Saving money can be divided into two distinct areas of activity.
The first activity is simply not to spend the money at all, and have an excess of cash left each month that accumulates over time. This activity requires careful budgeting and discipline. You need to avoid all the usual demands and temptations on your cash, such as luxuries, one-off purchases, and trying to keep up with the Jones’s.
Once you have saved the money by not spending it, you then have a choice as to which savings method you wish to use to store your cash, and hopefully, increase its value.
The second saving activity involves being a bit more pro-active and making savings on the things we need and have to buy. This form of saving involves reducing expenditure and costs, on items such as household utility bills, mortgage payments, food shopping, car costs, phone and internet costs, and other items we choose to buy.
How to save money
Saving concept one – not to spend it
In order to save money by not spending it, you need to create a budget and identify how much you can realistically save each month. Then you must stick to your budget robustly, which will take discipline and determination, as we know the temptation to spend is all around us.
It doesn’t matter how much it is, to begin with, it’s getting into the saving habit that’s important. Once you have identified the amount likely to be leftover each month, be-it £25, £50, £250 or more, it is then sensible to set up a regular savings plan, by deducting this amount from the bank account where your income is received, and putting it somewhere else.
It is important to understand that you are better off saving first, and spending what’s leftover, than to spend first and save what’s leftover, because you know it, and I know it, there won’t be anything left over if you don’t!
Saving concept two – reducing expenditure
By reducing expenditure on the items we must buy and have to buy, we are saving money that can then be used to ensure we remain within budget and also free up some extra cash, that can be set aside as savings.
Fortunately, the invention of comparison websites has made the whole process of searching for and switching to the best deals available, much quicker and easier than ever before, and the service is completely free for customers.
The difference between the average deals and the best deals available, are many hundreds of Pounds each year, and if you are currently on the most expensive deals for many of your necessary products and services, your annual savings could even reach the thousands of Pounds per year!
All these extra savings can be put aside for your personal savings plan.