Running a household costs money, and when you add children into the mix, you can feel that you are on a never-ending merry-go-round of earning money to spend money. Many families live month to month and must stretch out the monthly pay cheque to make ends meet. Yet, it is important to try and save money, no matter what your income is. Here are 4 ways to show you how to start saving money and make a realistic saving plan.
- Open a savings account
You need to open a bank or building society account that you can move money into each month. Some months you will be able to transfer more money than others, but the benefit of having a separate bank account to your current one is that you won’t draw money out. There are many bank accounts available to you, so research one that meets your needs. It is a good idea to choose one that has an associated app so that you can easily transfer money from your smartphone without the need to visit a branch.
- Record your spending
To be able to save money, you need to know how you currently spend it. You can do this by creating a simple spreadsheet to record your expenditure. Do this for three months. Three months’ worth of records will give you enough information to get a picture of where you are spending money on necessities, and where you are leaking cash.
- Make a budget
Your first step to creating a budget is to record the family income. Remember to use the post-tax figures: the net figure! You have already recorded your expenditure for three months, and so you can use this data to identify your fixed expenses: direct debits and mortgage or rent payments, etc. You will then have variable expenses; these include groceries, travel expenses and leisure and entertainment costs. Your variable expenses are where you can make savings. Deduct the fixed and variable expenses from your net income, and if there is money left over, that figure is the start of your saving. You need to set goals as to what you want to save and review your lifestyle to reach them.
- Alter your spending habits
You may be in the habit of seeking promotional codes or online vouchers when you buy big-ticket purchases, but you should also apply your online savviness to day-to-day purchases. Items that you regularly buy can be bought online at reduced prices, for example, discount toiletries and cleaning products. Use online price comparison sites to review your utility provider’s rates and to save money. You don’t need to live like a hermit to save money, you just need to make wise decisions as to how you spend it!
By saving money, you are creating an important safety net for your family. You do not know what the future holds, and your family’s lifestyle can be seriously impacted by challenges such as a redundancy or ill health that restrict your household’s ability to bring in a wage. Set yourself a realistic goal, and regularly transfer any money that you can to help reach it.