Given the uncertainty in the economy right now, many Fools may be wondering how they can save more money. Even if you've had your income reduced or completely wiped out by the coronavirus response, there are still ways to level up your personal finances.
Here are a few easy tips to help you tighten the belt and save more money in 2020.
Review your current spending habits
The first step in any personal finance setup is knowing where your money is going. I think budgeting is key if you want to save more money with less income. Without a proper budget and spending tracker, it's very hard to pinpoint the areas where you can cut back.
A review of your current spending habits can be whatever you like. If you want to download your bank statements and go through it with a fine-tooth comb – great! If you simply keep a diary of what you spend each day, that's also great!
The bottom line is that being aware of when and where you are spending is the key. How you choose to be more conscious of your spending habits is up to you.
Save more money by spending less
This one is a bit of a no-brainer, right? But you'd be surprised by how many Aussies struggle to reduce their spending. The COVID-19 pandemic has thrown global economies into a period of huge uncertainty. Recessions are not the time to be spending big (unless you're investing in cheap ASX 200 shares for the long-term of course!).
If you want to save more money, you have to spend less. It's really that simple. There are a few easy ways to reduce your spending and that's made a lot easier if you follow step one above. Work out what's a necessity and what's a luxury, and strip back what you can to ride out COVID-19.
Invest your extra cash in ASX shares
Apart from the above, there's one other way to save more money: increase your income. Now, given the current climate, that may not be through formal employment. Additionally, interest rates are at all-time lows of just 0.25% in Australia so there's not much on offer from keeping your cash in a savings account or term deposit.
That leads us to ASX dividend shares. If you have the financial capacity right now, you may be able to save more money by buying and holding ASX dividend shares like Fortescue Metals Group Limited (ASX: FMG).
I personally like to stock up my emergency fund before I invest. Keep some cash spare for your necessities and then try and get some extra income from my investments.
