Today we’re going to look at ways to save money fast. I’ll include ideas for how to save money on groceries, and frugal living tips to make the pennies stretch further.
Hi, I’m Sam. I’m on a mission to help women take control of their finances. How? With some simple tips around budgeting, saving and investing.
Ok so let’s dive right in to my 14-step plan to saving a tonne amount of money, seriously fast.
Step 1 – Set Your Goals
If you save money a lot of fast, you first need to understand WHY you’re saving money, and WHAT you’re saving it for.
It’s essential to have a clear purpose
If you don’t have a clear purpose, then one of three things can wind up happening:
Scenario 1: you fall off the wagon
You will fall off the wagon after a while because it seems pointless.
Without a goal in mind, you’ll never feel a sense of accomplishment in saving.
So, when the sales come around the temptation to blow that lovely pile of money you’ve saved might be too great.
OR
Scenario 2: you never feel like you have enough
You’ll forever be saving, but you’ll never feel like you have enough money.
Again, without a target for your savings, how will you know if you’ve reached the summit?
The stress of not feeling like you have enough might always stay lurking in the background.
OR
Scenario 3: you save too much
You’ll keep saving for years and years instead of investing.
The opportunity cost of this is that you lose out on thousands if not hundreds and thousands if not millions in lost wealth.
This is a lot more common with women than men, sadly.
The global gap in wealth between men and women is $105 trillion. That’s 4x the size of the entire US economy. What a tragedy.
Which scenario you might fall into is the result of your upbringing, your current circumstances, and thoughts, beliefs and attitudes to money.
Avoid These Scenarios Altogether – Have a Plan
To avoid these buckets, make a plan around why you want to save at all. It will help you save more money fast, and help you feel good about doing it.
There may be an obvious reason, like paying off debt. If so, that’s your target- crystal clear.
If you’re in a fortunate position to be debt-free or have little debt, then it’s time to get creative.
Here are some examples to get you started.
The Emergency Fund
It’s important to set up an emergency fund of about $3,000. This money should be readily accessible.
Finance guru David Ramsey talks about having a $1,000 emergency fund. This is a great start but with the rising costs of almost everything from food to fuel, $1,000 is probably too low these days. $3,000 is a more sensible number.
Having an emergency fund will stop you from having to resort to credit cards if something comes out of left field.
3-6 Months Living Expenses
The next pot to have is 3-6 months worth of essential living expenses. This will provide you with a financial cushion if you lose your job.
This fund should be enough to cover your fixed costs, like rent and utility bills.
Things like Netflix subscriptions and entertainment need not be included. If you lost your job you would just cancel these.
Whether you need 3 or 6 months is up to you
Consider the stability of your job and your risk tolerance.
In my opinion, a government job is more stable, so three months should be sufficient.
Similarly, if you work in an industry that is pretty stable like healthcare or IT, and/or you feel comfortable with a 3-month cushion, then stick with that.
If you work in a more volatile industry or you’re self-employed, then you might consider setting aside a minimum of six months as a contingency.
Clear Non-Mortgage Debt
If you have non-mortgage debt, especially consumer debt, then seriously consider saving money fast and clear this debt ASAP.
The high interest rates from consumer debt will erode your wealth-making potential in the long run.
Once you have paid this debt off you’re free to focus on bigger and better things.
Save For a Home
You might want to save for a deposit on a home. This may feel difficult if you are already paying rent but with a few lifestyle changes this is still possible.
Save to Invest
You might want to save money to invest it and grow your wealth. Investing is your ticket to moving into a higher wealth bracket.
I’m not a proponent of extreme frugal living or FIRE, unless necessity dictates it.
My approach to securing your financial freedom is to grow your wealth slowly and steadily.
Even just £300 a month invested steadily over time can turn you into a millionaire – if you start early enough.
If you add to that over time as you earn more money, you can hyper-accelerate your wealth potential.
You can read more about this in my article Investing for Beginners.
Save for Life Goals
The list of possibilities is endless. Saving for a wedding, a vacation, home renovations, a new car, designer shoes. The sky’s the limit!
What you decide to do with your money is entirely up to you.
Once you have taken care of your emergency funds, consumer debt, and investments.
I heartily encourage you to create a ‘treats fund’ and indulge yourself. Life is for living!
So now we have set our goals you’re hopefully fired up and ready to go. The next step is to bump that up against your numbers.
Step 2 – Make a Budget
The tool for understanding your numbers is the budget. A budget is a snapshot of your revenues (incomings) and expenses (outgoings).
Budgets help you plan your finances and achieve your savings goals. I used budgeting to save over $200,000 over the last decade. See my post on how to create a budget for easy step-by-step instructions.
An Example
Tracking your spending over the last 6 months you realize that spent an average of $600 a month on take-out.
OK, that can come down RIGHT NOW! Your heart will send you a silent prayer of thanks. : )
Reduce your spending a little at a time
If you tried to drop that too drastically you are setting yourself up to fail. It will be too much too fast and you’ll just end up falling off the wagon.
Instead, reduce it to $400 next month. Then reduce it to $300 the month after.
