Some of you may ask yourselves, “How do I stop spending money,” “How do I save money fast” or “How do I save money as a student” – Well, below are some tips of mine that may help you.
Many people my age don’t save. Even people many years older than me, still don’t save. They love to buy the latest and greatest, but they don’t save. And it’s not their fault, they simply have never been taught how to save. Saving is POINTLESS and unmotivating when you have nothing to save for, and this is the biggest problem.
I have 5 tips for those who may need some motivation to save. Now before I start, you may be thinking to yourself, “Okay so why should I be listening to an 18-year-old telling me what I should be doing with my money” – Put it this way, I am not a genius, I am not rich and I don’t know everything but the little that I do know may just be enough to help you. I have read many books to do with personal finance (boring to most of you but I LOVE it) however most of my ‘techniques’ and passion have arisen from my Dad, who has been my mentor and is someone I give full credit too.
Tip number 1: Have a reason to save. Without having a particular reason, then saving becomes a drag. For me; my dream is to go into property development and investment, so of course, what I’m saving for now, is my first house. This has been my goal since I was 12, it is such a passion of mine, that to me, saving for this is unbelievably easy and has become highly addicting.
Like I mentioned in the previous post, I already have a solid amount of money that was accumulated when I was younger, in my “Long-term savings account”. My goal in 2016 was to hit $10,000 in my “Long-term savings account” so that I could put it into a term deposit (an account that locks away your money at a high-interest rate, but you cant access it for a year or so) – Read more about how I accumulated so much $$ at a young age …
It is exciting seeing compound interest work away at my account. Whenever I see the account, it is a reminder of why I work so hard. Make saving exciting, try to realise the benefits of it and how it can help you in the future, this leads me to my next point…
Tip number 2: Try to save for something that will become an asset, not a liability. Now to summerise in super easy language, an asset is something that makes you money, something that can help you in the future e.g savings, investment houses/land. Whereas a liability ends up costing you money, e.g. a car/debts/phone/laptop.
You don’t really want to be putting all of your savings towards the newest laptop, although it doesn’t cost you money over time, instead, it devalues over time which ultimately results in you losing money.
Try saving with your future wellbeing in mind, try to picture yourself in 10-20 years time and then work out how you are going to get from where you are now, to your ideal self in the future. If that requires money, then I would suggest saving now, but if all you want to do is become a homeless person then don’t listen to my advice.
Tip number 3: Keep a finance book. When I was younger, another rule that arose from our pocket money was that we kept a finance book. It was a book that was neatly drafted into 5 columns, in this order: date, item, in, out and amount left in that account. This meant that at any time, Dad could ask us how much money we had, we could open up our books and it would be up to date with the total right there.
Confession, out of us 3 girls, I was the worst at keeping this up to date, but remember I was the youngest so I did find it hard at age 7. As soon as I got my EFTPOS card at age 12, I didn’t see that it was necessary to have a finance book as everything was written on your bank statement, however, bank statements never accounted for the cash that you had.
Only recently, I started a new finance book but instead it was on my computer. It has been a lifesaver and now I can at a glance find out how much money I spent in a particular month and why. It is so easy to manage, but the hard part is remembering to input EVERY SINGLE transaction otherwise it doesn’t work.
Below is a picture of a draft finance book using “Apple Numbers,” – this is what mine looks like. Difference between this draft copy and mine is that I have about 7 different tables, one for the overall transactions and then others for, say, food, transport, personal, shopping etc. But if you follow a simple template like this, then you are on the right track.
**Note that even the smallest amounts, like $1.50 were noted. Yes, it’s only $1.50 but it still adds up and this way you will be able to know exactly how much money you own.**
Tip number 4: If you can’t start big, then start small by putting aside a small amount of money each week.This makes saving for anything super easy. It takes more time but in the long run its great. Since I learnt at such a young age the value of money and how hard you have to work to get it, it meant that I instantly became a ‘saver.’ It got me SO excited when I got paid.
Unlike most people who would go out and spend their money as soon as they got it, I would split up my money into my many different bank account (I have about 9 different accounts.)
I highly recommend having HEAPS of different accounts. Instead of the usual “Spending and Saving,” I would have, a car account (for petrol) spending money (I only ever allowed myself $20 per week), holiday account (money for my upcoming family holidays) and a few others.
Tip number 5: Take time to find what limit you will set yourself in terms of when to spend and when not to. Many of my friends who are at University simply do not save as they see their student loan as a ‘free pass.’ Uh yes, there’s no interest on the money that you are borrowing, and that’s amazing, but that doesn’t mean you can clock up a major debt by buying unnecessary items.
For awhile, I became someone that wouldn’t spend a few dollars on something because I started to love money in a dangerous way.
Money slowly became the forefront of my mind, which ended up taking God’s place in my life. After taking a step back, I saw the person that I was and the road I was going down if life was based on money.
My favourite verse was a real slap in the face to me, is Timoty 6:10 “For the love of money is the root of all kinds of evil. And some people, craving money, have wandered from the true faith and pierced themselves with many sorrows.” – It was unbelievably true and related a lot to me.
I made a change, and this change only happened recently, I decided to stop worrying all the time about money. Yes, we need to be watchful of it and not go crazy and buy unnecessary things, BUT, if you live your life with money being the foundations of everything, then you are not heading in the right direction. Learning to spend wisely, is equally important than saving
Final words: Learning to spend wisely, is equally important than saving. I learnt when I needed to treat myself from time to time. After working a 7am-7pm job, I deserved treating myself every so often, and once I did, I became so much happier.
One of my favourite books is “Why we want you to be rich” by Robert Kiyosaki and Donald Trump, and Trump says this “So many people struggle financially because they think cheap and buy cheap. You can get rich by being cheap, but who wants to be a rich cheap person?” – Moral of the story isn’t to become a saver, not a spender but instead to become a saver AND a wise spender.
This guest post was written provided by Hannah Koumakis a blogger @ www.workingonholiday.com