We all have financial goals. Some of us want to save enough to put down a deposit on our first home, pay for a dream holiday or ensure we are living comfortably in retirement. Financial goals provide us with something to work toward, and without them, we’d find ourselves in a consistent state of treading water, with no reason to not go and blow all our cash every time payday comes around.
Whatever your financial goals are, investing, building additional and diversified income streams and acquiring assets are crucial pillars for building wealth. However, to do these, it is vital to have cash because, without it, you can’t purchase assets or invest. Sure, you can work more to bring in more money, but sometimes, it a more efficient use of your time to save cash than to work more hours for extra money. Yes, there are many opportunities to save money in everyday life, including switching to cheaper alternative products, taking advantage of special offers, clipping coupons and collecting cashback.
Loyalty programs are an excellent way to get a little extra back on the money you were going to spend anyway. Examples include JCPenney’s Rewards program in the U.S., Tesco’s Clubcard in the U.K. and Full Tilt’s Rewards. With these programs, users earn points to exchange for rewards such as money off future purchases or additional products or services.
Taking the Tesco Clubcard as an example, you swipe your card every time you shop in the any of the supermarket stores, online or at its petrol stations. For every £1 you spend, you earn Clubcard points, which is generally one point per pound. Then several times a year, the Clubcard points are totaled up and converted to vouchers for cardholders to use in the store.
For Tesco, the aim of the Clubcard program is to encourage loyalty (hence, the name loyalty program) whereby you are incentivized to shop in its store more often because you’ll receive a small financial benefit. However, a loyalty program is only helpful in money saving if you aren’t tempted to spend more than you would have anyway.
Coupons, Special Offers and Buying in Bulk
Everyone has seen or heard stories of extreme couponers who somehow manage to get paid by the shop when walking out with a lifetime’s supply of washing powder or cake mix. This achievement takes a lot of effort, and for many, such an effort isn’t worth it. However, there is a simple thought process that can be used to see whether coupons, special offers or bulk buying are worthwhile.
Since the 2008 financial crisis, central banks across the world have kept interest rates low to help to stimulate lending and spending to encourage the economic growth. It has worked to some extent, and it has meant that people who have mortgages and other borrowings can save a lot of money in reduced interest payments. Unfortunately, people with money in traditional bank savings products have been suffering from low interest rates on their hard-saved cash, with many banks offering less than 1 percent, and some even as low as 0.01 percent.
Buying products in bulk when they are on time-limited offers or using coupons to get increased savings on products can be an excellent way to give your savings a boost. An excellent example of this is found in German food retailer Aldi, which has stores across the world, including the U.K. and the U.S. In the U.K., it uses yellow cards to display prices on shelves, with red cards used to display discounts. These discounts usually vary from week to week and are likely used to help clear products that are in a surplus.
Most often, products you use frequently will be discounted. For example, bags of dried pasta or jars of sauce. Both products have a shelf life that usually extends beyond 12 months, and the discounts may be 5-8 percent. Therefore, if you can buy a year’s supply of pasta, have somewhere to store it and the cash to pay for it up front, you can reduce your annual expenditure on pasta by 8 percent. It may not sound like a lot, but if you combine it with many other products over the span of a year, you’re reducing your spending by seven times more than you’d earn by keeping the money in the bank.
Cashback is an excellent tool for saving money, only if you don’t get encouraged to spend money you wouldn’t have otherwise. Credit cards often provide cashback on spending, either everywhere or in specific stores, are an excellent way to get anywhere from 0.5 percent to 5 percent back on your spending (again 5 percent is more than you’d earn in the bank).
Additional opportunities come from cashback websites. These websites list online retailers where you can earn a rebate on your spending, but only if you click through from the cashback website first. These are funded out of the advertising budget of the retailers and are usually used to encourage consumers to buy with them and not a competitor. Cashback rates can be anywhere from 0.5 percent to 30+ percent, so they do provide some opportunities for big savings if you are planning to spend the money anyway.