If you missed the
introductory post on working out your budget, take a look over there first, we'll wait for you, don't worry!
If you ever think that you can't afford a holiday, or you're just after some tips to help you save, this series is for you. We'll be covering budgeting, saving, tricks for spending less when you're on holiday and a bunch more. I hope you join me, and more importantly, I hope you get a nice holiday out of it!
OK, so you have your budget worked out. Do you have any money left over for the month? If you do, you're already ahead of the game! I recommend opening a high interest savings account or a term deposit where you can store your holiday funds. Personally, I prefer the savings account so I can access the funds without penalty in case of emergency, but if you think you'll be tempted to dip into them, perhaps a term deposit where they are 'locked' is safer! Look at the pros/cons of each and see which is best for you.
If you don't have any leftover funds in your budget, or very little, lets look at ways you can save on what you are spending currently. First, look at your monthly budget and organise your expenses into "
Essentials", "
Nice To Have" and "
Totally Unnecessary" (This excellent method comes from
Paid To Exist).
Totally Unnecessary
Right away, you can remove the "Totally Unnecessary" expenses. You don't need to spend that money. Trust me. Redirect those funds into your savings plan.
Nice To Have
Can you remove any of these items from your spending? Or reduce the amount you spend on them? I'm always amazed on the street style interviews when they ask someone how much they spend a month on clothes, and often, it's more than my annual budget! Look carefully at your "
nice to haves" and pare down your spending where you can. Get creative and figure out how to save on them without killing your social life entirely.
- Can you reduce your eating out experiences to once a month instead of once a week?
- Can you have a movie night with your friends at home instead of going to the cinema?
- Could you try eating at the local noodle house instead of a fancy restaurant?
- Would you try hiking or a picnic in lieu of a paid leisure activity?
- Are there free cultural events in your community?
Tweet me or comment below with your cheap/free social activity ideas!
The Essentials
You obviously can't stop spending money on these, and I'm sure they make up the bulk of your spending. Let's look at ways we can reduce the spending on essentials.
1. Rent/Mortgage
While it might seem drastic, are you paying more than you need to on this? Are you willing to sacrifice convenience, location, size or even renting your spare room out to save money? It might be worth considering.
2. Utilities
Look at your consumption. Can you cut back on the amount of hot water you use by showering at the gym or at work? Are you leaving appliances on at night that are sucking extra electricity? Can you offset heating/cooling costs by being a little more energy efficient in your home? Is it possible to downgrade your phone plan or internet plan?
3. Groceries
Look for coupons and shop for things on sale. If you see something that you use often on sale, pick up a couple extra and keep them in storage (like toothpaste, toilet paper, coffee etc).
Plan your shopping and don't impulse buy. Each week I do a meal plan, write a list and buy only what I need (aside from the specials mentioned above).
Try getting your fresh produce at a farmers market, if you go just before closing time, you're likely to get excellent deals as the vendors are packing up for the day.
Buy in bulk and compare prices. You can save a lot of money without sacrificing the quality of food that you're eating.
Make extra for dinner and take leftovers for lunch the following day. Or, prepare your lunch the evening before so that you're not tempted to spend big on a cafe lunch at work.
I try to make recipes that recycle ingredients - so if I need a quarter of a pumpkin for one recipe, I make something else that week that will use the rest of the pumpkin. It saves money and reduces waste too.
4. Medication
I don't recommend trying to save money here, aside from shopping around. Some pharmacies offer much better prices than others. Even prescription medication prices can differ greatly between pharmacies. In Australia we can choose generic brands instead of the name brands. They are cheaper and I'm assured they are exactly the same product.
5. Insurance
This is another thing I wouldn't cut out. When I reduced my spending, I kept my insurances as they were. One thing to do though, is shop around and make sure you are still getting a good price, especially if you've been with one provider for a long time. You may be able to switch companies and get the same level of insurance for less. Or you can get a quote and ask your current provider to match it, you'l find most of the time they will reduce your premium to keep your business.
6. Banking
Make sure you are getting the best rates on any loans that you may have. As with insurance companies, banks will often match prices to keep your business, so shop around and do the research. It's ideal to pay off your credit cards each month, but if that's not possible, you should definitely look at doing a low/no interest balance transfer to pay off your debt. Avoid spending on your credit card unless you can pay it off each month. As with loans, shop around for the best interest rates.
Even more ways to reduce your spending and save!
1. Clothing
Look at your shopping choices carefully. It would be rare, if you really examined the situation, that you NEED a new pair of shoes, lipstick, dress etc. Be strong, and try to avoid any additional spending in this area. If you have to stop visiting online shops or the mall, please do. At the end of the day, a holiday is so much more rewarding than an overflowing wardrobe. I generally only purchase clothing on sale, or I look at secondhand items that might be cheaper (and often better quality than the chain stores) Remember, if you don't need it, dont buy it!
2. Entertainment
I touched on it above, but try to think of cheaper (or free) ways to socialise. You don't need to spend lots to have fun. Consider a gathering at home, have a pot luck dinner with friends or go on a picnic. Visit museums or free cultural events in your city/town. Go for a hike. Build a pillow fort and have homemade popcorn with a bunch of friends. There are tonnes of ideas that won't break the budget.
3. Gym
This is definitely a nice to have and non-essential. I didn't want to give up my gym membership though, so I downgraded it to local clubs instead of it being worldwide/Australia-wide. I also entered a new contract in order to get a health fund discount. While I had to sign on for two more years, it was worth it for the discount, and the fact I wasn't planning on leaving the gym anyway.
4. Work more
This is not ideal, obviously. But if you work fulltime, perhaps you can take on the odd freelance job here and there (I did this and paid for my holidays with a couple of extra hours work a week). If your budget cannot be stretched further, perhaps this is an option. I don't want you to be pulling double shifts. Please. But perhaps a shift once a week at a coffee shop or offering services in your area of expertise may be a way to gather a little extra cash.
5. Sell stuff
If you have a lot of excess 'stuff' perhaps you can sell some. You might be able to get a few hundred dollars together by selling things you have in storage and are not even using, like extra furniture, old sporting equipment, baby supplies you no longer need, books and more!
There are definitely more ideas on how to save money, I'd love to see your tips in the comments.
Kitty
xo