I recently read this post on Take Courage, and after leaving a ridiculously long comment, decided to write a post myself about the various ways I save money.
I’d like to first make it clear that by ‘without budgeting’, I mean that I do not set specific, hard budgets for my spending. Some people find this really effective, and I have heard of people doing ‘cash budgeting‘, where each month they take out say £300 in cash and put it in an envelope marked ‘Groceries’, and only use what is in that envelope. When it’s gone, it’s gone; you’ve used up the budget.
This sounds like an interesting method, particularly if you really need to save and don’t have any wriggle room in your bank balance. However, I have never tried it, as I find a more relaxed method works fine for me. I sometimes set ‘soft’ budgets, but they are more like a general guideline, and if I need to spend more than this I don’t beat myself up about it. Likewise, if I end up spending less, I don’t then feel the temptation to spend that extra £30 I’ve budgeted for!
On that note, here are some other tips I use to help me save money:
1. Keep track of everything
I’m a little obsessed with spreadsheets, and each month I go through my bank statement and input my spending into a spreadsheet, where I categorise everything I have spent money on (eg. Food, Mortgage, Electricity, Fashion, Gifts, Petrol etc.). Gradually as the months go by, I can see which areas I spend the most in, helping me to focus on categories where I’m able to cut down on my spending.
2. Make savings part of your necessary ‘expenses’
At the point in the month when the money comes into my current account, I immediately transfer a large chunk straight into our joint account (where the mortgage, bills and groceries come out of), and also a chunk into my savings account.
This way, I barely even see the money, and I don’t have to worry about making sure I have a certain amount left at the end of the month to pay the important bills or send to my savings account, because it’s already gone.
3. Set goals, not budgets
E.g. “In order to go on that trip to Thailand next year, I need to save £3000 in 2015, so I will put away £250 per month into a savings account.”
By setting goals like this, you have a clear motivation each time you make that transfer to your savings account, making you less likely to bail on it each month. I find this much more effective than just setting yourself budgets for the sake of ‘saving money’ in general, because you haven’t given yourself a good enough reason not to over-spend.
4. Shop around
When looking for suppliers, services, insurance or big ticket items, use comparison sites, and never go with the first offer you see. You can save money each year by re-evaluating your phone, electricity or gas suppliers, as most will increase your tariff after the first year anyway, and you might even be given an incentive to change to another company.
And if you can’t really be bothered with all that, at least phone them up and threaten them to leave, as they will usually give you a discount to keep you as a customer.
I’m not 100% on the morality of doing this, as I’m fairly sure this is why so many HMV stores have had to close down, but I am very guilty of a phenomenon called ‘showrooming’.
It’s where you go into a shop and if you see an item you want, rather than buying it in the shop, you get your phone out and look online to see if you can get it cheaper. I do this all the time, especially in book or media shops like Waterstones, where I’ll do a quick search on Amazon and buy it online while standing in the shop looking at it!
This is probably ruining the retail industry, but you can save a lot of money on books, CDs, games and DVDs by doing this, especially if you end up buying the ‘Used – Like New’ or ‘Used – Good’ items on Amazon instead of straight-up ‘New’!
*Tip: Most things in the Urban Outfitters home/book/gift sections can be bought on eBay or Amazon for much less!
6. Buy second hand
By ‘second hand’ I don’t just mean charity shops or car boot sales (which can be hit and miss). As mentioned above, I would highly recommend giving ‘Used’ items on Amazon a go, as they’re often just as good as the ‘New’ items and you’ll save yourself some money.
Also check out Gumtree (or Craigslist), Preloved, eBay, Facebook buy & sell pages and local newspaper ads for second hand stuff. I recently found the exact swivelling grey cuddle chair I’d wanted for ages on Gumtree from a guy half an hour away from me!
If you’re looking for fashion for cheaper, check out the Depop app!
7. Haggle – or at least ask!
If you don’t ask, you don’t get, so if you’ve got the guts you should always ask!
When paying for services or buying second hand items, don’t go with the first price you’re given. Tell them it’s way over your budget and you can’t go over a certain amount (even if you actually can, use this as a starting point). I saved £200 when buying my car this way, and N got our central heating installation bill down by £1500 just by haggling!