After 3 months you can reduce it to $200 a month.
In the meantime, incorporate alternatives to take-outs in your routine.
Learn how to make take-out meals at home and plan your meals better with some food prep tricks.
Recognise the vulnerable times when you’re likely to order take-out and come up with cheaper substitutes.
This way the changes will be sustainable.
OK so after 3 months your take-out budget has gone from $600 to $200 a month. Well done! Keep tracking this expenditure and maintain the $200 spend rule.
Automate the savings to a separate account
And the extra $400? Set up an automated transfer of $400 from your checking account directly to your savings account. In 10 months, you’ll have $4,000 saved.
BOOM.
See how many other categories you can for which you can reduce or even eliminate your spending, and you could be looking at thousands of dollars in savings over one year.
Step 3 – Review Your Housing Costs
Housing transportation, childcare costs, and food are amongst the biggest hitters to saving the most amount of money fast.
If you are renting, is it possible to move to a lower-cost area? Perhaps you could move to a smaller apartment or house to reduce costs?
Do an online search and see what your options are.
How much you could save over two years by renting in a cheaper location?
Another option could be to do a house share in the same location.
When I moved to London from New York I just made sure that I had decent transport links to my office.
My co-workers were all based in the more expensive parts of town and paid way more in rent than I did, which I thought was crazy!
My neighbourhood was trendy and homely, and it probably saved me £12,000 a year.
ZING!
If you own your place and you have the space, is getting a lodger an option? Or letting your home on Airbnb for temporary periods? Even a few hundred a month can boost your savings over time.
Step 4 – Review Your Transportation Costs
Transportation is another big-ticket item. When looking to save serious amounts of cash in one year.
Car
If you own a car, Calculate the total cost of car ownership. That is car lease payments, gas/petrol/diesel, insurance, parking, and taxes.
How does this number look to you? Does it fit in with our savings priorities? Could you downgrade the car to something more affordable?
If your household has two cars, can you afford to get by on 1 car? Or better yet, can you ditch car owership altogether?
Taxis
Track your taxi spending over the last few months. Could some of those journeys have been a bus ride or a walk?
Sometimes a taxi is a necessity, especially for safety. One way to keep your taxi spending under control is to set a monthly budget for it and stick to it.
Step 5 – Review Your Childcare Costs
If you have kids then you’ll know that childcare is likely the single most expensive cost when it comes to raising a family.
Make sure you are aware of all the government assistance available to you when it comes to childcare and take advantage of it.
If you’re able to get help from family even if it is only one day a week, take advantage of it.
Every parent knows that the only true parenting hack is to live close to the grandparents.
Step 6 – Review Your Food Costs
Food is another area where the bills can be pretty high. But it is also an area where you have more control than the others.
It’s easier to make savings on your food shop than to move home or change your car.
Once I started packing leftovers for lunches in the office, I saved £2,000 in my first year.
I was gobsmacked by how fast I could save money this way!
Step 7 – Set up Sinking funds
Another way to save money fast is to set up sinking funds.
What are Sinking Funds?
Sinking funds are ear-marked sums of money that we set aside for specific purposes.
We call upon that money when we need it. This way we don’t see a massive jump in our expenses that throws our whole budget out of whack.
More importantly, we don’t resort to credit card debt to pay for expensive things like emergency car repairs, vacations and Christmas
Sinking funds are also really powerful way to keep you in budget.
This is becasue you have already decided how much you want to spend for certain things like vacations and holidays, so you’re less tempted to over-spend on them.
How Do Sinking Funds Help You Save Money Faster?
They stop you from going in the red when unexpected expenses occur.
Even when the expenses are expected, they can throw you for a loop and tip you over into unwanted debt.
Vacations are a prime example.
When you book a vacation you might think that the package deal of the flight and hotel is all you need.
But then the tips come in. Then you have your excursions. That moonlit boat cruise sure does look good. A spa treatment, or three? Why not!
Just put it on the credit card and deal with it later.
Suddenly the £700 package deal winds up costing a whopping £3,000. What!
If you’re going to a resort you have to assume that it’s going to have these incredible enticements, and you might want to relax a little and enjoy them!
So then plan for them. Be realistic about what you can afford, make an estimate and set aside some money ahead of time in a sinking fund.
How To Set Up a Sinking Fund
Some banks like Monzo Bank in the UK give you the functionality to create sinking funds within your current account. Monzo calls them ‘pots’.
If you don’t have this feature with your bank account, you can just set up a separate instant-access savings account and call this your sinking fund.
Other Banks like the Halifax in the UK allow you to rename your accounts which is nice and handy.
So you could rename a savings account ‘vacation savings account’ to help you keep track of it.
Once you’ve decided on your budget, you simply divide that number by the number of months between now and the event. This would be the amount you transfer into your sinking fund each month.
An Example
You want to set up a sinking fund for Christmas in April of that year.
You determine that your Christmas budget is $600.
April à 1st December is 7 months
So, you have 7 months to raise $600
600 / 7 = $85.71 per month
Therefore, you need to save $85.71 each month between now and the end of November.
Automate the Process
The next step is to set your account to automatically transfer this amount of money into your Christmas sinking fund each month.
