We all have good intentions at the beginning of the year, right? Get fit, go on that holiday, get a pay rise, grow our business, save money… but how many times have we all let each year fly past us without actually achieving any of the goals we set out for at the beginning of the year?
Studies show that LESS than 25% of people actually stay committed to their new year resolutions.
Why is this? Well, most people are just all talk and no action. We all have good intentions, but it’s the actions we take to achieve those goals that are going to make a real difference. We spoke about setting financial goals and how to achieve them earlier in 2019, which will be a good read if you already know what financial goals you want to achieve this year and will help you set a plan to make it happen.
But, how many of you want to SAVE MONEY IN 2020? People say it all the time, ‘I don’t know where all my money goes each week’. Well, it’s time we find where it’s going and make some simple changes in 2020 that will see you actually save some decent money this year. Here are our top 4 tips for saving money in 2020!
Create A Budget
First thing’s first, you need to know how much money is coming in and how much money is going out each week. Creating a budget will help you see where your money is actually going and set a limit on certain areas you spend money on. Getting a visual of where your money is going can really help you see what areas you can improve on.
You can easily set up a budget on an excel spreadsheet; write down how much money you bring in each week, and then add up your weekly expenses/bills. To determine how much is left over.
Income - Expenses = Savings
Look back at your last month of spending on your bank account, this will help you to see what your expenses are, the normal things will be:
Rent/Mortgage
Insurance
Council Rates
Water Rates
Electricity Bill
Fuel
Food
Car Registration
Phone Bill
Subscriptions (Netflix, Gym, Spotify, etc)
Alcohol
Now, a fair few of these won’t normally be paid on a weekly basis, like electricity and insurance, but calculate how much it would cost you per week for these. E.g. If you pay $1,000 for home insurance/year: $1,000/52 = $19.23
Now you should be getting a good idea of how much money is coming out on a weekly basis just for general living expenses, and you can see how much is left over at the end of the week. There are always extra things we don’t account for each week, so you’re not going to be able to save all that money that’s leftover, but decide on a fair amount that you can put aside for savings so that you still have a little left for ‘play-money’ and put the rest away for savings.
Here’s something you will love! There are now free apps that can do most of the work for you! One we really love is called Pocketbook, it’s free, connects to your bank account and helps you budget your finances, track your spending habits, and helps you save. It’s super simple to set up, it automatically categorises the different transactions, and gives you a really good idea of where your money is being spent.
Pay off Credit Card Debt
Being in debt isn’t always bad. There is good debt and bad debt, good debt is taken on as a way to build your wealth like buying a house, for example. Whereas bad debt diminishes your wealth over time as it’s not attached to an asset, these are usually for items of services that you could not afford based on your income, such as relying on credit cards for nonessential items, or getting a personal loan for a car or to pay for a holiday.
2020 is the year to take control of your BAD DEBT! Now that you know how much you can save per week, based on the budget you made, you can start paying off your bad debt quicker. Before you can even think about saving money, you first need to get to a position where you’re not in any debt. Not only will paying your debt off quicker save you paying extra interest, but it will get you into a good habit of putting money away each week so that once the debt is paid off, you can then save that extra money and use it in the future to buy something for yourself. We should never buy something that we can’t currently afford if it’s not going to be an asset to us in the future. If we can’t afford it now, we probably can’t afford it next week either.
Bank Your Pay Rise
If you’re lucky, you might have got a pay rise in the New Year, or looking at getting one this year. We can easily get a pay rise and quickly adjust to a new weekly wage, but instead of adjusting to the extra money and wondering how you ever went without it, bank it and save it! If you’re making an extra $50/week, put it aside and by the end of the year you will have an extra $2,600 you would have easily wasted away each week if you hadn’t put it away. It should be easy putting this money aside because you’ve lived without it just fine up until now.
Set Up Direct Debits
This is a really handy tip, especially if you’re wanting to set up and stick to a weekly budget. Have you ever thought your finances were going great and then all of a sudden you’re hit with 3 quarterly bills that are more than $1,500 in total? It’s a horrible feeling having all the bills turn up at once, but you can easily avoid this by simply setting up direct debits for your bills and pay them week by week. This way, you always know exactly how much money you have and can rest easy knowing you are up to date, or maybe in front, with all your bills. There is no better feeling than getting an electricity bill that’s in CREDIT! Remember how we calculated the weekly expense for your insurance? Pay that $19.23 every week instead of the full $1,000 in one hit each year.
Remember what we said at the beginning of this blog? LESS than 25% of people actually achieve their new year resolutions, decide that this year you WILL BE in that 25%. Don’t just talk about how great these tips are and how they are going to change your life, take action this week to make it happen. Decide on just one of these tips, the one that will have the biggest impact on your life, and take action on it. You’ve got this!