Skip to playerSkip to main contentSkip to footer
  • 2 days ago
In this Short, we'll walk through Step 2 from my latest YouTube video that can help you grow your savings without making drastic changes to your lifestyle.

I share the exact steps I took to double my savings, and how you can apply these same strategies to achieve your own financial goals. Whether you're saving for a big purchase, an emergency fund, or long-term wealth, these tips will help you get there faster.

#savingmoney #saving #savingtips #personalfinance #moneytips
Transcript
00:00The second step to increase your savings is to focus on reducing your biggest monthly expenses
00:05and to optimize your spending. No more than 50 to 60 percent of your income should be covering
00:11need-related costs. These are fixed costs like rent or mortgage, utility bills, your day-to-day
00:17food and transportation, as well as any other costs that make up your essential living expenses.
00:23Housing, transportation and food are the three biggest expenses for a typical household,
00:28and finding a way to save on these will make the most difference to reducing your fixed living costs.
00:33For example, could you renegotiate your rent? Maybe you could agree a longer tenancy term and by giving
00:39your landlord assurance that you'll be in the property for a longer period of time,
00:43it might enable you to agree a lower monthly rent cost. Another way to reduce costs could be to use
00:49a comparison website to switch to a lower cost provider for things like your utility bills,
00:54internet and insurance. It can be tricky to stop your expenses from ballooning, particularly in high
01:00cost of living locations, unless you consciously manage it and set a ceiling. So capping your fixed
01:06living expenses at 60 percent of your income helps to keep this in check. Optimizing your spending is
01:12also important to be able to save more. No more than 20 percent of your income should go on your wants.
01:18It's so easy to get caught up with a new trend or latest version like the newest iPhone and we
01:24instantly convince ourselves that we need it, even if our current phone works completely fine.
01:30When you're in this moment, it's a good idea to pause before buying and ask yourself,
01:35do you really need it? If you're really focused on saving, then you have to be tough on your
01:40discretionary spending. It's really common for your wants to merge into your need related costs
01:45or exceed that 20 percent threshold of your income. But ultimately, it's just going to derail your
01:52savings goal. If you decide that you do still need it, then think about how you can get it for
01:56cheaper. For example, using a comparison website, buying it secondhand, getting a cheaper alternative
02:02or waiting to buy it in a sale. The other key thing, if you want to save more, is to pay off any
02:08high interest debt that you have. For example, car loans, personal loans, credit card debt or student
02:13loans. You really want to do this before you start saving, as it usually costs more to borrow money
02:19versus the returns that you get on saving. If you have $2,000 in a savings account with a 4% annual
02:26interest, you'll earn $80 after one year. But if you have credit card debt of $2,000 with a 22%
02:33interest, it will cost you $440 over that same year. High interest debt is always going to grow faster
02:41than your savings. So if you have any, pay it off first. And once it's cleared, then you can build
02:46your savings.

Recommended