As promised, in cool ways to save money, a follow-up article was necessary. While I don’t think it’s possible to get cooler than the tips shared in the first article, you will find the tips here will have additional value. Saving money for those deep into personal finance isn’t just spending less; it is channelling the difference between what you spend and what you earn somewhere where you keep it. So what other cool ways are there to save money?
Pay off debt
I understand if you feel like I trapped you but hear me out. There are two very important things about debt that we need to understand. Of course, not all debt is born the same, but ultimately repayments on debt reduce your disposable income. The longer you take to pay off debt, the longer you go with a diminished disposable income. Secondly, interest-bearing debt increases the amount to be repaid as it ages and compounds. In simple terms, interest-bearing debt keeps growing the longer it is outstanding. Meaning you will either pay more, pay for longer or both.
Watch your income too
We don’t often associate your income with saving, but it plays a very big part. As long as you can avoid Parkinson’s Law, the more you earn, the more you have available for savings. So you should actively think about your income and how you can increase it. Many people take their income as a fixed and given amount, but you can do things to increase your income. You should do things to increase your income. It stands to reason that the more money you make, the greater the excess you have available for savings and investment.
Audit your Subscriptions and commitments
If you track your expenditure, you should realise that more of your money goes to regular expenditures; your commitments. So if there is one area you want to audit, it is your commitments. Subscriptions fall under this category as they are solid commitments to make monthly payments for something. Here’s the thing; I prefer you look at the substance of something rather than the form. What I mean is, just because that $30 or $50 you pay for something monthly isn’t a binding legal arrangement doesn’t mean it’s not a commitment. The substance (you paying it monthly like clockwork) says it is a commitment.
Audit your Hobbies
There is some nexus between your hobbies and your commitments, but it’s worth mentioning hobbies on their own. Just to be clear, hobbies are things you do purely for leisure and pleasure. We all need these as they are good for our mental health and balance. However, the cost of these hobbies should always be looked at carefully. Especially where the hobbies come with accompanying or incidental expenses that we may turn a blind eye to. Audit your hobbies and make sure they are not costing you an arm and a leg. Perhaps you can find less draining ways to engage in them.
Become passionate about finance
Hopefully, what I’m about to say to you is not new. If you want to be good at something, you have to understand it better. This is something I’ve had to learn the hard way in helping people with their finances. Some things seem obvious to me, but I have been immersed in finance every day for close to two decades. It’s normal for us to think other people know everything we know. The point is you will not get better with your savings until you improve your general knowledge about savings and finances. I encourage you to learn one thing per day or have one interaction with personal finance materials such as articles, podcasts, videos, books and so on. The more time you invest in improving your personal finance knowledge, the better you will get at understanding the sometimes small things that make a big difference in personal finances.
I did warn that these tips may not be as cool as the first batch, but I hope you agree that they address important issues in improving your saving. Most importantly, I hope you try them and give us feedback.
