Wednesday, 5 March 2008

Tightening the Belt - 12 Ways To Save Money

[photo: Bashed]

I’m in debt.

Until I started sorting my life out, I had bills coming out of my ears and no idea how I was going to handle them all. What with the maxed out credit cards, store cards, bank loan and catalogue payments and a drastically reduced income, I found myself struggling to keep my head above what felt like very stormy water. I had to tighten the belt, of that there was no doubt.

I knew I’d let my lifestyle get out of hand and by simplifying things I was sure I could get a better grip on my finances. When it came to spending, my main priorities had to be to get rid of the debt and to get my kitchen remodelled and decorated (the latter's a practical need... my kitchen really isn't functional enough for me).

Things I’m finding are really helping me save money are:

1. Keeping track of spending. Knowing exactly what’s going where can be quite an eye opener. Since tracking my spending I’ve cut my grocery shopping bill by almost half (and, as a consequence, am no longer wasting anywhere near as much food), haven’t spent anywhere even close to what I usually would on clothes, cosmetics, hair products, and the likes, and have learned to really think about where my money’s going.

2. Using cash. Each week I take out a fixed amount and that’s what I have as purse money for the week. Bills, groceries and other important stuff are paid out of my current account, but the cash has to pay for personal items, craft supplies, and any small bits and bobs that might be picked up in charity shops, at Wilkos and the likes. Using cash instead of a card feels more like real spending and gives you a better idea of how quickly your money’s disappearing (or not).

3. Using the envelope system. My mum always did this and even though she was on a very tight budget, she never fell behind with anything. When she suggested I did the same, I decided to give it a go. You simply designate each envelope to a specific area (i.e. groceries, fuel, clothes & personal items etc) and spend from each. When it’s empty, it’s gone. That’s that. If there’s anything left at the end of the month then half is carried over to the next month and half is put into my savings jar.

Instead of using real envelopes I leave my money in the bank and use a spreadsheet where each page is an 'envelope'. Money is designated to each and I view each in the same as I would an envelope. I do it this way because I find it both easier and safer to leave the money in the bank rather than have cash at home. Money that's left over is transferred into my savings accounts - my virtual jar - and marked for either the emergency or kitchen fund.

4. Piggy Bank Saving. I have two piggy banks, one for the kitchen fund and one for holidays, Christmas, etc. Every time I've been to the shops (or anywhere else where I've used cash), I put my silver change into the pigs. If I feel I can afford it, I'll pop a pound coin or two in too. When they're full, they're changed up and the money's banked and designated to its "envelope". It's surprising how quickly the money mounts up - I've already saved over £70 in just a few months - and you really don't miss those few coins.

5. Staying home. When you’re out and about it’s easy to spend money. Special offers are everywhere, lunch is often bought out, you buy yourself a drink and if you’re driving you’re also using fuel. Apart from online shopping, there’s little to spend money on at home.

6. Getting the best utility deals. There are so many companies vying for your business these days, you'll probably find one that's cheaper than your current supplier. The same goes for car/home/pet insurance etc. I switched my home contents insurance and went from paying over £15 a month to £9.60 and the deal I have now is better than the original one! Six pounds a month may not sound a lot but that's £72 a year and when that's combined with all other savings, it can mount up to quite a bit. and can help with most of this.

If you make a lot of calls to mobile phones or abroad, it's also worth signing up with a company like I use them and pay just 6p per minute to call mobiles during the week and 3p at weekends. I can also call my daughter in Norway for just 5p per minute. Believe me, my phone bill has been cut dramatically since signing up!

7. Saving a little each week. Few of us will notice the difference if we transfer £10 a week into our savings account every week but those £520 that accumulate can make a big difference. I certainly don't notice it and I'm on a low income. It's important not to keep dipping into your savings though or you'll never build up a decent emergency fund.

8. Snowballing debts. If, like me, you have several credit cards, store cards etc that need to be paid off, concentrate on one first. Make the minimum payment on the others but throw more (as much as you can afford) at one of them, either the one with the highest interest or the smallest one. My smallest also happens to be the one with highest interest so it was easy to make the choice.

Once you’re clear of these debts, you’ll save huge amounts in interest and will be able to put that money into your savings instead. Unless you pay off your card spends immediately, credit is, without doubt, the most expensive way of spending money.

Photo: keltannen

9. Making food from scratch. Home-made food made from raw ingredients will always be cheaper, not to mention healthier than ready-made meals and the likes. Because of my health, I can’t always make a meal (neither do I need to) but whenever I can, I use raw ingredients as much as possible. I bake my own bread using a bread-maker (well I did, before it conked out, but I'm on the look out for a replacement), and bake my own scones, cakes and the likes. Not always, admittedly, but when I can.

10. Buying Second-Hand. Just because something's been used before doesn't mean it can't be used again. When I was a kid, hand-me-downs were perfectly acceptable but these days it seems that even those who are struggling to pay their debts etc are only happy with new stuff, and often the best of the new stuff, too.

I've picked up loads of things from charity shops, boot markets, eBay and Freecycle - in fact, at least half of what's in my home must have come from those places. By keeping my spending as low as possible I'm able to buy things that I like (no, I don't just buy any old trash because it's second-hand) and still manage my debts. What's more, some of the stuff I've picked up in charity shops and the likes has been brand new! I even got a cooker through Freecycle. It works, it's clean, and it was FREE. Excellent!

Photo: sunspark58

11. Giving frugal gifts. Some things are really easy to make yourself, like bath salts and foot soak (see Donna’s recipe here). If you can sew or knit or do other crafts, all the better. If making things isn’t your ‘thing’, how about giving a gift card offering the recipient dinner at your house, or maybe an evening of baby sitting. There are lots of possibilities. I once gave a friend a weekend’s use of the caravan we had and she was thrilled to bits! A cutting from one of your garden or house plants is also a nice gift to give. I've already set up a list of gifts I need to give this year so that I can prepare them in advance, that way there will be no (hopefully) last minute frantic gift shopping.

