Fortunately, there are various ways to save money without compromising your standard of living. Keeping a handle on your budget can be challenging at times, especially if unexpected expenses arise or you have trouble controlling your spending habits.
It just takes a little creativity and determination to find affordable alternatives that don’t dig too deeply into your pockets. Follow these tips to start reducing your expenses now so you can save some money for future purchases or investments.
1. Make a budget and stick to it
A budget is a foundation for any successful financial plan. If you don’t know how much money you have coming in and going out each month, then you can’t plan for future expenses.
A budget also helps you identify your spending habits so you can change them if necessary. You may be surprised to discover what areas of your spending are excessive or unnecessary, allowing you to find creative ways to save money.
In addition to helping you save money, a budget can also help you earn money. If you find yourself with extra money at the end of the month, you can use it to buy stocks, start a side business, or invest in other long-term savings options.
Having a budget can help you achieve financial freedom quicker by allowing you to plan for unexpected expenses.
3 different budgeting methods
There are many different ways to budget your money in order to save it. There’s the 50/30/20 Rule and even the Pinoy version of an Ipon challenge. Likewise, you could use a paper and pen method, an app on your phone, or even a web-based program.
No matter which way you choose to go, there are some basics that all budgeters need to follow. Here are three popular methods of budgeting and give you the pros and cons of each one. We hope you find this information helpful as you work to create a budget that will help you save money.
1. 50/30/20 Budget
The 50/30/20 budget is a budgeting method that involves allocating 50% of your income to necessities, 30% to wants, and 20% to savings. The idea behind this budget is that by dividing your income into these three categories, you’ll be able to better control your spending and save more money.
Pros:
- Forces you to save money
- Better control of savings
- Allocation sets your maximum expenses
- You can modify this to save more money! E.g. 40/40/20; 30/20/50, etc.
Cons:
- It can be difficult to stick to, especially if your income fluctuates from month to month – freelancers and self-employed individuals.
- Doesn’t leave much room for unexpected expenses – especially, if they’re higher than your savings.
- And finally, it can be hard to determine what qualifies as a “necessity” or a “want.”
So far, this is the most popular one with young professionals.
2. Envelope system
The Envelope Budget system is a budgeting method that involves allocating a set amount of money to specific spending categories, and then dividing that money up into physical envelopes.
For example, you might have an envelope for groceries, one for gas, and one for entertainment. Once the money in an envelope is gone, you can’t spend any more in that category until the next budget period.
Pros:
- Help you stay within your budget and avoid overspending
- More flexible traditional budgeting method
- Allows you to save more
Cons:
- It can be time-consuming to set up and maintain
- Need to be careful not to lose or misplace your envelopes, or you could end up in a bind financially!
- This budgeting method may not work well if you have irregular income or unexpected expenses.
This is what my budget savings line looks like each month!
3. Zero-based budgeting
The zero-based budgeting method involves ensuring that every peso you earn has a purpose. This concept is pretty forward: Income-expenses-savings = 0. It’s a good idea to follow that id if you’re aware of your monthly expenditures.
Pros:
- Flexible to monthly expenditure changes and “unforeseen expenses.”
- Ideal for people with fixed incomes or those who know their monthly expenses.
- Less room for error and money well-spent!
Cons:
- Time-consuming to prepare
- An unforeseen large expense can dismantle your whole budgeting system
- It’s still best to have some emergency funds at the end of your budgeting
We’ll have a separate “Ipon Challenge” article by the end of the year. So, abangan!
Shop for bulk, discounts, and sales
A great way to save money on everyday purchases is to shop for discounts and sales. There are various apps and websites that can help you find great deals on the items you need, including groceries.
If you want to save money without sacrificing your quality of living, you need to be willing to change your shopping habits. Instead of shopping at the same stores you always go to, try shopping at stores that offer discounts and sales on various products. You can also visit thrift stores to purchase used items at greatly reduced prices.
You may also want to consider joining a membership club that offers discounted or free items on a monthly basis. These clubs send you discounted items that you can use for yourself or give away as gifts (may come off as a subscription basis to some).
Pay your bills promptly and automate payments
Another great way to save money is to make sure your bills are paid promptly. Bills have been shown to have a negative impact on a person’s psychological well-being, so it’s best to pay them as quickly as possible to avoid feeling anxious or stressed out.
You can also try automating your payments to save time and reduce the chance of missing a payment. Some bills can be set up to be paid automatically from your bank account, which can help you avoid forgetting to make a payment or running out of money before the due date.
Making sure your regular bills are paid on time can help you avoid extra fees from companies like your phone and internet provider. Bills can be large expenses, but they don’t have to be a burden if you make sure to pay them on time.
Making a budget and knowing how much you have to pay each month can help you stay on top of all your bills.
Consolidate your debt and only use credit for savings
If you have credit card debt, it’s best to pay it off as quickly as possible. Credit card debt has some of the highest interest rates, making it difficult to climb out of if you don’t have the money to pay off the full amount each month.
If you can’t pay off your debt with cash, you can try to find other ways to pay it off. One way to do this is to consolidate your credit card debt into a single monthly payment that you can pay off over time.
Another way to pay off your debt is to use a credit card for savings. This allows you to take advantage of the money you’re currently earning in interest and use it to pay off your debt faster without suffering more financially.
Credit cards can be dangerous if you don’t pay them off in full each month, but they can also be helpful when used correctly.
Buy used or refurbished items
There’s nothing wrong with buying used items! You can also save money by choosing to buy used or refurbished items instead of purchasing new ones. Electronics like computers and smartphones have short lifespans that can be accelerated by frequent use.
If you don’t want to buy new items every month, consider buying used electronics from a trustworthy source. You can also purchase refurbished items that have been cleaned and inspected by the manufacturer to ensure they’re in working order.
Buying used or refurbished items can save you a significant amount of money when compared to buying new ones. You can also choose to sell your old items to buy new ones without breaking the bank.
Eat at home more often or bring your packed lunch
You can also save money by eating at home more often. You may not think this will help you reduce your spending, but it can if you follow a few simple tips. First, you should plan out your meals for the week so you don’t end up eating out because you’re too busy or too tired to make dinner.
Second, you should make sure to shop at grocery stores with coupons or buy items with a low price per unit, such as eggs. Third, you can also make your own home-cooked meals to save money on eating out.
Eating out can be expensive, especially if you have a large family. Eating at home can save you hundreds of dollars every month that you can use for more important expenses.
You can also save money by making your own snacks and drinks at home. This is a great way to save money on your family’s diet and control the ingredients in your food.
Drive safely and save on car maintenance
Finally, you can save money by driving safely and following a regular maintenance schedule for your car. You can reduce the amount you spend on car repairs by making sure to follow the manufacturer’s recommended oil change intervals and tire rotations.
You can also choose to drive a car that is known for being affordable to maintain, such as a [Honda?].
You can also save money by driving carefully and following all traffic laws. Driving aggressively, speeding, or running red lights can lead to costly car repairs and tickets that can wipe away any savings you may achieve by making smart choices.
Conclusion
A great way to save money is to shop for discounts and sales, pay your bills promptly, and buy used or refurbished items. You can also eat at home more often to save money.
Saving money can be challenging, but it’s important to find ways to reduce your expenses and avoid overspending. If you’re having trouble controlling your spending, try reducing your spending in various ways until you find a method that works for you. After that, it’s just a matter of sticking to your budget and following these tips to start saving money.
