Saving Money Daily Life Expenses by Creating a Budget and Finding Innovative Ways to Cut down on Costs. A How to Guide to Increase Your Disposable Income.
All of us want to save money in our lives. If we could save a little on the things we don’t enjoy having to pay for, it means we’ll have more money left over for the things we do enjoy. So, what can you do to save money without necessarily having to radically alter your lifestyle? Well, we’ve come up with some tips and tricks that will not only help to keep you out of debt, but will also help to increase the amount of disposable income in your life!
Coming Up With a Budget
The first step you need to make towards saving money is to come up with a budget. This may sound like an absolute basic (and it should be an absolute basic), but there are a huge and ever increasing number of people who do not live by a budget.
This is often why so many people slip into debt! Put simply, a budget will help you to take how much you earn, know how much of that sum should be paid in taxes, how much of it is going to need to be spent on the bare necessities of life, and ultimately, how much is left over to be spent on extras and luxuries. As long as you know how much is available for luxuries, and you don’t exceed this amount, you will stay out of the red! So, here are a few steps that will help you to come to this conclusion.
Working Out Your Total Income After Tax
So many people will see their “salary” written down on their work contract and assume that this is the amount that we have to spend throughout the year. But this really isn’t the correct approach. After all, your salary is generally given as an amount before tax and other legal deductions. You can use an accountant, or you can take a look at government websites, to figure out what tax bracket you fall into and how much money you actually take home each month.
The Bare Necessities
Once you know how much will be deposited in your bank after tax, you need to figure out how much you’re planning on spending on the bare necessities of life. These can include your home (so mortgage or rent payments), energy (such as your gas and electric bills), water, sustenance (the ingredients you use to make your meals) and sometimes a means of transport in order to secure a job or work. This is a key area where many can save. Sometimes we spend more on the bare necessities of life than we actually need to and we will come to look at this in a moment!
Your Disposable Income
Once you’ve removed tax and the cost of your bare necessities from your income, you’re left with your disposable income. This is the money you have to spend on other areas of your life. Some people use it for socialising. Some people use it to fund hobbies and pastimes. Some people will use it for holidays and travel. Others will use it on clothes, electricals and other novelty items. Some people save it. How you use this money is completely up to you – just don’t exceed it, because this is where you will begin to experience trouble with debt.
Reducing Your Outgoings
Now you’ve got a budget, you needn’t worry about sinking into debt. But how can you take things a step further and actually increase the amount of disposable income you have? Well, you can’t change tax. This is a legal requirement that you need to stick with. So you’re going to have to look at cutting the costs of your necessities and your luxuries. Here are a few areas and ways you can go about saving!
Saving on Your Home
Your property is likely to be the main thing eating up your earnings. It’s generally the most costly thing any of us fork out for in our lives. This rings true for whether you are renting or buying. Mortgage payments are expensive. Rent payments are expensive. But there are ways to save on these payments.
Just take a look at the home you’re living in and determine whether you’re using it to its full potential or whether you could have something a little cheaper. If you have extra bedrooms and spare rooms, do you really need them? If you could live in a cheaper area, do you enjoy living in the more expensive area enough to justify paying extra for the privilege? These are the kinds of questions you need to start asking yourself. It’s a question of weighing up whether certain perks are really worth paying more for, or whether you’d rather be saving money.
Your Bills
Bills are a big area with potential for saving. Of course, you can’t exactly decide to live without electricity, gas, and water. But the good news is that the majority of people can significantly reduce their usage of these resources (which is also better for the environment).
You can also significantly reduce your energy costs by changing your providers and scouting out the best deals on the market. Many of us sign up onto a contract to the first company that presents itself to us, as we want to get our gas or electricity in order and working, or we will stick with the same company for years on end, even though others’ may have changed their rates and be offering something more cost effective for the sake of brand loyalty. You really shouldn’t be worried to switch to a new supplier. Even if you really want to stick with your current brand, it’s worth taking a look around. If you find a better deal, your current supplier might price match to keep your custom.
Your Phone
Many people get sucked into the habit of thinking they need to upgrade to the newest version of their phone as soon as a new option is available. But if you’re not actually dissatisfied with your current phone, you can just keep it and save a new monthly contract coming out of your bank account every month.
Another area people tend to spend excessively with their phone is being on the wrong contract or pay as you go package. Firstly, you should use price comparison sites to check different providers’ offers. Many will be cheaper than what you’re paying at the moment. If you find yourself forking out for extra add ons each month because you don’t have sufficient data, minutes, or texts, you should also consider switching to a contract with unlimited calls and texts.
Food and Drink
We need food and drink. So don’t start starving yourself for the sake of saving a little money. But there’s huge potential for savings in this area of your life too. If you buy lunch at work every day, you can start making packed lunches at home and taking lunch in with you. This will save you a lot and half the time, your own lunches will actually be nicer.
If you only buy branded foods, consider trying some own brand or unbranded alternatives. They’re often pretty much the same (many people can’t tell the difference in taste tests) but have a much lower price tag. If you eat out a lot when you’re socialising, consider asking friends round for dinner instead and starting evenings where you all cook for one another. This is just as fun, a novelty, and will save you money.
These, of course, are just a few ways you can save on a day to day basis. There are other options that you can take, but these should help to get you started out in the right direction!
