They say money talks, but we think, on the contrary, they know how to shut up! 🙂 We pay by card everything, 2 lei there, 20 lei a book, 3 lei water, 10 lei a red melon, 12 lei a coffee, a lunch, an online order and at the end of the day we find that we do not even know what we gave the money, concretely we are left with only the book. Saving, says Mihai Constantinescu, ATLAS Specialist in Financial Education, is not about giving up the things that bring you joy, but just monitoring spending and paying attention to waste. Let’s see how we do this!
Peter Drucker, a famous management consultant, educator and author (his writings help to lay the philosophical and practical foundations of modern management) said that:
If you can’t measure it, you can’t improve it.
The same goes for our money and how we spend it, how we save and how we invest. If we fail to monitor what we spend money on, it will be almost impossible to improve this chapter of our financial lives.
Therefore, before we think about ways to save money, we should first see where this money is going.
Expense tracking methods
- the classic way of writing down in an agenda, every day, all the spending over the day
- an Excel file to track what money you spend
- the simplest option, which I also use, is to choose an expense tracker mobile app in which to enter at the end of each day all the expenses of that day.
The great advantage of an app is that you can have real-time access to your spending statement each month, divided into categories, see how much you’ve spent in each category, and how much money you have left. I use the Money Manager Expense & Budget app to monitor expenses, which can be found in both Google Play and the Apple Store.
I recommend that you start tracking how much money you spend each day and what their destination is, as soon as possible. Try to do this with your partner for at least three months. You will see that there are many expenses that do not bring you any pleasure, but which, together, can be an essential component of your costs.
You can save money by eliminating waste
I believe that saving is less about giving up the things that please you and more about eliminating waste.
Track your expenses, and then you can see exactly where you can limit waste and find ways to do so.
Below you can find some ideas, already put into practice by me and working, ideas that will help you save money monthly:
- Use the rounding card payment option that some banks or Fintechs already offer (if you have the rounding option turned on and you make a payment of $12, rounding to multiples of $5 or $10 will automatically send the difference to your savings account. In our case, if we have chosen the rounding to a multiple of 5 RON, for the payment of 12 RON, 3 RON will automatically go to the savings account, the current account being debited with the amount of 15 RON). I know that this option is currently available at ING Bank and on Revolut.
- Open a current account with another bank. Ideally, it would be one that does not charge account opening and administration fees and activates a recurring, automatic monthly payment from the salary collection account to the newly opened account of at least 10% of salary on the payday. Try not to attach any cards or online apps to that account, so you have the most challenging access to taking out the money and also, in order to get it out, you need to go to that bank.
- For purchases greater than RON 500 use online price comparators.
- If you have mortgages, at the beginning of each year, check out the current interest with which banks offer loans. If the current interest rate is at least 0.5% lower than the interest you already have, you should consider refinancing the loan at that bank. As a concrete example, if you have a 30-year mortgage, an interest rate made up of ROBOR 3 months + 3%, and today there is a bank that offers a mortgage with ROBOR interest three months + 2.5%, then you should think about refinancing. A 0.5% interest rate decrease can earn you about $30,000, which is the lower amount you’ll pay for interest by the end of the loan. In general, refinancing costs are approximately the amount of rate.
- Make yourself a private pension Pillar III – so, every month, automatically, the salary you will receive will be reduced by the amount you decide to place in the private pension. There is a tax advantage up to €400 per year, and the minimum monthly amount is 50 RON.
- Use only economical light bulbs.
- Turn off the water when you’re in the shower, and you don’t need water for rinsing.
- Lower the temperature in the house, during the winter, by 1 or 2 degrees. This operation can save you 10-15% on your gas bill.
- Renegotiate all utility contracts – telephone, cable, energy, gas, water, sanitation, everything you pay monthly. You’ll be surprised to see the new offers.
- Close all subscriptions you have for activities you no longer practice, your gym subscription, your pool membership, etc.
Another area from which you can save massively by eliminating waste is the food area. Try to plan your meals more carefully each week and try to buy less food, more often. On average, in Romania, about 30% of the food purchased is thrown. At an average budget of 30% of a family’s income allocated for food, it follows that 10% of the total income can be saved only from the elimination of food waste.
Saving money is an ongoing process that can be learned using the right techniques. I hope this article has given you some ideas on how to get started. Monitor spending and eliminate waste! Let’s set up a financial coaching session and talk about what you can do with the saved money I’m waiting for you!