*Note: N is an excellent haggler, and always pushes it one step further than I’m comfortable to do. He’s gutsy, and doesn’t mind if people think he’s being a difficult customer, because 9 out of 10 times he gets results from it.
8. Pack lunch from home
Lots of people already do this, but it’s worth mentioning. I used to spend £3 – 4 a day on ‘Meal deals’ for lunches at work. Do you know how much that adds up to a month? £70!!
When you make evening meals, make more than you need and refrigerate/freeze leftovers in tupperware boxes. These are great for grabbing on your way out in the mornings for lunch. Or you could make yourself sandwiches or a salad the night before, while you’re waiting for your dinner to cook in the oven.
9. Invest in coffee at home
This is for the city folk. Spending £3 a day on a Starbucks isn’t an issue in the country, as going there ‘on the way to work’ would take me 20 minutes out of my journey to the nearest petrol station!
However, I used to crave a ‘proper coffee’ at the weekends, and I would go out of my way to buy one. Spending £5 each weekend on coffees still adds up to £260 a year!
N and I recently bought a coffee machine in the January sales, and I haven’t craved Starbucks since, because my coffee tastes just like it! You can get a filter espresso machine like this one* on Amazon for fairly cheap, and I’d say it’s definitely worth the investment.
10. Stick with Debit cards and avoid Credit cards
This won’t suit everybody; I understand that lots of people use Credit cards due to cash flow reasons, which is fair enough!
I have personally vowed to only ever own a Debit card, purely because I find them easy and simple to use, and I don’t have the worry of getting into debt, spending more than I have, or damaging my Credit score by forgetting to pay. Tracking my money ins and out (as mentioned above) means I’m in full control of my Debit card spending.
Lots of people suggest borrowing clothes from friends if you want a new look etc. Unfortunately, I live hundreds of miles away from most of my friends, and we all have very different styles, so I’ve never been able to embrace that.
However, N and I do live close to our families, and we borrow things from each other all the time. For example, we don’t own hedge trimmers or a lawn mower because N’s mum lives 5 minutes down the road, and for the amount of times per year we’d use those items, we might as well just borrow them for a day!
12. Sleep on it
I do this for most purchases that cost over £20! Whether I see it in a shop or online, I always walk away and give myself a day (and night) to think about it. If I’m lusting after it and still want it by the next day, I’ll definitely consider buying it.
If something costs £50+, however, I could be holding myself back for days, a week or a month before I’m totally sure I want and need it.
13. Be savvy about your luxuries
For example, if you refuse to give up a monthly cut and blow dry, spray tan or mani-pedi, check out your local training college to see if they offer discount prices or free modelling haircuts to have the Hair and Beauty students practice on you. And don’t worry about getting a botch-job, because the trainers always inspect the quality afterwards, and wouldn’t let you go home looking like a hot mess.
14. Invest in assets
My last and most important point is to invest in assets. If you read any finance blogs, you will probably know this by heart.
Your aim should be to get your money to work for you. To do this, you need to invest it, either in stocks or in assets. Since most of us aren’t stock-trading savvy, assets are probably the way forward.
Instead of letting our savings sit around in bank accounts with 1 or 2% interest rates, N and I bought our first house. Now, instead of giving our hard-earned cash to a landlord each month never to be seen again, we are paying off our mortgage. Technically, (apart from interest), we are just moving our money from one place to another, because each time we pay some of our mortgage off, we own another chunk of our house.
Unless there is a property crash in the next few years, we will eventually end up with an asset that could potentially be worth much more than we bought it for.
*Tip: If you’re worried about investing in property, or if the process is too much for you at the moment, think outside the box! Instead of buying a house, my parents bought and lived on a house-boat when they were younger because the property market was unstable, and boats were holding their value much better!
Evidently, I’m not a financial advisor, and I know that some of these tips won’t work for some people, but I just wanted to give my 2 cents on the matter (or ‘2 pence’…hands up if you think that should be a thing in England!).
*Indicates affiliate links; but please know I wouldn’t recommend something here if I didn’t love it myself!