You’ve switched service providers and found a better deal.
But have you really saved money?
At the end of the month, do you have anything to show for all the effort you’ve put in to comparing products and working out the best deal?
Getting a better deal on your bills is only the first step to saving money.
Just say you switched mobile phone deals and will save $10 a month or $120 a year. You give yourself a little pat on the back and then promptly forget all about that extra $10.
What’s going to happen?
Will you actually save that $10 when the next bill comes in?
For most of us, the savings we make will get swallowed up in day to day spending. A coffee here, a treat there and the money is gone.
Last week I switched mobile phone providers and saved myself $12 a month.
An extra $144 a year!
And then that very same day I signed up for Netflix for (you guessed it) $12 a month.
I guess at least our cash flow isn’t worse off.
But there were probably a whole lot of better things we could have done with the savings.
You might be thinking $10 a month isn’t very much, you would be happy to spend it on something fun. Which is totally ok. That’s what we decided to do, at least for the next few months, by signing up to Netflix.
But small savings can add up if you’ve shopped around for a range of household bills. You might be saving $10 on one bill, $20 on another, $5 on another and suddenly you could be putting aside a few hundred dollars each year. Would you rather put that towards something important, or spend it on day to day expenses?
Our brain can play funny tricks on us when it comes to money. It’s easy to give into short-term temptation and then find a dozen ways to justify ourselves after the fact. Saving can become a battle of willpower that we often lose. That’s why we need to have a few tricks in order to come out on top.
how to really save your money after getting a better deal
Saving money only happens when you take proactive steps to do so. You’ve got to take that money by the horns and corral it before it wanders off, or worse, stampedes towards the shops screaming yee haw!
That’s why it’s super important to pay yourself first. If you don’t, those savings will be gone before you can say ‘Netflix.’
So how do you save it?
First you need to decide where you want to channel the extra money. Do you want to :
- put the savings towards your financial goals?
- put the extra money saved towards paying off debt?
- put the extra savings towards long term investment?
- put the extra savings towards other expenses?
If you choose one of the first three options, then you’ll be better off in the long term. You will reach your financial goals earlier, pay off any debt faster and be more financially secure in the future.
But sometimes it makes sense to channel your savings towards other expenses.
For instance, instead of continuing with Netflix after the free-trial, we can put the extra money towards the Rates, knowing that they will probably go up next year.
Or we can use the savings to help pay for swimming lessons for the kids.
Whatever you choose to do with your savings, the process is the same. As soon as you negotiate a better deal, log into your online banking account and adjust your automatic savings to include the amount you’re now saving.
Whatever you normally transfer towards your savings (or debt) as soon as you get paid, add your new savings to.
So if you normally transfer $300 a fortnight into your savings account, change that amount to $310.
By being proactive with the amount you’ve saved, you’ve turned potential savings into real savings.
Switching your service providers to save money is a savvy financial move. But it’s only half of the picture. To turn spending less into saving more, you have to take the next proactive step.
Don’t let your savings slip away. Put your savings into your saving account and turn paying less into real savings.
Melissa Goodwin is a writer and the creator of Frugal and Thriving who has a passion for living frugally and encouraging people to thrive on any budget. The blog is nine years old and is almost like her eldest baby. Prior to being a blogger and mum (but not a mummy blogger), she worked as an accountant doing other people’s budgets, books and tax.