We all want to save money but what are we doing with the money once we have saved it? There are many people who believe they have saved money by spending less. For example, you go shopping at the sales and buy something for $20.00 less than what it was a week ago; have you actually saved that $20.00? Probably not, but you feel pretty good and went on to buy some other things because you believed you saved $20.00.

Saving money is a skill beyond finding a bargain. To make a real saving we must put that saving to good use.

If you regularly go out and make savings on your purchases but don’t bank those savings, you won’t financially get ahead.

What is a real ‘monetary’ saving?

To answer this question, let us consider how a business would record a monetary saving. A business would have budgeted for expenses across a range of items and services. Coming under budget (by spending less that what you planned) would be a saving. This saving would contribute towards the profit of the business. The profit will be distributed to the investors in the business.

Using the business example, you should have a personal budget across a range of items and services. And any savings would be be put towards your investment goals such as:

  • Paying down your mortgage
  • Boosting your pension plan
  • Investing in knowledge through a study
  • Paying off credit card debt
  • Putting money aside for a rainy day
  • Time out – holidays and catching up with friends and family.

The problem with budgeting is that most people are no good at it!

Very few people have the discipline to create a budget and then stick to it day in and day out. Because we don’t budget we rarely get the most out of our savings.

Just because we can’t budget shouldn’t stop us from putting savings to good use. Below are some simple and effective tips that will help you to get ahead without having a budget.

Quick tips for turning savings into investments

Save first – Spend later

One of my all time favourite tips. Before you see your wages, make sure you have directed a part of your wages into long term savings accounts. This way you force yourself to only spend what you have left. If you have any funds left over between wages, put that money into one of those savings accounts.

Offset Mortgage Account

If you have a mortgage make use of an offset account. This account means you only pay interest to the bank on the difference between your savings and your mortgage. For example, if you had a mortgage of $100,000 and savings of $10,000, your interest will be calculated on $90,000. The interest is usually calculated daily, so any savings will make a difference.

Use your savings to pay off your credit cards

Credit cards tend to have very high interest rates and charges. Do whatever you can to make sure the credit card is paid off in full – each and every month.

Stash your savings

One of the easiest ways of saving money is to come home and empty your pockets of loose change into a big container. Do this everyday for 12 months and you’ll have enough money for a great Christmas!

Make one off contributions to your pension plan

With your savings, make a contribution to your pension (superannuation) plan. It is becoming quite easy to do this online. This way you will get the benefit of compound interest and it will make a massive difference to your retirement plan. To see how this works in real life see our popular post – Five Ways To Save Money – To Be A Millionaire

Buy a book – Educational

Investing your savings into your education is one of the best investments you could ever make. Learning doesn’t stop after school and college. We all have to keep evolving and to keep in touch with what is new, otherwise we become less valuable as the world moves on without us.

The next time you find yourself a saving on something you need, buy it and immediately and invest that saving. It’s the only way to get ahead.

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