Saving Money

Here’s a simple rule for you. The less money you spend, the more you have left! If you spend lots of your time earning money, surely you want to do what you can to save money too. A great rule that you probably know, but do you use it?

Here are some tips to help you look after the money you do have to keep your costs as low as possible.

Shop Around

By learning to shop around for products and services, you quickly find that certain things are just not worth paying extra for. The web is not always the cheapest places for products if a high-street store has a particularly special offer. So if you go shopping for a particular product, do some research for prices before you leave to hit the high street! Don’t forget to include delivery costs for internet prices.

Play them at their own game

If you are considering leaving a service, e.g. a mobile phone company, a broadband service provider, an electricity supplier, an insurance company, then tell them what other companies have offered you. Most companies will try to beat the offer to keep you as a customer. For example, I was given a £45 discount from my broadband service for 12 months because I was about to try a different company. So I stayed!

Earn Cashback

There’s a growing popularity in cashback websites such as GreasyPalm, TopCashBack and Quidco who give you money for purchasing goods and services through them. This is because the cashback sites get paid an affiliate fee by retailers and share a proportion of this fee with you to entice you to purchase something through them.

Keep a budget

Not everyone likes this idea, but having used it for the last 10 months, I’ve seen the benefits very quickly. Budget planning really works. You basically work out all of your known outgoings for a year, such as car servicing, car tax, mortgage payments, insurance payments, food, clothing, health costs, fuel, etc. You then put money away for each of those costs every single month. You might need an extras fund to cover unexpected costs too. You make sure you stick to that budget and don’t go over it.

By doing this, you’ll soon find you don’t dip into any savings you have, and you slowly build up your cash. You also prepare yourself for nasty surprises to a high degree.

Pay off debt

It’s always a good idea to pay off debts before trying to save money in a savings account. For example, if you have a credit card debt at 10%, but a high interest savings account at 6%, then you are actually losing 4%! Although the numbers have been rounded to make a point, real credit card debt is often at 15 to 20% and savings interest is less than 6%. How else do you think the banks make money?

For some great advice on when to pay off debts, read this useful Money Saving Expert article about paying off debt.

Avoid tax on interest

If you’re lucky enough to live in the UK then you want to look at Individual Savings Accounts (ISAs). These are bank accounts where your interest is left untaxed by the government. You only get a small tax allowance, currently set at £3600 for 2008-2009 for cash, but it can save you a great deal of money even with a modest savings account. Read up on the Financial Services Authority’s (FSA) information about ISAs.

I’m not sure if other countries have similar programmes, I’d love to hear about them if you do.

Conclusion

None of these tricks are rocket science, but I easily save hundreds of pounds a year just by using these tricks myself. It’s my mission to convert all of my friends to using these tricks. I’ve already converted 3 people so far!

Here are some other resources I recommend: Money Saving Expert, Fool UK, Fool US.