7 Smart Ways to Save Money Effectively

With the right mindset, a smart financial plan, and a bulletproof personal finance system, to save money effectively is so much easier than you think.

As a millennial in my late 20s, part of my everyday decision-making as an adult is to try to save money effectively.

A few years back, I wasn’t really good with my finances. I could care less about saving money, emergency fund, insurance, and investments alike.

My paychecks were spent mostly on shopping, dining, and traveling. But in 2017, my freelance business stalled, my profits declined, and my father needed surgery following a road accident, so I had to take out a bank loan to consolidate our debts.

Gosh, was I so broke!

Saving money is hard.

Trust me, I have a love-hate relationship with my finances over the years. However, my determination to get back on my feet helped me to reassess my financial situation objectively so I could turn my life around.

All that’s required of me was the right shift of mindset, a smart financial plan, and a bulletproof personal finance system. If you follow this system, I can guarantee it works.

TIP #1: Automate your finances

As much as possible, I want to think less and make fewer decisions about managing my money. And automating my finances does exactly that. 

Automating your finances is allowing your money to go where it needs to be – without you consciously doing it every pay day. 

Here’s how it works: Every time my salary hits my bank account, my bank automatically transfers money to my emergency fund, pays my credit card and utility bills, contributes money to my investment portfolio, and leaves me just enough money to spend on whatever I want (guilt-free!).

TIP #2: Pay your bills in full and on time

If you’re serious about saving money effectively, I cannot stress this enough: pay your bills in full and on time. 

If you don’t pay your bills on time, late fees add up quickly. 

If your internet or utility bill gets cut off, there are re-connection fees. 

If you delay your credit card payments, expect exorbitant interest charges. 

Always remember that the more you leave your bills unpaid, fees against fees is a recipe for financial disaster. 

So, spare yourself from misery and pay your bills on time. Or, go back to tip #1 and automate your bills payment. Most banks offer convenient bill pay service where you can set up recurring payments, pay bills, and transfer money without the hassle of you doing it every time. 

TIP #3: Pay your debts fast.

When it comes to debt, you have to be brutally honest to yourself. 

How much do you owe? Are you paying promptly? Are you keeping track of late fees and interest charges? Or, are you intentionally delaying your payments for self-indulgent activities?

If you let the years slip by and make no efforts to repay, you will not only lose your self-respect but the respect of others too.

And a piling debt is never going to help you to save money effectively.

Commit to using 20-30% of your salary to pay off your debts. And experience the thrill of crossing out your debts one by one until you’re proud to call yourself completely DEBT-FREE!

TIP #4: Buy a life and health insurance policy.

Not buying a life and health insurance in the earliest part of my professional career was one of my biggest regrets. And so was my father’s. 

When he needed a surgery following a road accident, not only did we drain our family’s finances to the last centavo but we incurred boatload of debts too.

Sickness, disability, or death can happen to any of us. It’s only a matter of when. So, it’s best to be prepared with a life and health insurance that can shoulder the cost of an unexpected illness or disability for you.

Related: The Complete Guide to Life Insurance in the Philippines

TIP #5: Mindfully decide what you want to spend on.

I practice mindful spending in the last three years. The concept is simple: I decide what’s truly important to spend money on, and what’s not, rather than blindly splurging on everything.

For example, I don’t like drinking coffee so you will rarely see me in coffee shops like Starbucks.  

But I love to hang out with my friends and family so I enjoy eating out with them every other Friday night. That’s because one of my values is quality family time. And that’s non-negotiable.

My friend likes to travel twice a month but doesn’t like to eat out. Another friend likes to shop for new shoes but doesn’t mind to skip travelling at all. But they both know it is what they truly enjoy spending money on.

Now, this is not about depriving yourself of all the good things in life because that’s not what I advocate. We all should enjoy life. The point is to truly know yourself and values that you know what’s worth spending your money on and leaving what’s not to pass.

TIP #6: Know when to say NO to friends and family.

How many times do you find yourself rushing to your friend’s or family’s aid?

If they borrow money from you, do you say yes and lend them the cash right away? Or, do you take time to say no because you’re not in a good position to help?

While I understand that it’s hard to say no to friends and family, your help must be given wisely.

After a falling out with a friend a few years back due to unpaid debt, I make it a policy to never loan money to friends except for very small amounts.

If in a rare instance that I really have to, I assure myself of my friend’s ability to repay. Otherwise, I politely tell them directly that I’m not in a good position to help.

After all, if they’re your friend, they won’t take it against you and you both move on.

TIP #7: Enjoy life and do the things you love.

The purpose of knowing how to save money effectively is for you to enjoy life now while you prepare for your life tomorrow. Don’t overstrain or try to save too much. If 10-20% of your income is as much as you can comfortably keep, be happy to keep this portion and adjust as you get on with the habit of saving.

As you read the end of this post, commit to yourself that you’re going to start with the habit of saving. Comment down below your commitment to saving and what you want to accomplish in life. I cheer for you!



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Dee Luchavez

Dee Luchavez

I'm not an expert in finance; I'm just someone who made poor money decisions in her 20s and learned my lesson the hard way. Since then, I've learned how to earn, save, and invest smartly. And I've improved my financial health more than I ever thought possible. So through this site, I hope to inspire you to do the same. No scams. No get-rich-quick gimmicks. Just smart advice that works.

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