All of us certainly know the benefit of saving money to invest for the future. Unfortunately, in today’s world, good intentions are often swamped by just ‘living our lives’, being quickly replaced by far more immediate financial concerns. Relegating our financial future to be pondered at another time. Leaving us with one of life’s great paradoxes; how do I invest for tomorrow, while spending for today?
After many years advising clients, I discovered the one great obstacle stopping people investing is quite simply “I don’t have any money at the moment” The number of times I have heard this phrase is absolutely astounding.
I don’t have the money to invest.
Now I am not quite sure if people either don’t have the money, don’t have money to spare, or are just not motivated to do any investing. But I certainly know that this is the number one reason not to invest.
I suspect that the phrase is really an all-encompassing excuse that covers every conceivable possibility, from actually having no money, right through to “I don’t want to invest in anything that is risky”. It is a bit like when you say to a salesperson “I’ll think about it”. You’re not really going home to think about it at all, you just want to get away! I have written a post about what obstacles we all put up to avoid investing, make sure to have a read.
For starters, we all have a fixed amount of money coming into our household. Depending on your stage in life, it is used for all manner of expenses with very little left over. All in all, every cent of income is pretty well accounted for. And therefore it always feels like a real struggle when trying to save money.
So I guess it’s easy to understand why people are loathed to risk any of their hard-earned funds, chasing investment returns that could be very slow coming. And did I mention investment risk? Just about everyone wants quick returns AND the lowest possible risk.
Oh, and let’s not forget our partner’s thoughts on investing ( which may be positive or negative). They will certainly want to contribute ideas for the long-term use of family resources. And I can as- sure you from personal experience that both of you need to be on the same page to have any investing success.
Saving money
So is there a solution for saving money?
What if you were to start investing, using funds that had already been spent. That’s right, use the money you have spent. I call it “ to claw back committed expenditure by becoming more efficient with our spending “.
Saving the money you have already spent?
To free up investment funds you need to examine your expenditure and see how you can reduce through substitution.
For example, you might buy a coffee each morning before work @ $4 each. So, replace buying coffee by taking a thermos from home. You still get your coffee hit, but you’re saving money. About $20 a week and over a year close to $1,000.
The coffee money you saved has already been budgeted for in the family accounts; so it is not re- quired for any other purpose. You have just ‘cashed it out‘ by switching caffeine delivery methods.
A rather simple idea, but very effective.
There is no rocket science involved here (or none that I am aware of) Rather it’s a simple method that will guarantee access to funds free of all domestic bonds and provide some great additional benefits;
When you invest, you will be using already ‘committed’ money – you have just clawed some back by substituting a more efficient method – they are now ‘domestically unaccountable’
Because your investment funds are already ’spent’ funds you are not dependent on any short-term gains or concerned by any short-term losses.
Your investments will not interfere with any other savings or retirement ideas or plans you already have in place or wish to do, like superannuation.
Your attitudes towards risk and return will be far more tolerant.
By using money that essentially you have already ‘spent’ your investments should be left alone and as they are not needed for the family finances. They will benefit from having plenty of time to grow, downturns and normal investment cycles will become opportunities, and compounding returns will propel your wealth. (more about all these in later posts)
So if you are ready to ‘cash out’ some expenditure and start saving money, I have compiled a list to begin your journey. It is not complete in any way shape or form, it is just some ideas to get started with. Grocery shopping is a great place to start by the way.
Important–Becauseyouarewantingtosavemoney,youwillneedtoconvertthe savings you do make into physical cash. Calculate the money-saving amount exactly and then reimburse this amount into a completely separate bank account.
By the way, in an earlier post, I made the distinction between investing and saving, so it’s a good idea to have a look.
Saving money
Here are a few money saving ideas
Move your bank accounts to take advantage of any reduced fees, better interest or whatever else the bank is offering to tempt you. That way you will be saving money by saving money. (I think)
Why not make your own gifts instead of buying them. A nice cake or jar of chutney say’s a lot more to someone than a 50th-anniversary edition Rubik’s cube.
Make sure everyone in your home turns off the lights and any other appliances. If it doesn’t need to be on, then don’t have it on. Even those LED’s on the TV that remains on constantly draining power, which in turn cost’s money.
Make your own where possible, bread, jams, pickles, sauce. Why not invest in a dehydrator and make dried fruits, tomatoes, jerky you name it. Oh, and did I say they taste sensational. Eat your way to saving money, yes, please.
Buy yourself a slow cooker; this is the greatest invention ever. Add the ingredients in the morning turn on the cooker and come home to a wonderful meal. And great leftover potential, 2 or 3 meals each time.
How about making your own beer or wine which is not only fun but a great way to saving money. I have done it and it’s pretty foolproof, plus you end up with a very nice tipple. And just think, the more you drink the more you will be saving money!
Cancel the cable or satellite TV, or reduce your channels at least. I actually got rid of mine after 15 years. It was hard to do in the beginning but give yourself 2 weeks. I assure you, you certainly won’t miss ‘The Nanny “ and Gilligan’s Island reruns.
