Smart tips that’ll boost your bank balance
How to save a lot of money fast
Before you can start saving money every month, you need to come to grips with your cash flow. This means understanding all of your incoming and outgoing revenue streams, including any debt repayments, monthly bills, and savings contributions. Let’s break this down, step-by-step.
1. Learn to budget and understand your finances
The most important tip for saving money fast is to learn to budget. If you’re in control of your budget, then you’re in control of your finances. Becoming financially independent is essential if you want to reach both your short- and long-term savings goals. Here’s how to create a budget so you can start saving fast:
- Keep track of all of your finances over a 30-day period. This includes all of your income and expenditures.
- Compare your monthly income to your monthly expenditures to assess how much you’re currently managing to save, or how much you’re overspending each month.
- Separate your expenditures into fixed and variable costs. Your fixed costs are expenses that are typically difficult to adjust, such as your rent and utility bills. Your variable costs include more readily-adjustable expenditures such as groceries, entertainment, and subscription services.
- Identify any variable costs that you can start cutting back on to increase how much you can put towards your savings goals each month.
- Assess your progress regularly and make adjustments if necessary. If this seems a little overwhelming, there are plenty of budgeting apps available that can help make sticking to your budget easier.
2. Get out of debt
Before you start saving, you’ll need to pay off any outstanding debts. The longer you delay paying off a debt, the larger it becomes due to accruing interest over time. Therefore, any savings that you make will typically be offset by the amount you owe to your debtors. So, make getting out of debt a priority before you focus on saving for something else.
To do so, consider using the 50/30/20 budget. Created by US senator Elizabeth Warren when she was a Harvard bankruptcy specialist, the 50/30/20 rule offers a simplified approach to getting out of debt. It works as follows:
- Use 50% of your income on your needs, i.e. your fixed costs such as rent and utility bills.
- Use 30% of your income on your wants, i.e. your variable costs such as dining out and subscription services.
- Use 20% of your income to put towards your savings. So, if you make €2500 a month after tax, this would mean you can put aside €500 a month. In just a year, you’ll have paid off €6000 worth of debt.
3. Create a designated savings account
To save money fast, you need to separate the money you spend on your daily needs away from the money you intend to save. This means setting up a designated savings account. By doing so, you minimize the risk of you dipping into your savings funds to cover daily expenses. Instead, it encourages you to stick within your day-to-day budget while keeping your savings safe from temptation!
4. Automate your savings
If you have a fixed monthly income, consider automating your savings contributions each month. This means setting up an automated transfer from your daily spending account to your savings account each month. By automating your savings, you further reduce your chance of using these funds to cover your daily expenses.
5. Automate your bills
While we’re on the topic, it might also be worth automating your bill repayments. Companies frequently charge you late fees if you don’t pay them on time, so paying them before the due date will help you avoid any additional charges.
6. Put a spending limit on your card
A great tip for saving money fast? Set a limit to how much you can spend on your credit or debit cards. This stops you from overspending and encourages you to reassess your daily expenditures in advance. Many banks offer this service. At WB, for example, you can set your daily spending limits and choose whether to allow yourself ATM withdrawals—all in a matter of seconds, right from your WB app.
7. Use the envelope budgeting system
Another great life hack to help you save money fast is to use Dave Ramsey’s envelope budgeting system. This means taking your monthly income out of the bank in physical cash (yes, all of it!) at the beginning of each month and allocating it into separate envelopes in accordance with your budgeting goals.
So, you’ll have envelopes for your fixed costs (e.g., rent, utility bills), and envelopes for your variable costs (e.g., clothes shopping, eating out, groceries). By paying for everything with a fixed amount of physical cash, it makes going over-budget virtually impossible.
How to save money fast for a house
Saving up for a down payment on a new home can seem like an impossible target, but there are a few smart tips you can use to make some big savings in next to no time. Let’s take a closer look at how to save money fast for a house.
8. Cut back on rent
Cutting back on rent is one of the quickest ways to start saving a sizable sum of money each month. If you currently live alone, one of the easiest ways to do this is to choose to live with a roommate. This immediately halves your rent, and if you choose to live with two additional roommates, you’ll pay roughly a third of what you’re currently paying.
So, if you’re currently paying €1300 a month for a three-bedroom apartment and you get an additional roommate, you’d save €650 a month. If you decided to live with two people, you’d save around €870 a month—that’s nearly €10,500 a year!
If, however, you already live in a shared apartment, consider swapping to a smaller room. Rent rates are usually calculated in accordance with the size of the room being rented, so you could make some significant savings each month. What’s more, it may also encourage you to downsize, which could mean making a bit of extra cash by selling your unused items.
9. Cut back on your utility bills
Another great tip to save money fast is to cut back on your utility bills. Your electricity and gas bills contribute to a significant chunk of your monthly fixed costs, so if you can reduce them, you can find yourself pocketing a fair bit of extra cash. Here’s how to do it:
- Change your energy provider. By making sure you’re on the cheapest tariffs on the market, you could save yourself hundreds of euros each month.
- Swap your light bulbs for LED light bulbs. Not only is an LED bulb 75–85% more energy efficient than a standard lightbulb, but it also lasts 15–25 times longer.
- Invest in a smart thermostat. This will adjust your central heating intelligently, potentially saving you a great deal of money.
- Seal up any air leaks. Air gaps around your windows and doors can increase your electricity bill as your heaters will have to run longer to keep the room warm. Instead, seal these gaps with pressure-sensitive weather strips to keep any warm air from escaping.
10. Take up a side hustle
If you want to seriously boost your monthly savings, it’s worth considering taking up a side hustle. This could mean anything from working a few evening shifts at a bar or restaurant after your office job, securing a few freelance gigs, becoming a virtual assistant, or perhaps even pet sitting.
If you can afford to do so, it can be particularly motivating to put all the money generated from your side hustles straight into your savings account. However, be wary of burning out. Your mental health is more important than trying to achieve any savings goal!
11. Cancel any unused subscriptions
Subscriptions are a money-making dream for a lot of companies. This is because once a customer subscribes to their service, they’re more reluctant to cancel their subscription—even if they hardly ever use it.
This, in large part, is due to the sunk costs fallacy. When applied to a subscription service, the sunk cost fallacy means that cancelling a rarely used subscription is hard, as you’ve already paid so much money for it. Therefore, canceling the subscription would mean accepting that all the money spent on it up until that point has been wasted. But, by delaying canceling the subscription, it still feels like there’s a chance the service might eventually be used. In general, though, few of us ever fully use our subscription services to their fullest. So, it’s more cost-effective to cancel any unused subscriptions now, rather than hold out for a time when you may hypothetically use it.