The pandemic-influenced recession is getting deeper with each passing day. With businesses shutting down, unemployment is reaching new heights. Money has become important than ever. Are you wondering how to save money even on a tight budget? Finding the holy grail of personal finance is easy if you just do it right. Here are 5 super easy ways to help you save some pounds during a crisis.
To most of us saving money feels like a herculean task even in normal times. We design financial resolutions every year, and we forget it when we enter the 2nd week of the month. That is because maybe we have made strict resolutions that are difficult to implement or we don’t put much focus on it. And the going gets tough when we are in a crisis. The last thing that we ever want to think about during such times is – money. There are a lot of life-changing events that can alter the path of our personal finance. Undoubtedly, saving money during a crisis is challenging, but once you know the golden rules, you will be ruling your finances. Someone said it right – money speaks only one language. “If you save me today, I will save you tomorrow.”
Here are 5 easy ways to save money even during a crisis.
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Money saving tip #1: Create a budget
- Budgeting is an extremely important financial tool that streamlines your finances. In a way, it controls the money that you spend. Make a list of all your monthly outgoings including utilities, debt payments, medical expenses, education, housing, and groceries. Calculate the total amount that you are spending towards each of the categories. Now, examine each category carefully and find grey areas. Spot categories where you can reduce the outgoing.
- For example, you observe that you go out for a movie night every week and you end up spending £15 for a movie ticket and food and dining. That adds up to £60 per month. If you cut back on your movie nights or go 2 times a month instead of 4, you will save around £30 per month. That will become £360 per year.
- Let’s take another example, suppose, you spend £80 every week on your food. Whenever you are hitting the grocery store, you are picking up “brands”. Drop that habit. Don’t focus on brands while shopping for grocery, you can easily save £10 – £15 every week on your food that will lower down your monthly expenses.
Read about the top 5 budgeting systems to pick the right one.
Money saving tip #2: Redesign your money goals
- We all have different money goals and we put money in each of our pots according to our needs. Let’s say you are putting a considerable part of your income as a deposit on your new home. Reset this goal and start putting more money towards your emergency fund. A sudden change in the level of your income or employment are common events that we all expect during an economic meltdown. You need to be prepared financially if you find yourself in a similar situation. Relax, and sit down and take a closer look at your goals. Remember, a financial plan is not “one size fits all”. Your goals may not need any changes. Understand your finances before taking any decision.
Precisely, you will have to prioritize your goals according to:
- The current situation of the crisis
- Your income and employment status
People with a strong financial plan sail smoothly over these rough waters. Read what initiatives the government has been taking to help you combat the slump during this pandemic to manage your finances effectively.
Money saving tip #3: Benefit from low interest rates
- Interest rates are at an all-time low. The Central Bank slashes the interest rate to stimulate consumer spending to boost the economy. You can save some pounds easily if you refinance your debts or mortgage at a lower rate of interest. Or you may switch to a high interest paying current account rather than putting your money in a savings account. A plummeting rate is a blow for savers who have money sitting in their savings accounts.
- Also, you can switch from savings accounts to your property. If you have a flexible mortgage, you can choose to overpay to reduce the interest you will pay. It will also reduce the overall repayment period. But before that check your fine print and check with your lender for any extra charge that you have to bear for making overpayments.
- If you have a personal loan that you are paying, you may not expect the price to come lower as most of these financial products have a fixed rate of interest. However, it varies from lender to lender.
Read how you can safeguard your money when interest rate drops.
Money saving tip #4: Spend less than you earn
- Tired of hearing this? Well, this is a money mantra which has not failed anyone yet. Your expenses should always be less than what you earn. It helps in maintaining the cash flow. If you spend more than your income, you will have a deficit in your monthly budget. You may need extra funds to help you reach your next payday.
- You shouldn’t overspend, especially during a crisis. Overspending will lead you to borrow money, which will add more debts in your life. Too many debts will hinder your financial life. As we have already mentioned in #1 – you should have a proper budget. Make money moves according to your budget and do not get off the track.
Here are 30 tips to get rid of debt fast.
Money saving tip #5: Don’t exhaust your savings
- Your savings is your safety net. You had built it up to use in times of need. But ensure that you do not dip into your savings without a plan. Take out the amount that you need and have a plan to put back that amount as soon as possible. Because you may need to use your savings again in the future. Also, keep a check on the number of times you are using your funds. Do not overdo it simply because you have enough funds to help you survive for 6 months easily.
- It becomes quite difficult to predict the future during a crisis. Holding tightly to your money may prove beneficial for you in the long run. So, cut back on non-essentials to save as much as possible. If you prepare yourself for the upcoming twists and turns – you will glide over the financial tragedy. These money management principles are well-known to us. But we hardly focus on these things and yet we crave to be financially independent. You can achieve financial independence by being disciplined with your money management habits.
