How to save money: save up to €3,000 a year

Savings bring security to your finances

Saving money is a subject you should regularly think about when managing your personal finances. Everyone should have a so-called savings buffer, i.e. enough savings in their account to cover any unexpected expenses or larger purchases. This way, you will not have to always resort to taking out a loan or stress out about how you will be able to pay any larger expenses.

Saving is also good for the environment. When you reduce unnecessary consumption, you also reduce the waste you generate. In addition to the environment, circular economy also saves money, it favours borrowing and renting goods over purchasing them.

Saving money on a low income is possible

Saving is important for everyone. In fact, the lower your own income, the more important it is to have a savings buffer to secure your own finances. 

There are many ways to save money on a low income, even if you can not put away large sums of money at once. Together, even small things can help you save staggering amounts of money. Cents become euros, euros to tens of euros, and before you know it, you have a hundred euros in your hand.

Saving does not have to be unpleasant. On the contrary, it can be fun, and for many, it becomes a kind of hobby or even a way of life. It is very rewarding to see your account balance grow as a result of your efforts, and it also brings you a financial peace of mind. Seeing the results of your efforts also motivates you to keep saving.

Many ways to save money

There are many ways to save money. You can strive to reduce your spending and costs in a number of ways, and try to find additional sources of income. Whether you are able to save 10 or 1,000 euros per month, saving is just as important for everyone.

Below, we have listed some ideas on how to save money. As you go through the list, think about which tips could help you to accrue more savings.

Write down your income and expenses and create a budget for yourself

When you want to take a closer look at your personal finances, the first thing you should do is to write down all your income and expenses. This allows you to define your everyday budget.

Income may consist of e.g.: 

• salary
• pension
• benefits
• rental income
• dividends 

Expenses may consist of e.g.: 

• food and drink
• groceries and medicines
• loans and instalments
• housing costs (including rent, maintenance charge, heating, water, electricity and waste management fees)
• insurance premiums
• internet or telephone subscriptions and streaming services
• travel expenses (e.g. car expenses, bus tickets, taxi fares)
• appliances (including household appliances, telephones and computers)
• furniture and interior decoration
• clothing
• health and beauty products and services
• hobbies
• holidays and other leisure expenses
• taxes

Once you have recorded all your income and expenses, you can get a clear picture of the overall state of your finances. You will be able to see if you are spending too much money on a certain area of your budget, and can consider different ways to improve the current situation. It might be possible to save on housing costs, for example. If your current apartment is not essential to you due to living comfort, location or other similar factors, changing apartments may be a good opportunity to save money. 

Creating a budget will also help you to plan your future savings. By cutting costs, you can save more money. Once you know how much money you are able to set aside every month, you can incorporate regular savings into your budget. In addition to this, having a concrete goal towards which you are setting money aside every month makes it easier to really commit to saving.

Take full advantage of savings accounts

Nowadays, many banks offer so-called online piggy banks. Practically speaking, an online piggy bank is a separate current account. The catch is that whenever a customer uses their payment card, a certain amount of money, like 0.50 or 5 euros, is transferred to their piggy bank. Customers are able to define the amount themselves. 

For example, if you set the sum at 1 euro and use your payment card once a day for a month, you will save 30 euros.

Banks also offer customers a possibility to invest the money deposited in the online piggy bank directly in one of the funds the bank offers.

Choose the best subscription deal

You should regularly check if there are better deals available on your electricity contract, phone or internet subscriptions and insurance contracts. The prices may vary significantly between different service providers. For example, if your energy consumption is on the lower side, you may be able to obtain a very affordable monthly contract. You may also be able to get better contracts if you can handle a slightly slower internet connection or can make do with fewer minutes on your calling plan.

Choosing the right insurance can also save you a lot of money. Consider if you really need all the insurances that are being marketed for you, or if you could instead acquire a suitable insurance package from another provider for a lower monthly fee. 

Cut down on unnecessary spending

Stop buying impulsively, and consider the need for each larger purchase carefully and on a case-by-case basis. 

