At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.
In today’s blog post, we share part two on some money-saving hacks to remain debt free.
Create a budget
Now, this is just really basic stuff and I’m talking about it all the way through here. You have to have an understanding of how much money comes in on payday and what your bills are going out. Without the visibility of how money is moving around your household, you are like a ship at sea without a rudder just floating around lurching from one crisis to the next, and if you’re one of those people that’s, oh, it’s not fair, this always happens to me! It’s because you’re unorganised. It’s because you’ve got no budget and no idea what’s going on with your finances. I’m sounding a little bit harsh on this one because it’s absolutely crucial to understand where money moves around in your house.
Live a cash-only lifestyle
On payday, because now you’re doing a budget and all your bills are automated, everything’s (Bills) going out, you can tell how much you have for discretionary spending.
You can tell how much you can carry around until the next payday. That is your fun money. It might be money that you use to buy lunch out or all sorts of things.
Now, if you go on payday to the ATM, remember all your bills are automated and you withdraw a fixed amount, and you put the cash (twenties or fifties) into your wallet and that’s it! You will learn to live within that budget. That’s how much money you get for fun. And if it runs out, you have to stop your fun.
It’s that simple.
Invest in passive income streams
Now, this is a bit further down the track. If you are someone that’s beginning on this journey, we want you to create a budget. We want you to automate your bills. We want you to carry cash only. All these things will help you live within your means, and hopefully, you have extra money, you can save because you’re watching it.
And then if you purchase things like shares, which do have a risk element involved, but if you purchase things like shares that pay a dividend to you a couple of times a year, that’s passive income! And the more you save, the more you can invest in shares, the more passive income your shares will pay you in dividends.
Spend less hacks
If you have little hacks like I’m only gonna buy a coffee only on Fridays and Mondays, Monday because it’s the start of the week and I wanna feel good and Friday cause I’m celebrating the end of the week. They could be your cafe coffee days. You could also put a couple of days in your week where you don’t even take your wallet to Work.
How can I spend money if you’ve got no wallet? All sorts of things like that. So cut your expenses, and do things like making lunch. Don’t go too hard though. Cutting expenses is like a diet. If you go too hard, it’ll just fall over too quickly. So just ease into it. Don’t be too hard on yourself and make sure you give yourself fun, but cut back on expenses, which means you have more money left over to create that passive income stream.
Have a backup fund
Have a backup fund, or we like to call it an emergency fund.
If you’re at the start of your journey save a thousand dollars. And then after you’ve got everything in order, maybe paid your debts down, and I’ll talk about that in a minute. Build up three to six months’ worth of your expenses. Now you can tell what your expenses are because you’ve done a budget, you know what your rent and food and everything cost.
Now that’s got a number to it. Let’s say it’s a thousand dollars a. Save $12,000, and that means that you can meet your expenses. Should your income stop, it means that you can meet any emergency costs should they occur. Have a backup fund.
Get rid of debt
I want you to stack up all of the debts.
It’s called the snowball technique.
And then when you’ve done your budget, you can see what’s left over. That is what you’re gonna apply to your smallest debt. , everything else is gonna be on a minimum payment. Once you’ve paid off that smaller debt, you take the money that you were paying to that and everything you can spare and you pay it on the next debt, and then you do the same on the next debt and you do the same on the next debt, and that’s called the snowball technique and it works.
And some people might say, oh no, that’s wrong Jeremy. You should pay the one with the highest interest rate first. If that was your method of thinking, why do you have debt in the first place? The reason we do the snowball technique is that we use the motivation and the momentum of getting ahead, which is more powerful than just finding the one with the highest interest rate in doing that one and going nowhere.
Important things to remember
The conclusions are, to do a budget, know where your money is, and get rid of your debt using the snowball technique. Carry cash, and build passive income. Have an emergency fund. Happiness will follow. A big part of mental health problems these days is people worrying about how they’re gonna make ends meet.
This is a plan for you to do it.
That’s a wrap
So what do you think? What money-saving tips have you tried?
If you need any financial help or advice please get in touch with us at Super-Advice.