If you read about personal finance articles online, you may have noticed that while they do give well-meaning advice on saving small and sacrificing every time to save money, the money saved in such ways is way too small to notice. The kind of advice they give is “stop going out for coffee” or “don’t bring takeout food anymore”. Yes, it helps a bit, but it does not help you when you want to save up hundreds and thousands of bucks.
Rather than sacrificing the happiness of each moment of your life, why not try the new age of personal finance advice: save from the three big categories of your life. If you want to save big, you should optimize your big expenses instead of cutting back on every small expense.
What are these three big categories?
Anything you can possibly do in these categories can lead to big savings. And when we say big savings we do not mean a few rupees here and there, but thousands of bucks! Think about it, a few thousands more saved per month adds up to quite a big stack of funds at the end of the year.
According to studies by the government, the three categories given above cover more than 60% of household expenses. This means that if you want to save a big amount of money in a relatively short amount of time, focus on saving in these categories.
In this article, we are going to show you how exactly to do that!
So, without further ado, let's get right down to it.
Optimize and save from your housing expenses: We are starting with housing because it is the largest expenses category or group, and you can save the most from this category alone. Studies show that the housing category takes about 33% of a household’s expenses. That’s quite a lot, right? And the biggest expenses in this category are mortgage and rent payments, as well as telephone and utility bills.
How can you save money? You can save a lot of money just by refinancing your mortgage. Just by doing this you’ll end up with a considerable pile of money per month. Additionally, you can save significantly over time on total interest.
If your property is a rented one, think of creative ways of keeping down your utility bills. To lower your mobile service bills, don’t be scared to negotiate with your service provider to lower your bills.
Optimizing your transportation expenses: This is the second-largest expenses category for a household. In this category, the three llain transport costs are new very buying, car insurance and gasoline. Everyone needs transportation, but you don’t have to spend a fortune behind it. Control it. If you live in an urban area, think about using public transportation or about getting a bike.
If you do need a car from time to time, use Ola or Uber for quick rides.
But what if you need to own a car? Well, in this case, the best thing to do is to optimize your car insurance. Shop around for this at least once a year and compare your interest rate for the car insurance. Additionally, if possible, ensure that you do have the optimal car insurance coverage to increase your deductible. This alone can save you many thousands a year.
Optimizing your food bills: Did you know that food bills constitute your third-largest expense? The two major categories here are meals away from home and meals at home. These account for 12.5% of your annual expenses. Here’s what to do: increase the times you eat at home if you eat out a lot. Try using restaurant gift cards at discount from various websites.
You can spend thousands a month on eating out, just for lunch. If your employer gives out free lunch, take advantage of that. You can bring in home-cooked food at times. It’ll be interesting to know that over time, eating at home and cooking your own food is healthier and less costly than eating out.
For spending on food, focus on quality over quantity. Dump the bad habits and instead go for dinner for two each month, or buy top ingredients for healthy home meals.
If you compare your yearly expenses to your daily coffee habits, fast food buying and other easily avoidable expenses, you’ll see why it pays to think big when saving big. To save a lot, focus from where you are losing out a lot of money. Then optimize those areas. Finally, sit back and enjoy your bank account getting larger.