Effective Household Money-saving Strategies

Practical Tips for Families to Increase Savings

Aug 12, 2009 Wei Yin Wong

Families can increase savings by saving first before spending, using the Minus Ten Technique, using the Plus Ten Technique and through smart cash investments.

Without effective household money-saving strategies, it’s very easy for families to overspend. Even a nicely created monthly household budget will be useless if no effort is made to ensure that a certain amount of money is saved regularly.

No money left by the end of the week or month to save? Check out the following practical tips that families can use to increase their savings.

Save First before Spending

Many households take care of essential bills such as utility bills, rent, mortgage, transport and grocery expenses first when their wages are paid, only to find themselves with not much left. No wonder it’s hard for them to save money.

Tim Blue, financial expert and author of The Seven Ages of Money [Choice Books, 2003], says that’s because these families are working backwards. Instead, he suggests that each family puts itself at the top of the list of debtors. In other words, families should pay themselves first before paying the other bills.

“Expenditure always rises to meet income. If you’ve got it, you will spend it. Set aside the amount you want to save first, say $25 a week. When you begin by paying yourself, you will start automatically adjusting your other expenses,” he elaborates.

Minus Ten Saving Technique

Those who use the Minus Ten Saving Technique essentially have 10% of their salary deducted and put into a separate account before their pay reaches them. Lacking the self-discipline to ensure this? Blue’s advice is to arrange for the bank or the employer to put 10% of the salary every month or every week into a savings account or managed fund.

Plus Ten Saving Technique

Those who use the Plus Ten Saving Technique set aside another 10% of their money each time they spend. For example, if the rent is $1000 a month, put aside $100 as savings. Spent $5 on snacks? Put aside 50 cents. Do this regardless of how big or small the spending is By doing so, there will be savings for each spending.

Consciously practice this. Make no exceptions. Once this becomes a habit, all items will appear to cost a bit more. A $200 designer dress will instantly become $220. And this may make people think twice before paying for it. So there are two benefits – it helps families to save and it discourages families from spending unnecessarily.

Smart Cash Investments

After the family has picked up some money-saving skills, it’s time to invest the cash smartly so that the money grows into a sizeable amount after a period of time. Smart cash investments include high interest online savings accounts, fixed-term deposits and cash management trusts.

Those with multiple bank accounts should also consider consolidating savings within a single bank to reduce fees and other charges.

Families with difficulty saving money can use several approaches to start saving and help the money grow over time. Effective household money-saving strategies include saving first before spending, the Minus Ten and Plus Ten Saving Techniques as well as smart cash investments.

Found this article useful? Read also Principles of Saving for a Home, Understanding Cash Investments and Saving for a Home Deposit.

References:

Understanding Money Website

Westpac Bank. “Helping You Bank with Confidence” in Smart Money Moves booklet. October 2008.

The copyright of the article Effective Household Money-saving Strategies in Family Finances is owned by Wei Yin Wong. Permission to republish Effective Household Money-saving Strategies in print or online must be granted by the author in writing.

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