Here’s one I bet you didn’t think of. Check your tyres regularly. Correct tyre pressure will improve your cars fuel consumption. Apparently, most people’s tyres are underinflated. So the next time you’re at the gas station, grab the tyre pump and start saving money
Pack food for your road trips instead of takeaway. Not only will you be saving money, but you will be guaranteed quality fresh food. And if you’re like me, you will avoid that bloated, eaten too much, feeling for the next two hours of your trip.
Remove the credit card numbers from your online shopping accounts – I have ‘one touch’ purchasing option with Amazon. Sure it’s convenient, but it’s also very easy to spend. And especially if you are partial to a few glasses of wine whilst online shopping!
Make sure you write a list before shopping – and make sure you stick to it. Being a regular grocery shopper, I know that taking a list and sticking to it can create amazing savings. It will be difficult at times as you will be battling some of the best marketing minds on the planet. But remember, you need to stay strong when saving money. (Now put those candy-coated peanuts back!)
Another good idea when grocery shopping is before you check out, take your trolley to the fruit and vegetable section and have a good look. Say to yourself, ‘do I really need this item?’ And then take out all that stuff you bought on impulse – I average 2 items per shop. (See why you need to stick to the list!). Oh, and you do this in the fruit and vegetable section because there’s no temptation buying in that area. Unless of course you’re tempted by a broccoli!
Why not repair clothing instead of tossing it away. I don’t sew, so this is easy for me to say. But do you have someone in your family who can? Maybe you could learn to do a few simple stitches.
Will you be saving money? Depends, but I will let you decide on this one.
Avoid convenience foods and fast food. If pizza franchises can make pizza’s you certainly can as well. And burgers and fried chicken, coleslaw, bean salad – all of them can be made cheaper at home with fresh ingredients. So you don’t ever have to miss out on the takeaway food experience if you’re saving money. (I know, you’ll still have the washing up!)
Invite friends over instead of going out. Games nights, card nights, chilling out around a fire in your backyard. Why not get that 70’s fondue set from your Aunt Agnes – a bit of cheese some bread and plenty of wine, sensational.
Try to plan your meals around supermarket ‘junk’ mail. Instead of ‘binning’ the advertisements straight away, have a read through and check what’s on special. Then ‘Google’ the specials and get some recipe ideas, works every time.
You also need to cancel all your unused club memberships, particularly if they direct debit of ‘subs’. There has got to be an unused gym membership lurking in your purse or wallet. (well in my case at least), Go check and see what you actually belong too, so you can get rid of them!
Try the generic brands of items that you buy regularly. I know everyone has their own thoughts on generic food, but try lot’s of them, decide which are ok, and then stick with the ones that suit you. Yes I know, saving money wasn’t meant to be easy.
If you can, try to avoid wandering around shopping malls in lieu of other activities. Window shopping can be good fun, but the retail world spends millions on research to find what attracts consumers and what makes them buy. Remember, your trying to save money, so don’t let retailers ensnare you with their trickery! Go for a bush walk instead.
Have you thought about starting a garden? Easier said than done? But if nothing else, what about planting a herb garden? Fresh herbs are fantastic in any recipe, and supermarkets are charging $3 a bunch for them. Now that’s saving money.
While on the subject of fresh herbs, do you ever buy a bunch, use some, and leave the rest to wilt away in the bottom of the fridge? Well here’s a good way to use up the leftovers. Whatever the herb, if you have a couple of varieties even better. Just chop them finely, melt some butter in the microwave, toss the herbs in with a bit of salt, a good stir, and when it starts to cool put it in some cling wrap and roll it into a ‘butter log’. Pop it in your freezer and you now have herb butter for the next month. You can also add the chopped herbs to a bottle of olive oil to create beautifully flavoured salad oil.
Probably the most obvious of money saving tips is to take public transport. This will save wear and tear on your car whilst saving money getting to work. You can also try carpooling, or com- mute via a pushbike or motor scooter. You might even find you don’t really need your car after all! No that’s saving money.
Make a point of learning about all of the benefits your company offers. You might be surprised by the array of benefits extended to staff. Have a good look, there could be some real money saving discounts.
Keep reading about and continue learning, ways of saving money. There is at least a quadrillion idea’s out there, it’s just a matter of tracking them down.
Always ‘shop the shopping’. As I always say, buying is not shopping. Shopping is carefully looking at all items, comparing prices, checking the per gram price and the use by dates. Figuring out what’s the better deal, and walking away from the ones that aren’t. You know the drill – if you are saving money you need to “shop it’!
Eliminate loyalty – if you can find a cheaper supermarket go for it. If it’s cheaper online then at your favourite department store, then save your money first. Shopping around for your “shopping’ is probably the easiest and quickest way of saving money there is.
Remember the list is just to get you started. I would love to know if you have any specific ideas or thoughts about saving money. Let me know in the comments below.
Good luck with your ‘cashing out’ and stay tuned for the next stage of long-term investing.
Thanks for reading and see you next time. Homepage
