One of the most common good intentions in the new year is to save money, in addition to signing a gym contract or studying diligently for your studies. But how do you save money effectively without giving up too much? We have a few tips.
First, we divide the expenses into two types: the fixed costs and the variable costs. There are different approaches to reducing these two types of spending.
Reduce Fixed Costs
Fixed costs are the costs that are usually incurred month after month or year after year and are fixed, so to speak. This is because they are contractually agreed, for example, and are regularly automatically collected or transferred. These include rent payments, electricity costs, the mobile phone contract, subscriptions, memberships and more.
List All Fixed Costs
Sometimes it’s the small or infrequent fixed costs that are easy to lose sight of. Some apps can automatically scan your bank statements for recurring expenses and then list all your contracts that you have.
You may find one or the other position that you have wanted to quit for a long time.
Terminate Unnecessary Contracts
After you have an overview of which contracts exist and how much of it is debited and how often, you should terminate unnecessary contracts directly. Especially with small amounts, people like to put it off.
If you don’t feel like writing a cancellation email, there are providers who will do it for you.
Also Terminate Required Contracts
The classic: You never go to the gym and the contract is automatically renewed for another year. It’s also easy to miss the notice period.
That’s why it’s helpful to cancel a mobile phone contract, gym contract or various subscriptions immediately after signing the contract. In this case, the contract will continue to run until the contract term has expired. After that it ends automatically. Before the end of the contract period, you usually have the option of canceling the cancellation and continuing the contract if you still need it.
Especially with mobile phone providers, you can be sure that they will contact you before the contract expires. You can use this to find out about new conditions for the continued existence of the contract.
Instead of terminating a contract as a precaution, you can of course also set a notification in the calendar or use an app that will remind you in good time before the end of the notice period. Our recommendation is both: terminate the contract as a precaution and set a notification so that you remember to take care of the terminated contract in good time.
Compare Contracts
If you have already terminated the contract as a precaution, but would like to continue it after the end of the term, this puts you in the situation of dealing with this contract: Should it be continued or is there a cheaper alternative in the meantime?
Especially with mobile phone contracts or electricity contracts, it can be worth looking for cheaper alternatives. Because after a period of one or two years, a lot has changed on the market again. Perhaps new competitors have emerged or electricity prices have changed overall.
It can also be worth comparing insurance companies regularly. On the one hand, your life situation changes from time to time and insurance may no longer cover your actual needs. On the other hand, the market can of course also change: The competition is particularly fierce when it comes to car insurance, so that an annual change can definitely be worthwhile.
Reduce Variable Costs
Controlling variable costs is a bit more difficult than fixed costs. Many small expenses for a visit to a restaurant or a delicious snack can quickly add up to a large amount. That’s why it makes sense to set budgets for various expenses that you stick to. You can then try not to spend more than a certain amount per month on shopping or car sharing, for example.
How to Budget for Expenses
Our Household Book
Once a week, take the time to write down your expenses and see how much you spent on what. Our budget book is a helpful Excel tool for this .
Envelopes
Anyone who loves cash can put the money in different envelopes at the beginning of the month, each containing the amount that can be spent for a specific purpose.
It may sound a bit analogous, but many people have a better sense of their spending when paying in cash and holding the money in hand. It also saves you the hassle of writing down expenses.
Automatically With an App
In addition to the manual method, there are also numerous apps that you can use to track your finances. You can even link some of them directly to your account so that expenses are automatically allocated to a budget.
Saving Hacks to Save Even More Money
Rent More and Buy Less
Do you know that? You want to shoot a holiday video with a drone while on vacation, but you don’t have a drone? Want to throw a party in the garden but lack tables, chairs and a sound system? You want to do a survival weekend and don’t have any equipment?
With many of these products, people tend to buy them even though they are rarely used. It can therefore be financially worthwhile to rent such a product instead of buying it.
However, you should calculate this well, because this savings hack can quickly become a money guzzler. Especially if you take out subscriptions and then fall into a subscription trap.
Avoid Consumption-promoting Impulses
Numerous newsletters, Instagram pages and YouTube channels constantly show you some great new things that you absolutely want to have. The fact that you get weak from time to time and order a product that you don’t really want is unfortunately completely human and does happen from time to time.
You can therefore save money by systematically switching off, unsubscribing and no longer subscribing to all consumption-promoting media such as Instagram channels, newsletters and much more.
Forego 0% Financing
It is very tempting to buy a product with 0% financing. This means that instead of paying for the product directly, you take out a loan from the seller, which you then pay off over 12 or 24 months. With 0% financing, there is actually no interest.
But the whole thing has a catch. This type of financing has a consumption-promoting effect. The hurdle is much lower to buy a product that you might not have afforded with a one-off payment.
Therefore, only buy things that you can afford with a one-off payment. If in doubt, you just have to save a few months for the product and then you can afford it later.
Set Purchase Deadlines
If a great product smiles at you, don’t buy it until a month later. In this way, you avoid making an impulse purchase out of one mood that you might not have made in a different mood.
After a month, the temptation has either gone and you’ve managed to avoid a pointless impulse purchase. Or you would still like to have the product: Then you should be treated to it.
Write a Shopping List
Even in the supermarket, tempting products smile at you from time to time. The previous tip of simply postponing the purchase for a month isn’t very practical here. But you can avoid impulse purchases here by writing a shopping list before you go shopping. Especially when you go shopping hungry, the shopping list saves you the wallet.
Find Power Guzzlers in the Home
Old household appliances in particular can use up a lot of electricity unnecessarily. You can identify them with an ammeter that you connect between the socket and the plug. It might be worth investing in a new device that will save you electricity in the long run.
By the way: Regularly de-icing the chest freezer saves electricity or prevents it from becoming a power guzzler. This is the only way it can cool efficiently. More efficient LED lamps instead of the old light bulbs also save electricity.
Car Sharing and Rental Cars Instead of Your Own Car
We Germans love our cars and I don’t want to encourage people to do without them. Especially if you live in a big city and don’t use the car much anyway, it can be financially worthwhile if you simply don’t own a car and use car sharing offers or rent a car for the weekend from time to time.
Incidentally, this also has the advantage that you don’t always have to worry about repairs on the car. You always have a new and (hopefully) clean car.
It is of course even cheaper to use public transport and to cycle as much as possible.
Share Streaming Subscriptions
Subscriptions for Netflix, Spotify or other services are not that terribly expensive, but usually several subscriptions come together. You can save money here by sharing such subscriptions with friends or family.
But beware: It can happen that you violate the general terms and conditions of some providers. So that should be checked beforehand.
Make a Tax Return
In a few weeks or months it will be that time again: the first wage tax statements will be distributed and you can start preparing your tax return. On average, you get back about $1,000 per tax return from the tax office. This is particularly worthwhile.
So that the whole thing is not too dry, we have tested a few control software for you.
Pre-cook Food at Home Instead of Eating Out
Lunch in the canteen or in a snack bar for $5-10 every working day doesn’t seem like much, but it adds up to $100-200 per month. If you like to cook and, for example, cook a little more in the evening to have something for lunch, this saves a lot of money.
You can also save money by planning your groceries and meals carefully.
