How To Save Money The Hard (But Effective) Way
In Part 1 of our money-saving series, we listed down some foolproof but fun ways to increase your savings. If that was too “beginner level” for you, then you’re ready to take it up a notch. It will be tedious, maybe even a little annoying, but here’s a list of proven ways to save money.
Adopt the 5-minute rule
A large part of over-spending boils down to impulsive spending. If we can reduce those spur-of-the-moment decisions, you’ll find that it becomes easier to stick to your budget. One rule that I adopt is the 5-minute rule, whereby I give myself 5 minutes before revisiting the question of whether I should purchase something. You should also leave the shop (regardless of whether it’s offline or online) during that 5 minutes to avoid any further distractions.
This has worked to great effect for me and my S.O. as most urges are perceived as needs initially but in the span of 5 minutes, you’ll get more clarity over whether an expense is truly necessary as logical thinking starts to kick in.
Bonus tip: To further reduce the likelihood of spending on a whim, check your inbox and unsubscribe to all marketing emails. As the saying goes - out of sight, out of mind.
Automate a monthly transfer to another account, and make it hard to access the money
Most financial experts would probably agree that the best way to accumulate a healthy pool of savings is to have more than one bank account (one for day-to-day transactions, and the other for long-term savings), automate the transfer of a fixed sum monthly to the savings account and make it difficult for yourself to withdraw money out of that account.
Personally, I set my withdrawal limit for the designated savings account at $0 so that even if I have the urge to take out any funds, I would have to go through the trouble of configuring my withdrawal limits. If it’s really necessary, one would go through the hassle no matter what but if it’s just on a whim, the extra steps would hinder most people from following through.
Track your expenses and stick to a budget
There are now a multitude of reputable and user-friendly expense tracking apps that you can download and access from your smartphone, so that you can’t complain about the hassle of writing down your expenses in a diary.
For me, I have been religiously recording my expenses on Seedly for a few years and I credit it as one of the key reasons I went from a spendthrift to a frugal person over the years. There’s nothing like a big, fat number in total expenses staring back at you at the end of the month that makes you feel guilty for giving in to every urge.
You can also take it to another level by setting specific budgets for each category. For instance, if you suspect that you’re overspending on entertainment, try and fix a lower budget for that category.
Tip: Challenge yourself by lowering your budget each month little by little and see how far you can go!
Review your subscriptions at least once a year
Tbh, this is super mafan lah. Nobody likes the hassle of switching providers or cancelling subscriptions, but hear me out. Try summing up the cost of all your monthly subscriptions – from your mobile plan to Netflix to Amazon Prime, and you’d be surprised at how much you have to fork out monthly.
Now, it’s all fine and good if you really put your subscriptions to good use, but the fact is that most of us do not make full use of these. So do yourself a favour and list down all the subscriptions you have, go down the list and see how you feel about each one. If you had to think hard about the last time you used it, it’s time to pull the plug.
For absolutely essential subscriptions such as mobile plans or home WiFi plans, you might want to check if the rate you’re paying is still in line with the current market rate. As the telco industry is quite competitive, the same plan that you signed up for years ago (and still locked into until now) could be a lot cheaper.
Follow the one-in-one-out rule
This concept is typically used to achieve minimalist or clutter-free homes, but I believe it’s applicable to personal finance as well. As the name suggests, every time you buy a new item, you must get rid of a similar item. For example, if you want to get the latest iPhone, you must sell off your old iPhone.
This rule can help you save either by serving as a deterrent for you to purchase something new (especially when your existing items are still perfectly usable) or it can partially offset the cost of what you’ve just bought. Plus, you get to Marie Kondo your home (and life too).