How to curb spending and double savings
I’m very lucky in that I have a well paying job and have been careful over the last 10 years not to get into debt. I don’t have credit cards, no car loan, I don’t buy items (things like washing machines etc) on finance and no bank in Malta would give a foreigner an overdraft so I’ve lived within my means, built up some savings (although only around 1/3 of my yearly salary), which I add to every month.
You are wasting more money than you think
But, despite having minimal mandatory expenses, and saving €2000 - €2500 most months, I’m still wasting a huge amount of money each month, often with no idea what I’ve spent it on. Since I started paying more attention to my finances and finding ways to save more I realised that I could easily almost double my savings each month without noticing the difference.
And most of you can too.
5 easy steps to spending less and saving more
I put together a dynamic excel budget spreadsheet listing my estimated ‘budget’ per month (which was what I thought I was spending) and then my ‘actuals’ for each category per month. I was horrified by how much more I was spending than I realised and on such unnecessary stuff. Like doing a big food shop but still having 3-4 trips to Convenience. Buying new skincare when I have a shelf full of expensive unfinished items. Adding more bags and clothes to my wardrobe, often with no idea what occasion I would actually wear them to. Phone cases, earrings, pins and badges, stickers, mugs, hair accessories - most of which seem like tiny purchases but when added together total multiple 100s of Euros.
Switch your spending to Revolut
Switch all your spending to Revolut. It updates instantly, categorises your purchases and let’s you set budgets. Even when it just comes to keeping track of what you have spent, it’s so much better than traditional banks.
Keep track of every purchase
Create a spreadsheet, or use mine. In the “Budget” tab, fill in what you want to spend each month. Then once a week, fill in the “Actuals” and see the “Overview” tab tally up what you spent vs what you should be spending. It’ll turn red when you over spend and green when you save more than expected.
It’s rewarding to see the green boxes (and believe me, they’ll all be red in the beginning, it takes time to learn new habits) but it’s also a very enlightening exercise to actually go through your spending, transaction by transaction. You will start off horrified but don’t give up- just do better next month.
Write monthly reports
At the end of each month, write up a few bullet points summarising the month. For June, for example, I have realised:
Considering I barely wear makeup, I spend a lot more on beauty than I realised
I need a category specifically for large electronic purchases- €279 on airpods without even thinking.
I spend a LOT on the cats- I purposefully buy quite expensive food because it is much better quality (I’ve done a lot of research) but I also spend a lot on toys and gadgets that they don’t give two shits about.
I spend 100s on clothes each month, which I justify by donating a lot to charity but I always wear the same 5 things!
Just by being more considerate of my skincare spending, holding off from clothes shopping and thinking twice before I splurge on some new electronics I could easily save an additional €1000 - €1500 per month. That would bring my average up to €3000 - €3500 in savings per month, which is insane!
Implement those changes and don’t give up
Once you start monitoring yourself and analysing the behaviour, it’ll be second nature to hold yourself accountable. But it’s important to not give up if you see yourself failing. If you have two bad months in a row, it can make you feel bad about yourself but if you just give up, you will never improve your habits.
Remember why you are doing this
If having a goal, or an aim is a way to help motivate you- do it. Save up 20% deposit if you only need 10% for a home loan. Save enough to take that big once-in-a-lifetime-trip. Or, with the current state of the world in mind, save enough that, should you lose your job tomorrow, you’ll be able to survive as long as possible. 3 months salary is the absolute minimum you should aim to have in your bank account, but ideally anything up to 3 years to keep you secure. Especially if you have dependants like a family, or even pets. If your cat becomes sick, you don’t want to be in a position to have to choose between paying rent, or getting your cat the operation it needs to survive.
