piles of money from saving? Because it is difficult.
Companies are constantly finding out ways to get you to spend. Through credit products they make it easier than ever to spend and worry about savings later. That is why we need to trick ourselves into saving. Below we go through our best method to trick ourselves into flexing our saving muscles!
Strategy to Save Money Live Better
Saving money is a game of psychology. We need to trick ourselves so that we don’t fall into the easy spell of spending money! The trick to start saving money today is…. drum-roll…. To pay yourself first. Paying yourself first is the most effective method to not overspend every month. To pay yourself first you remove the amount of money you save first. Take your savings money and move it into an account that you can not spend from. I move my money into my Questrade Account where I invest using my Value Investing | The 2020 Beginner’s Guide. If you would like to learn more about Questrade you can click here.
By moving my money into a separate account, I can ensure that I save the amount I want to. The problem with leaving your money in one account is we will spend it. Something in human nature makes us spend money if money is available, its unfortunate but it’s the truth. That’s why this trick is so powerful. Once you have moved your money to a separate account you can breathe easy that you are building savings! I go into detail on this topic in my free “How to Save More Money” worksheet. I explain how to find your Maximum Possible Savings Rate (MPSR) and use that goal to increase your savings! If you would like to sign up for the free worksheet, you can find it on our homepage here.
Automate to Save Money Live Better
Technology and apps can be a great resource to help everyone save money. Tools can help with budgeting and automate savings. The application I used to automate my savings was Mint.com.
Mint is a great free app to help breakdown down your expenses into simple expense categories. Once you are able to see your spending patterns you can start to focus on areas where you are overspending. If you would like to read more at Mint.com click here.
Best Habits to Save Money Live Better
Practice makes perfect. Building consistent money habits is key to saving more money. Below we go into detail about habits that accelerate our savings!
Monitor Credit Cards
My first tip would be to take control of credit card spending. As stated, earlier credit cards are a tool built to make it as easy as possible to spend. If this is the case, we have to recognize these convenience products and use them effectively.
If you have a strong credit score and a low balance on your credit card it can be a saving tool. I recommend that you look for a cash back credit card with no annual fee. Be diligent with your spending and you can use your credit card to pay for expenses. Then you receive money back on purchases you were already going to make. This boost to your savings every month can be helpful! You must only use a credit card for purchases you were already going to make. By following these strict rules credit cards can be a great resource.
If your credit score is low or you have a high balance on your credit card you are going to want to stop credit spending. In this situation use all or a portion of your savings to pay off the credit card balance! This is a very effective way to move your savings so it isn’t accessible. If you are using this method ensure you remove the credit card from your wallet so that you aren’t tempted to use it.
After we have decided on our savings goal, we need to act. One of the most effective ways to achieve a savings goal is to look at your expenses. Through budgeting and analyzing your spending patterns you can pin point overspending. Once you have found areas of overspending you can begin to look for ways to reduce those expenses. By reducing expenses, you have found more money to save!
A lesson that I have learned is that reducing expenses is easier then increasing income. Let’s look at an example. A reduction in your monthly expenses of $500/month is equivalent to a $6,000 annual raise!
Most people realize when they breakdown their expenses that small savings add up!
Budgeting gets a bad reputation which I disagree with as long as it’s done correctly. Budgeting is an effective tool which can help you understand your spending patterns. Understanding your spending habits by category helps to highlight where you are overspending. I use the budgeting tool Mint. You enter all your banking information and Mint breaks down your spending. Once you see where you’re spending money, you target and lower spending in those areas to save more money! If you would like to read more about Mint click here.
Use Fiverr to Save Money Live Better
Fiverr is the largest online marketplace for freelance services in the world. Fiverr has helped with my personal finance & business needs for the last 3 years. It is the most affordable platform that allows you to partner with experts in almost every field. I have found that Fiverr is a great strategy to improve my output and save my time! I look at any time not spent doing something I dislike as productive. It also leaves me more time to focus on my goals and interests. The small cost for gigs has 100% been worth the time savings plus I have received expert advice! If you are looking to connect with experts in any field Fiverr is a necessary resource. To read more on Fiverr click here.
Increase Your Income
A great way to save more money is to increase your income. This doesn’t mean getting a second job. Instead find simple and effective ways to earn money on the side of your main income source. By bringing in more income you can grow your savings goal over time. If you would like to read about our recommended side income resources click here.
Challenging ourselves to earn income outside of our main career is intimidating. Remember to start small (Rome wasn’t built in a day). If you do not know where to start is to look around on Facebook Marketplace and Kijiji for free items. Flipping free items is a great way to start building business skills. There is no monetary risk since you are picking the items up for free. It is a win-win! With every sale you earn extra money and continue building valuable business skills.
This will be a great way to start earning extra money on the side but is difficult to scale as a business.
Invest Your Savings
Purchasing investment products is an affective way to invest your savings. Diversified investments are vital to any portfolio. To learn more about investing, I recommend a self-directed investing account. You will learn valuable skills over time and will save an enormous amount of money on fees!
The website I have use to invest my savings is Questrade.
Questrade has changed the financial service industry, period. I have been using Questrade to buy my ETFs and Individual Stocks for over 10+ years. Their easy to use portal and free ETF purchases make it a no brainer for my investment strategy. Questrade also has managed portfolios if you don’t want to mange your investments. If you would like to read more at Questrade click here.
It is not always easy to save money live and better. Saving money is difficult but with a strategy you can take control of your finances. Come back to this guide often and challenge yourself to develop your savings muscle! Through practice and patience, you will save money and live better!