Three stacks of coins arranged from shortest to tallest, with plants sprouting on the top
Three stacks of coins arranged from shortest to tallest, with plants sprouting on the top
Three stacks of coins arranged from shortest to tallest, with plants sprouting on the top

NOTE: This article is part of what is now a discontinued category. Beginning January 2020, I will no longer be writing and publishing articles on Lifestyle and Finance categories. PHMILLENNIA is now a dedicated travel blog and as such, I will focus solely on creating content related to travel and adventure. Thank you for your understanding. 

6 Simple But Effective Ways to Save Money

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Saving is important. It is one of the first and most critical steps to achieving both financial security and financial freedom. We save because we cannot predict the future, but we can do the next best thing – prepare for it. If you’re looking for simple but effective ways to save money, here are six of them:

1. Record your expenses

Woman's fingers on a calculator beside a stack of receipts
Being aware of your spending behavior enables you to identify expenses that you can cut back on and save money || Photo by rawpixel on Pixabay (edited)

The first step to gaining control of your finances is to know full well where your money is going. Keeping track of your expenses provides you with accurate information on your spending behavior, which in turn will help you manage your finances the way you want it. It will help you rein in spending and start saving by identifying nonessential expenses that you need to cut back on, and essential expenses that you need to prioritize instead.

You want to begin by listing all of your expenses in a typical month – that means every bill you pay and every purchase you make. Look at your monthly bills – electricity, cable TV, phone, Internet, mortgage, insurance, credit card billing statement, and otherwise – to help you catalog your average monthly spending.

Do not forget to include your day-to-day expenses, no matter how seemingly small and unimportant these are, as well as expenses that occur regularly but not necessarily every month, such as car maintenance.

When you have a complete inventory of your expenses, arrange these according to categories such as housing, utilities, transportation, food, clothing, entertainment, etc., and total each amount.

Remember to distinguish between fixed expenses and variable expenses. Fixed expenses cost the same each month, like rent, mortgage, insurance, and student loans, among others. In contrast, variable expenses are costs that vary each month. These include gasoline, groceries, electricity, phone, etc.

Once you have a clear picture of how much you are spending in a typical month and where, you are now poised to identify problem areas and make adjustments accordingly. It is now a lot easier to find out where you can cut back and by how much.

Perhaps you’re spending too much on your morning lattes at Starbucks. Or maybe being subscribed to three streaming services – Netflix, Amazon Prime, and Hulu – all at once might not be such a good idea after all. And why do you still pay for gym membership when you literally have never stepped foot inside an actual gym?

2. Create a budget

Money on a tiny chest beside a calculator, a pen, and a notebook (a reference to budgeting as one way to save money)
Creating a realistic and workable budget – and sticking to it – is doubtless one of the most effective ways to save money || Photo by JesusManuel1 on Pixabay (edited)

Now that you have an idea of your spending behavior, you can begin to work your expenses into a feasible budget.

A budget is doubtless one of the most effective ways to save money. Your budget is your spending plan. It is an outline of your income and how you want to spend it and where you want to spend it on. It allows you to see in advance whether you are spending more or less than you can actually afford.

Your budget enables you to control your money and direct it according to your financial goals. An ideal budget ensures that you will always have money for the things that matter most. If saving is one such thing, then your budget should also reflect it as such.

You want to make saving one of the priorities in your budget, along with allocations for essential needs – food, housing, utilities, transportation, basic clothing, etc. You also want to include payments for debts, if you have any. Once all of these are taken care of, only then can you apportion money for nonessential expenses, such as entertainment, vacations, and otherwise.

Your budget should help you keep spending to a minimum. Look for expenses that you can reduce, or if possible, completely eliminate. Do you really need to pay $5 for coffee every morning? Why not pack your own lunch instead of eating out every time? Since you never watch TV anymore, isn’t it time you ditched your costly cable subscription?

