In previous articles, we have already covered how to make smart investment decisions. When it comes to preparing for retirement, it is vital to put your money to work for you.
But before you can do that, you have to actually have some money saved up. That’s why today, we will be covering five easy to follow tips and tricks to reduce your expenses and start saving a more substantial part of your income.
Most people are never taught how to manage their personal finances. Unfortunately, it’s just something we are expected to learn as we journey through life. Learning to effectively decrease your living expenses is arguably one of the most important personal finance skills you can learn in your twenties.
In the past five years, I have lived on my own, with roommates and in foreign countries. I have sadly wasted money by not being frugal and by spending too much on frivolous things.
Through trial and error, I am happy to claim that I have effectively found sustainable ways to significantly reduce my living expenses without sacrificing quality of life. Here are my top five tricks for saving money I’ve picked up along the way.
1. Keep Track of All Your Purchases
This is step one when reviewing your living expenses. Whether you keep track on an Excel spreadsheet, make notes on your mobile phone, or go old school with the classic paper and pen route, you need to record your purchases.
Personally, I opt for pen and paper when recording my purchases. I try to do this every day and it has become somewhat of a meditative task for me. Writing down your purchases will help you figure out exactly what you’re spending money on and where you can cut your spending.
You may not realize how much of your disposable income is going towards your daily matcha latte habit until you total it up. This will be eye opening and even a bit depressing when you first start, but I promise once you get into the habit and start saving money this will be something you’ll enjoy.
It’s deeply satisfying to see not only how much I’ve managed to save at the end of the month but also how this month compares to the previous months.
I like to be exact with this process. I look at my receipts and record how much I spent on an aubergine, on a pack of herbs, on a glass of wine. Especially with groceries and household items, it allows me to easily compare prices between stores so in the future I know which stores will offer me the best prices for specific items.
2. Shop the Sales
After rent and utilities, food is probably your biggest living expense. Of course, the biggest way to decrease your food expenses is to limit your meals out at restaurants. So let’s say you’ve done that, maybe even learned how to cook your favorite Indian takeaway. Now, it’s the end of the month and you’re going through your bank statements, racking your brain, looking through your new purchase tracker; just trying to figure out how on earth you still managed to spend so much money.
Groceries! Food is expensive! But it doesn’t have to be with just a little bit of research and planning before you go shopping.
Now as I mentioned above, tracking your specific purchases will help you decide where to buy certain things for the best price. However, you should also keep a lookout for promotions and offers. Some deals last a week, others a month. Unless I am set on making something very specific for dinner, I will typically plan my meals around what’s on offer that week at my local supermarkets. When something I love or use often goes on sale, I will typically stock up on that item as long as it is freezable or nonperishable. You may not be making pizza this week, but it can’t hurt to save a few euros by buying your pizza cheese in advance and just storing it in the freezer.
Additionally, many stores will give out coupons with your receipts but often times these savings will go unlooked into the rubbish. I strongly recommend just glancing over these coupons to see if they would be relevant to you. Now, do not go buying something just because you have the coupon. You don’t save any money by purchasing things you wouldn’t buy anyways. Just save these coupons if they are truly useful to you.
3. Buy in Bulk
In addition to shopping the sales, be sure to buy your nonperishable items in bulk if you can afford the space. Toilet paper, kitchen roll, toothbrushes, soap, deodorant, laundry detergent, dish washing liquid, beer, wine, spirits; all these things you will eventually use you can buy ahead of time in bulk for a discounted price. If you live in a small apartment and just can’t afford the storage space, try talking to your neighbors and share the purchases that make sense to split up. These little savings here and there do add up in your overall savings.
4. Reduce Food Waste
Did you know that on average the typical consumer throws away a third of their food? That is good money down the drain! Simply unacceptable for the savvy shopper.
This is where meal planning comes into play. Meal planning and prepping is having a moment in the health food world- making it easy for the average person to try their hand at it. There are countless menu plans for the week available for free online, most even complete with grocery lists. Meal planning can help to ensure that you will use that entire head of cauliflower you bought rather than treating your fridge like a temporary rubbish bin and tossing half the head away once it’s discovered rotten and mushy in the back of the vegetable crisper. Meal planning will help you to use the same ingredients in different ways for multiple recipes, reducing food waste.
Now before you even step out the door for your grocery shopping, take a look at what’s already sitting in your fridge and pantry. Try to use up at least the perishable items you already have. If you have some foods that you are just sick of eating, freeze them if possible! Frozen fruits are great for smoothies- an expensive drink outside! Frozen vegetables can easily be tossed into weekday stir-frys. That half full jar of tomato sauce sitting on the shelf? Throw it in a baggie to freeze and toss it in the next time you’re making a pasta or curry. Fair warning, don’t let your freezer become a black hole of leftovers. Make an attempt to include these ingredients in your meals.
Another way to reduce food waste is to extend the shelf life of your food. Don’t leave your milk and cheese sitting out on the counter. Store your herbs in the fridge or on the counter upright in a jar of water with a bag over top. Remove vegetable tops since they pull moisture out from the vegetables. But don’t throw them away, use those veggie tops in pesto, broths, and even in hummus.
5. Look for Deals When Going Out
Obviously, it is half the price or less if you choose to stay in instead of eating out at a restaurant. But eating out is one of the great joys of life! As is going to the cinema, partaking in cultural exhibits, going to sporting events and concerts. I don’t want you to stop enjoying your social life. But first, do some research!
There are great deals out there on many websites. Often the savings is between thirty and fifty percent, but I have seen some deals with savings up to ninety percent. Again, make sure this is something you would normally buy at full price, otherwise, it is really not saving you any money. Groupon is a personal favorite since they often have additional Groupon members’ savings on top of the regular discount.
Deals can be found for gym subscriptions, restaurant outings, holidays, event tickets, products, spa treatments and more. Another favorite for restaurant discounts is The Fork, a company owned by Trip Advisor. The Fork is currently not available in the U.K., however, it is great to have in your savings wallet for when you’re traveling.
There you have it, my top five simple and easy tips for reducing your living expenses. I look forward to your thoughts and comments. I would love to hear about your favorite living hacks!