Set it to transfer a day or two after payday to give yourself a cushion.
If this is an automated step, you don’t have to do anything after setting it up.
You just sit back and watch your sinking fund grow. No worrying that you’ll accidentally spend the money and be caught short come December.
As long as you don’t dip into this pot ahead of time, the money is there to take care of all the extra expenses that come with that magical time of the year.
Step 8 – Set a limit on Treats
If you want to save money fast, understand your motivators. Knowing what keeps you motivated will help you change your behaviour in the long run.
Saving money isn’t just about spreadsheets and numbers (although that’s important too!). It’s about having a money-saving mindset.
The simplest way to do this is to decide what is really and truly important for you. It might be going on vacation, having a nice meal at a restaurant, buying clothes, or online gaming. Whatever floats your boat.
Spend a lot of time on this to zero in on your 1 or 2 drivers. If you have a long list, then your true motivators are lurking in there somewhere.
Zero In on a Couple
Put it this way, an asteroid is about to hit planet Earth. You’ve scored a one-way ticket to Mars in an escape pod.
You’ve been allocated enough oxygen, food and water for one lifetime and 2 recreation vouchers to exchange when you land on Mars. What would you choose?
Hopefully, that’s helped you choose your one or two motivators.
Treats are Allowed!
Now you have a couple of things that you can budget for to keep you motivated in the long term.
How much money you spend on those treats each month depends on what you can afford, and how fast you want to save.
Knowing that you can still enjoy your daily Starbucks or whatever means that you don’t feel constantly deprived.
It should also allow you to enjoy your treats without feeling stressed about it.
For me personally, I love logging onto my Amazon app and picking up stuff for the house or myself.
I have a set amount each month that I can spend and not have to worry about my savings targets being affected in any way.
Nothing and nobody gets in the way of me and my treats budget : )
Step 9 – Cut Back Other Expenses to the Bone
Now that you’ve given yourself a treats budget to keep you motivated with the things you truly care about, you can cut back all other expenses to the bone.
Downshift to generic brands, only buy the number of items you need, and shop in value stores. Find lower-cost alternatives for everyday items and watch those savings pile up.
Step 10 – Plan ahead
An easy way to save money is to plan ahead, whenever you can. Buying things last minute often gets expensive.
Some examples:
- Purchasing travel insurance on the day of travel is a lot more expensive than purchasing it a couple of months ahead of time.
- Buying food and drinks at the beach rather than packing your own and taking it with you.
But please don’t sneak your own food into the movie theatre! Just be intentional about where you spend your money. Let’s face it, vending machine snacks at a train station are hardly worth the money.
If you know you’re taking a long train journey, buy snacks during your grocery shop the weekend before.
Plan ahead, it will save you money.
Step 11 – Be Creative with Your Leisure Time
Look at how you spend your leisure time. There are lots of free and low-cost options out there that are as enjoyable than the pricey options.
Visit a free museum or take a walk in one of our beautiful parks. During Covid, I got into the habit of meeting up with friend for a long nature walk.
So long as I had comfortable shoes and a thermos of hot chocolate I could walk for miles.
I could get so much off my chest and it felt so great to get all that fresh air and exercise with my gossip. Best of all? It was free!
Consider alternating those dates with the mimosa brunches and watch those savings pile up.
Step 12 – Automate your savings
If you don’t automate your savings, your savings will just get sucked into another endless over-spend somewhere else.
You’ll be moving money from one over-spend to another. You’ll never make any real progress.
Be sure to track your savings and then automatically move them to a seperate savings account each month.
Step 13 – Turn your skills and hobbies into a side hustle
There are so many skills that can be monetised. From music lessons to DIY to blogging.
You may have any number of skills that people would be willing to pay good money for.
This extra income can hyper-accelerate your savings.
Some more ideas are below:
- Tutoring
- Virtual Assistant
- Waiting
- Bartending
- Task rabbit for DIY
- Proofreading
- Transcription
- Data entry
- Translation
- Uber taxi driver
- Food delivery
- Personal shopping
- Housekeeping
- Blogging
Step 14 – Consider earning money while you relax.
Sometimes you are so beat from work that you need to stare at the TV, I get it.
But you have 48 hours over the weekend. That’s a lot of leisure time. This is potential time to make money while you relax.
Think creatively about killing two birds with one stone.
Make Money with Man’s Best Friend
Do you love dogs but live in a tiny apartment and spend most of your week out at work?
Consider a side hustle walking dogs or dog sitting!
This way you get to spend time with four-legged friends and earn money at the same time.
Love kids?
Maybe you love kids but don’t have any of your own yet, or you choose to be child-free.
Babysitting is a great way to earn extra income.
Maybe your kids are a little older and you have some bandwidth to babysit. You are a pro by now, after all!
You Got This
Try these tips and watch the savings pile up. I was able to save $200,00 over 10 years.
I was able to pay off student debt, get married, buy a rental property, and going on some kick-ass vacations. It was all possible by following these tips and being consistent.
What are your money-saving tips? Do you have a money-saving success story? Share in the comments. You got this!