If you find yourself struggling with habitual overspending, then consider using the cash envelope approach to budgeting. It is where you set aside cash for your expenses and put these in envelopes labeled according to categories, such as groceries, gas, dining out, etc. If you need to pay for an expense, like groceries, you only take the cash from the envelope designated for groceries. Once the cash is gone, well, it’s gone. That way, you are not tempted to overspend.




3. Set saving goals

Piggy bank on wads of dollar bills
Before you start saving, it is important that you know exactly what you are saving for, how much you need to save, and how long you need to get there || Photo by 401(K) 2012 on 401kcalculator (edited)

Saving is a lot easier and so much faster when you have a specific purpose for the money you are setting aside. Having a clear goal gives you a tangible target – something real – to aim for. It allows you to visibly measure any progress you are making; you can clearly see if you are anywhere near your goal. Plus, setting a timeline for your saving goal gives you additional motivation.

So before you start saving, it is important that you know exactly what you are saving for, how much you need to save, and how long you need to get there. Are you setting aside cash for a new smartphone? A new TV? A new car? Are you saving to make a down payment on a house? Are you working your way out of debt? Are you planning to get married? Or are you socking away money for retirement?

Before anything else, you want to start with an emergency savings fund. It will help secure yourself against unexpected expenses that can leave you financially worse off, such as illness, loss of income, or whatever. Ideally, your emergency fund should be worth enough to cover at least several months of your expenses.

From there, you can decide what other worthwhile goals to save for. Short-term goals include setting aside money for a new smartphone, a car, or vacations. Long-term goals include saving for a mortgage deposit, your child’s college education, or retirement.

You might not be able to save for everything you want, so always be mindful of what goals need to take priority. Keep in mind that while short-term goals are a lot easier and so much faster to reach, these are not necessarily more important. Do not neglect your long-term goals.

Saving for retirement, a long-term goal, takes full advantage of compound interest. It’s earning interest on your interest over time. The more time you allow your savings to grow, the more you accelerate your earnings. So saving for retirement as early as possible is always wise.




4. Make saving automatic

Man holding a tablet (in reference to automating saving via mobile apps as a way to save money)
There are plenty of mobile apps you can use for free to help you automate saving || Photo by Adeolu Eletu on Unsplash (edited)

Despite being convinced of its merits, a lot of people struggle with saving. They either find it difficult to start, or once started, to sustain the habit of setting aside money for future use.

This is because a lot of people save money only as an afterthought. They would rather spend their income first, then save only what is left over. But between the bills that need paying, and the items that need purchasing, there is usually little or nothing left to save.

It is difficult to make a conscious effort to save, but it becomes a lot easier and so much faster when it “just happens”. To ensure that you always have money for saving, and that you are continuously advancing towards your financial goals, you need to make saving automatic.

There are different ways to automate your savings. One is through direct deposit. You can request your employer to deduct a certain amount from your paycheck – $100, 10% of your income, or whatever – every pay period, have it directly deposited to your savings account, and then send the rest to your checking account like nothing happened. This method not only helps you save money unconsciously, it also cultivates thrift by forcing you to make do with a smaller budget.

Ditto for scheduled or automated transfers. You can set up your bank or credit union account to automatically transfer a fixed amount from your checking account to your savings account on a regular, periodic basis, like every pay day. Once set up, you can just sit back and watch your savings grow.

There are also plenty of apps that take the work out of saving. Digit tracks your spending and automatically transfers available money from your checking account to your savings account. Acorns rounds up your purchases to the nearest dollar and puts the change in your very own investment account. Chime works pretty much like Acorns, except that the change is transferred to your savings account instead of an investment one.

5. Avoid impulse buying

Grocery cart on a background of grocery items (in reference to planning your purchases as one way to save money)
Whenever shopping, knowing beforehand which sections, aisles, and shelves contain the items you need is not only one way to save money, but also valuable time || Photo by Alexas_Fotos on Pixabay (edited)

To save money, you need to develop and practice good spending habits. One such habit is to avoid impulse buying.

Plan ahead before shopping. Before heading out to the mall, grocery, or wherever, write down the things you need to buy and how much you’ll spend for each. Be sure to stick to your shopping list, no matter how tempting those newly released designer sneakers look, or how mouthwatering those freshly baked apple cinnamon muffins smell. If it’s not on your list, then it should not be in your cart, too.