12. Finding happiness elsewhere. It’s a fact that people - women especially - use shopping as a way to cheer themselves up so by learning to find pleasure in what you already have (and that doesn’t necessarily mean what you own, but what’s in your surroundings), you’re less likely to spend money. I know that when I'm happily sewing or watching the birds in the garden, the last thing on my mind is whether or not to buy a new pair of shoes or an x-box. Men tend to buy to impress. If Joe's got a nice car, Jim'll want a better one, even if he has to get it on credit (which Joe probably did, too).

All of these methods have worked for me in the past and they certainly seem to be working again so there’s no reason why they shouldn’t work for you too.

Time and time again I hear people say “I really must tighten the belt” then do nothing to change their spending habits. I’ve been guilty of it too. But until you actually make some changes, nothing’s actually going to change is it? Frugality is as much a state of mind as anything else.

Sharon J

Cannot people realize how large an income is thrift? ~ Cicero


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Richard said...

Bread maker - Tesco's have got one on offer for £29 at the moment, £10 off. Does up a 900g loaf and looks perfectly OK.

K said...

Good post. I struggle to save money too. This is a really good list.

I think the happiness part is key!

Anonymous said...

all very good tips. I too have 'virtual' jam jars with money set aside in, all in my saving account and on a spreadsheet.

Sharon J said...

Richard. Do you know the make? Unless I find one second-hand (preferably free from Freecycle, like the old one) then I know exactly which one I'll get and would rather save for that. It has so many excellent reviews and does cakes and jam, too! Frugality isn't necessarily about getting the cheapest, but saving in other areas so that you can afford the things you really want (need).

K. I agree, without being able to see and appreciate the things around you, all this 'penny pinching' will just become a chore and difficult to stick with.

Colouritgreen. You know what they say about great minds ;-)

beanpole said...

All that sounds like hard work if you ask me. I've got a jar that I put change in and I try to put money in my saving account every month but i usully end up spending it again when I run out. rofl.

Richard said...

It looked like this one but was definitely 900g whereas this is 600g. Can't remember the make of your last one - what was it?

Sharon J said...

Beanpole. There's a bit of work involved in setting up the spreadsheet but other than that, it's not difficult at all. Okay, maybe some would say that cooking from scratch is difficult, especially those who are away at work for long hours but there are plenty of simple, quick recipes around.

I do understand where you're coming from on the 'keep spending the savings' issue; I was exactly the same. I've had to train myself to think differently about my money - once it's gone into the savings then it's gone, it's money I no longer have available. That's something else my mum has recently taught me :)

Richard. It looks like it'd do a decent job but I'll stick with the one I've decided on. For the extra £15 I'll get so much more and it's a Morphy Richards, a brand that I trust. As for the old one, I can't remember the make. Something obscure I think.

RecycleCindy said...

Your 12 ways to save money are wonderful tips! Thanks so much for sharing these frugal ideas.

Sharon J said...

You're welcome, Cindy :)

happyhippychick said...

I used to have a stash of maxed out credit cards but had to get rid of them as I used them too much - now I have one debit card with no overdraft allowance ('im indoors has credit cards etc so I am ok for emergencies, but I know if I get another one I'll max it out again)

I used to shop like nutter - definitely almost an addiction as I would get a high from it. Since I had my blip last year I've stopped shopping for the sake of it and not only am I much happier and calmer but I have a tiny bit of money left at the end of most months

I do need to try and save some money now for rainy days so I'll be going over your tips... I did set up a household expenses spreadsheet but it doesn't get filled in (that's a whole other story!)

Sharon J said...

You’re one amongst many, Rae. I’m just glad I got a wake up call. I managed without all this mass consumer nonsense before and I can manage again. I’ll be happier once I’ve built up an emergency fund again, though.

Once upon a time I had a spreadsheet that I filled out religiously but it slipped after I came back to the UK. Just another part of the change that happened in me, I guess. I think you have to be really serious about knowing what’s happening with your money to keep it up, though.

The strange thing is, those on a low income generally have no idea where their money goes whereas the wealthy know what every penny is doing.

happyhippychick said...

"The strange thing is, those on a low income generally have no idea where their money goes whereas the wealthy know what every penny is doing."

I think that's why the wealthy are wealthy

I grew up being frugal and brought my son up that way too - something has slipped over the last few years, probably once I started working full time and earning a relatviely decent wage - it must have gone to my head and certainly didn't make me happy

I know I'll still want (and have) little treats now and again but I don't feel I need them all the time now - I find happiness in other ways

Sharon J said...

"I think that's why the wealthy are wealthy"

Agree. I think a lot of people like to appear to be relatively wealthy by buying the latest and best of everything but they generally have debt up to their eyeballs. Those who really are wealthy don't need to flash it around; most live quietly and comfortably with the knowledge that they're financially secure.

I don't think anybody should have to go without a treat now and then but there's a huge difference between a TREAT and constantly buying stuff we don't need at inflated prices we can't really afford.

the anners said...

I love this post! So true - to live more simply IS to live more happily and more frugally - I'm just starting to figure this out too. I think not working retail has helped me to curb the spending as well!

Sharon J said...

Hi TA and welcome to my blog.

I can imagine that it's far more difficult to be frugal whilst working in retail. My daughter works in a petrol garage and says its all too easy to just buy a bar of chocolate and a bottle of pop when she's bored.

Good luck with your frugal lifestyle :)

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