Wananchi Opinion: This is how to reduce your expenses and save some coins
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It is not uncommon to hear people rumbling about how hard they find it to make savings or pay bills despite having some form of monthly income.
However, with discipline and determination, it is possible for one to build a pool of savings through regular savings and prudent management. It’s possible to begin your journey towards healthy savings.
Track your spending. Keeping track of your monthly cash flow for your income minus your expenditures will make it easier to progress towards your goal. You can also use a budget app to track your spending.
Paying off your debts will help you save more. If you can pay off high-interest debt more quickly through extra payments you will save on total interest paid and start putting your money into savings instead. You can pick up a side hustle to pay the debt if you don’t have disposable income.
As you work towards your financial goals, make sure to put your accumulating funds in a high-yield savings account to maximize your money. High-yield savings accounts pay interest rates that are higher than those by large traditional banks.
Create a 50/30/20 budget. One smart way to manage your money is following a budget by setting priorities for your spending. The 50/30/20 budget approach means devoting 50% of your after-tax income to necessities, 30% to wants and 20% to savings and debt payments. If one allocation exceeds these percentages, you can make adjustments elsewhere.
Stocking up household supplies when they are cheaper. Track your inventory of household supplies and consider buying them in bulk at discounted prices. This is actually cheaper than buying them when they are at a full price.
Take advantage of low-cost or free events in your community by checking listings at libraries and churches. Community events are cheaper ways to keep kids engaged and spend quality time together.
For outdoor events, pack snacks and water to minimize on your spending.
Making a shopping list of the grocery items will help you avoid impulse buying. This is a good way towards saving money on groceries. Also, get coupons or join loyalty programmes to maximize savings while shopping.
Minimize restaurant spending. If you want to save more you have to cut on the frequency of eating out and opt for home cooking because it’s cheaper.
If you want to save more, try purchasing appliances, furniture, cars, electronics and more during annual discounted sales period. It’s also important to track prices for deals over time.
Delay purchases with the 30-day rule. A good way to avoid overspending is giving yourself time between the time you like a product to the actual purchase. If you are shopping online consider putting the item in your shopping cart to enable you think it over. You can also try shorter periods like a 24- or 48-hour delay if 30 days seems longer.
Budget for gifts. To plan for costs, create a calendar for all the important gift giving events of the year then create a savings bucket or “sinking fund” specifically for the gifts and buy them during discounted period like the Black Friday.
Refinancing your car loan and taking advantage of lower interest rates could save you considerably. Shopping for car insurance regularly rather than renewing your current policy will help you save on costs.
You can also cut on car maintenance costs by driving less or removing heavy items in your car trunk to avoid rapid acceleration.
Reduce your electricity bill. Changes in your energy usage can help you save on your annual electricity bill and add to you long term saving goal. Consider plugging any insulation leaks in your home, using power strips, swapping in more energy-efficient appliances and switching to a smart thermostat to cut on the energy usage.
Set specific but realistic saving goals. It can be to Ksh.50,000 in an individual investment account a year or paying off your credit debt faster. Use a savings goal calculator to see how much you save monthly or yearly towards the achievement of your goal.
Another option is saving each day and making a deposit into your savings account when you have a sizable amount. While this approach does not build savings overnight, it’s a solid approach for slow-and-steady savings growth.
Finally, automate transfers. Setting up automatic transfers to your savings account each month is a useful technique when the savings are dedicated for specific goals such as establishing an emergency and investment fund and for vacation purposes.
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