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Saving Money
Last updated 7:59 am, Wednesday 16th June 2010

Saving Money is Green?

Crazy as it many seem, but saving money is actually being rather green in of itself. The need to save money often makes people think about what they really need and how effectively they are spending their money; it is quite possible at the same time to be more green.

Step#1 - take control

Simply put you need to know how money you are earning on a monthly basis. This needs to be the core 'reliable' money, like salary; and not money earned from ad hoc work or other sources. This reliable money is your base line income, its what you have to spend or save no matter what. Subtract from this the costs incurred in actually being employed, like travel expenses; that will give you true measure of what you actually earn.

Next, work out the total monthly cost of keeping a roof over your head - i.e. rent, mortgage, utilities (gas, electricity, water) and any council rates you have. If you only get billed quarterly, divide by 3 to get the roughly monthly figure. Add these all up and you have 'housing cost' per month - i.e. how much it costs to have accommodation a month.

Now if you subtract the monthly accommodation cost from your monthly reliable income you will have a result your net 'living funds' per month. If this is negative your accommodation is too expensive for your income and you need to either downsize or increase your income to cover the cost.

Step#2 - Living funds

Living funds is the money you have available to spend on actually living as such. Obviously the most important expense that comes out of this is food! Again work out your monthly food costs by adding up all your food receipts over the past month - do not be surprised if this is a significant amount!

Now take this monthly food cost and subtract it from your living funds. If the total is negative you are literally spending too much on food. If its is positive - well done, you have covered the basic key expenses of having accommodation and food.

Step#3 - Cost analysis

Anything look like too big an expense? Food costing too much? There are a few simple things that can be done to reduce ongoing costs...
  • Check to make sure your accommodation is energy efficient to run - simply put if the property has lots of draft and ill fitting doors, you will be spending a fortune in heat either lost in Winter or gained in Summer. A few cheap draft excluder's could save you quite a bit of money. For more tips see this article.
  • Typically the more 'processed' and 'convenient' the food the more expensive it is for the energy it gives you. If you are prepared to do a bit of actually simple cooking using ingredients you can reduce dramatically your food costs. You can also do your cooking in batches, i.e. why cook to make one meal sitting when you can actually cook for two meal sittings and just chill then reheat for the second? Also if you get into cooking and have some garden space (or even a window) you can grow your own herbs cheaply and save money.
  • Check with your mobile and telephone operator and remove all the 'value added services'; i.e. you want to get on a basic 'pay as you go' type package and not pay for stuff you do not use all the time.
Basically, what you are looking to do at this stage is see if some simple changes in spending behavior can save money. Its often worth going back over the past 3 months work of bank statements and just seeing where the money is going - add up the cost of the car, the cost of phones, the costs of the cable, etc. Then ask yourself what do you really need at the end of the day?

For instance:
  • If all you really use a car for is commuting; could you use public transport instead? You don't need to sell the car as such, just make more extensive use of public transport as that will reduce petrol, depreciation and insurance costs.
  • Could you cut down on the number of trips you make in the car to shops? i.e. shop less and buy in bulk when you do shop. Also when do you go food shopping do write down a list of what you want and stick to it, plus don't go food shopping when you are hungry...

Step#4 - big ticket items..

After doing the above and you are still finding it hard to keep your head above water consider the following:
  • If you have a mortgage consider restructuring it - simply put the simpler the way the mortgage operates the easier it is for you to control it and know exactly where you stand. The simplest mortgage is a 'lump sum repayment' - basically you pay off the capital sum and interest per month. The longer the term of the mortgage, the less you pay against the capital sum per month, but the interest element remains the same. So see if you can have a simpler mortgage over a longer term, and check if you can pay additional payments against the lump sum if you finances improve.
  • Got an empty bedroom doing nothing - consider taking a lodger.. Serious, that room could go a long way to paying your bills if done right. Always go through an agent and check all references (for the agent and lodger) yourself.
  • Sell your junk - everybody has stuff they do not use, probably filling up that bedroom you have spare; so just set up a car boot sale and clear out. Do not waste the money so earned - put it right against your ongoing costs.
  • Be on the lookout for a better paying job - if you are good at what you do and it requires some skill to do, there will be someone out there willing to pay you more.. Be cheeky, phone up companies who you would like to work for and ask for an interview..

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