Is it truly necessary that your new washing machine has a Bluetooth connection, and are you willing to pay extra for it? Do you really need the latest smart watch, or would a cheaper device with a heart rate monitoring feature and fewer extra functions be enough? Is it necessary to buy a new bag right now? Do you specifically want to buy an ice cream cone from the nearby stand, or should you buy the three times cheaper option available at the grocery store?

Unnecessary spending also includes having to constantly buy new items or devices because the old ones keep breaking down so quickly. For example, when it comes to clothes, it pays off to buy quality pieces for a slightly higher price, since they will last several years in use. It may also be smarter to acquire a new home appliance than resort to buying an used one, and to choose a well-known quality brand instead of the cheapest option.

You can also always repair broken items and clothes whenever possible. This also reduces unnecessary purchases.

Recycling saves money

Flea markets, both traditional and online ones, are a good place to start when shopping for clothing or furniture. When shopping second-hand, you can find stylish and durable designer clothing for only a few euros.

Use the library’s selection Instead of buying books and leaving them on the shelves to collect dust, you can avoid accumulating more items in your home by reserving the same book from the library instead – even multiple times, if need be. Nowadays, libraries also offer a wide collection of Blu-ray movies, console games, and even sports equipment. Take advantage of other possibilities of borrowing instead of buying and ask to borrow different items from your friends or acquaintances instead of renting or purchasing them.

Save money on food

Traditional Finnish food is very affordable. Cook food with seasonal ingredients and take a closer look at the prices of the groceries you purchase. For many products, you can exchange a more expensive brand item for a significantly cheaper store brand option. 

Buy discounted products that are close to their expiration date and freeze them for later use. You can also take advantage of different services aiming to reduce food waste where restaurants offer leftover food for a cheaper price.

Passive income brings additional earnings

Passive income means income that you receive even when you are not actively working. This kind of income includes e.g. advertising income received by bloggers, selling online courses or investing. Creating a passive source of income will initially require more work, but is easy and quick to maintain in the long run.

Investing is a source of passive income where wealth is acquired over a longer period of time. By investing in a fund or listed shares, you can generate income by receiving dividends and as the shares or fund increase in value.

Long investment periods may be beneficial to the investor due to the compound interest phenomenon, especially when taking into account the tax benefits that equity savings accounts offer. Investing is not well-suited for saving money in the short term, but it can still be a valuable tool for managing your own finances.

Check out our compound interest calculator and try how much you could generate passive income.

How to save 3,000 euros a year

Here we present a concrete example of how you can save 3,000 euros in just one year. You can adjust the example to suit your own consumption and current situation and edit your savings plan accordingly. 

By saving 250 euros per month, you can save 3,000 euros per year. Below, you will find an example of how you can save 250 euros per month:

• Set your bank’s online piggy bank application to set aside 3 euros every time you use your card. When you go shopping every other day, you save 45 euros per month.
• Compare different insurance, electricity, telephone and internet subscriptions and contracts to find the best offer. This can allow you to save 30 euros per month.
• Do not buy two items or pieces of clothing worth 25 per piece that you previously considered buying. This will save you 50 euros per month.
• Decrease your daily spending by two euros. You can do this by, for example, not buying a copy of the afternoon newspaper, brewing coffee at home instead of going to a café, or not buying a bag of candy, a bag of chips, a soda or an energy drink. This can generate savings of up to 60 euros per month
• Unsubscribe from one streaming service. This will save approximately 15 euros per month.
• Skip one restaurant trip or takeaway order. This will save you at least 20 euros per month
• Compare offers for your current loans in order to get a lower interest rate. You can also consolidate your debt and save on loan costs. This also allows you to specify a new monthly instalment sum for the loan. By comparing different loan offers, you can save 30 euros per month, for example.

More tips for saving money

• When your moisturizer tube is empty, use scissors to cut it in half. This allows you to scrape any remaining product from the tube. You can use the part you cut off as a cap. There is often still enough product in the tube to last you two to three weeks.
• Convert old shirts into cleaning rags and make rag rugs out of old sheets. 
• You can get an affordable and natural facial scrub by mixing honey and a little sugar.
• Cook with free natural foods such as berries, mushrooms, nettles and other plants.
• You can get incidental exercise by cycling to the store or to work. Take advantage of public transport. Walking to the bus stop will also give you exercise.