If possible, plan your route through the store as well. Most stores are intentionally designed to make customers stay longer than they really need to. The longer customers stay, the more likely they are to overspend.

Knowing beforehand which shelves, aisles, and sections contain the things you need can save you valuable time and money. This way, you avoid wandering aimlessly and picking up overpriced and unnecessary items along the way.

Instead of paying with credit, consider using cash. With cash, it is a lot harder to overspend when you are very – and painfully – aware of how much you are actually parting with. Remember to carry only the amount that you need for paying.

Because it is easier and more convenient than shopping at physical stores, you are more likely to make impulse purchases when shopping online. To avoid overspending, make online shopping more difficult for you.

Never store your credit or debit card and billing information on retailers’ websites. When you force yourself to spend time to find your wallet, dig out your card, and input your credit or debit card number, shipping address, and other information every time you make a purchase, you might reconsider.

Make sure you give yourself enough time to think over your purchases. If you cannot find a good reason for buying an item, simply do not click or tap “Add to Cart” or “Add to Wishlist”. Wait for at least 24 hours before paying for the items you have on your cart. You might be surprised by how many of these items you are suddenly uninterested in buying on the following day.




6. Reduce recurring expenses

Numerous magazines on a magazine stand (in reference to discontinuing useless magazine subscriptions as a way to save money)
Another way to save money is to cut back on monthly recurring expenses that you do not need to be paying, such as subscription fees for magazines that you do not even read or need || Photo by Charisse Kenion on Unsplash (edited)

If you are looking for costs that you can cut back on, then look no further than your recurring expenses. These are the expenses that you pay on a regular basis. These include your monthly bills on utilities, phone, rent, and insurance premiums, as well as your monthly or yearly fees on magazine subscriptions, streaming services, and gym membership.

Recurring expenses can take a steady toll on your budget. Wherever possible, find ways to significantly reduce or even completely eliminate recurring expenses that you do not need to be paying.

You want to begin by lowering your utility bills. Switch to LED light bulbs, which consume 90% less energy than incandescent bulbs and can last for many years. Use dimmer switches so you only use as much light as you need. Turn off the lights when you leave the room.

Buy energy efficient appliances. Unplug all electrical devices when not in use.

Install a programmable thermostat, which, when properly set and maintained, can have significant energy and money savings. Make sure your air conditioner is properly maintained – change the air filters regularly, and keep the vents open and clean.

Wash your clothes on cold water setting. To save on energy and water, only run full loads of dishes and laundry, and take shorter showers.

If your phone bill is too expensive, you can always trim it by ditching costly data plans, insurance, and other unnecessary features. Or you can switch to another carrier that offers the same services but costs cheaper.

Check your monthly subscriptions. Why do you still pay for cable when you do not even watch TV anymore? And do you really need to be subscribed to multiple movie and music streaming services?

What about all the magazines that show up in your mail that you never even read? And keeping up to date is important, but if your wallet cannot keep up with your newspaper subscription fees, then look for cheaper alternatives. You can always read from free news websites and apps.

If you find that your gym membership is making bigger gains from your wallet than you do from working out, then consider working out at home. You can check out home workout routines and bodyweight exercises that utilize little to no equipment online for free.

One final thing…

Do not neglect saving. It is one of the first and most critical steps to achieving financial independence. Saving allows you a certain measure of financial security by providing you a safety net for emergencies that necessitate spending. That way, you do not have to resort to debt.





There are FOUR PIN-WORTHY GRAPHICS below. Feel free to PIN them on your BOARD for INSPIRATION! Simply hover over an image and the SAVE button will appear.

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Hi. I’m Jared Jeric dela Cruz, the creator and author of this travel blog. I am an ardent dreamer, an aspiring adventurer, and a passionate storyteller

PHMILLENNIA is a travel blog lovingly crafted and nurtured to bring you  travel information, insight, and inspiration.

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