Track spending with a money saving plan
There is only one way to gain financial wealth: have an income greater than your expenses. You can either increase your income or find easy ways to save cash with a money saving plan.
The first step in reducing your spending is to review your current spending habits. You cannot measure progress without knowing your starting point. Remember, what gets measured, gets accomplished!
Tracking spending involves looking at your expenses over a fixed period, typically one month. You’ll need to sort your expenses into one of several categories to get a good idea of where your money is going. Common categories include:
Tracking your spending in today’s day and age is easier than ever. There are plenty of apps that can assist you with your money saving plan. Check out this up-to-date list of the best expense tracking apps. Many of these services can be connected with your bank accounts, automatically importing and categorising expenses for you.
Four easy ways to save money
Once you track your expenses for a month or two, you should have a pretty good idea of how you’re spending your money. Take a look at the amount you’re spending in each category. Do any of the numbers seem higher than you thought? If you answered yes, then you can likely optimise your spending with these easy ways to save money:
1. Automate your contributions
The simplest way to save money is pay yourself first! This is a neat little psychological trick that helps greatly if you struggle with impulse spending. You can set up recurring transactions that move money from your checking account to your savings account whenever you get paid. You then are free to spend the rest on your needs and wants.
Make sure to choose a savings account with the best interest rate possible, so do a little savings account comparison, looking at all the major banks in SA. Every 0.1% makes a difference! Also, you can apply this method with brokerage accounts, contributing to your investments instead of your short-term savings.
African Bank’s MyWORLD day-to-day bank account currently offers South Africa’s best interest rate of 5.5% on any positive balance. While you can enjoy this interest rate on your Primary account and Power Pockets, the good news is that you can enjoy 6.5% on a Savings Pocket linked to your MyWORLD Primary account.
2. Make shopping lists
It can be easy to overspend at grocery stores. How many times do you go to the shops for two or three items and come home with 8-10 items? A great way to counter overspending on food is to create a shopping list beforehand of essential purchases. Sometimes, you genuinely forget to add something on the list and that is okay. However, make sure you’re being truthful to yourself when making last minute additions to the list!
3. Utilise credit cards wisely
This piece of advice is two-fold. First, do not incur credit card debt if at all possible; high interest rates mean it is one of the most expensive types of debt out there! Secondly, take advantage of credit card rewards. You can easily earn 1-2% cash back on all your purchases by using a cash back credit card. Remember, this only works if you pay the balance in full and on time.
Putting it all together
Tracking expenses is something that everyone should be doing. You may be surprised at how much you spend on certain categories. Once you get started with your money saving plan, you can implement these easy ways to save money, leaving you a little bit of extra money every month. Use the money you save to invest or pay off debt faster.