Saving: Where to Cut and What to Keep

Good days can help you forget what the bad ones felt like, or in other words, the day after payday can be fantastic and then two weeks later when you’re eating packet noodle again - it’s not so great.

To make sure that you are prepared for unexpected medical emergencies, educational expenses, or household expenses, it is of utmost importance to plan ahead and have a savings account and some investments that will help get you through the tougher times. It is, however, a lot easier to understand the importance of savings compared to actually saving up. Here are a few tips:

1. Expense Cut

This may sound quite obvious, but one individual’s affordable expense is another’s luxury. You might have a couple of things that are actually a bit of luxury without noticing. Membership to certain clubs, online subscriptions, buying brand names when shopping. These expenses count as a luxury, and in difficult times they will not impact your standard of living too much.

2. Insurance

It could be health insurance, home insurance, or any other kind; they are instrumental in your race to save yourself from an unwanted financial position during an emergency. While it might be tempting to throw this on the expense cut pile, it is really not worth it. Unfortunately, if you were to stop paying these, and suddenly something happened, you are going to be in a much worse position, and it’s just not worth the risk. Add insurance to your ‘must’ list. 

3. Withdrawing from The Retirement Fund or Other Investments

If you’re somebody who doesn't spend a lot of time thinking about the future, then this risky option may actually work out for you. The best part about it is the fact that there is no extra work or loan taking involved, however, you will have to start building your liquid retirement fund from scratch. One step you can take to ensure that your position does not drop significantly is to go for a fund which you do not have to entirely draw into a current account so that it remains intact. It might be time to take a look at an automated trading platform - ideal for people who have a little to save and want to make their money work for them. 

4. Relying on Credit

The rise of the ‘cashless’ society has also seen the increase of people living in their credit lines rather on what the truly earn. However, you really should ensure that you have it under control and keep one line of credit with nothing on it. Meaning that when you need it, you can use it in an emergency. In the short term using a credit card, or a loan might be ideal, but it is essential you never borrow more than you can afford to pay back. 

A Quick Closing Note

While it might seem like saving is boring, it allows you to pay things off in one go, meaning you won’t need to dip into your credit line, you can put a healthy down payment on your house or just go out for a meal. Savings never have to be bigger than a few dollars a week, and by the end of the year it really adds up.