1. Draw up a budget:

You will need to pin down the amount of money coming in and money going out. It should be easy to figure out how much money is coming in. You're likely to have more difficulty with the outgoings.

The ultimate objective in working out a budget is for you to have a surplus, that is, to spend less money than you make in a month. Unless you generate a surplus each month, it will be difficult to get ahead financially. Any small amount will help: saving money as little as $10 a day on lunch at work gives you $50 a week which mushrooms into $2,400 over a 48-week working year.

You will need to know where you are actually spending your money to have an idea of cost items you can cut down or cut out altogether. List down everything; hide nothing; and be ruthless in cost-cutting.

2. Save:

If you normally spend less than your monthly income, saving money would just come naturally. The rule of thumb is to target saving at least one-tenth of your monthly earnings. Assuming you are able to do that, it will not be enough to just place the money in your transaction savings account. Do some research and compare a number of savings accounts to find the ones offering the best interest rates.

3. Reduce energy consumption:

Energy bills amount to approximately $1,500 a year for the typical household. Energy for heating your home can easily account for one-half of your power bills during winter, while hot water costs constitute about one-fourth.

Saving money on energy is not difficult to achieve. Appliances using energy-efficient technology will pare down power consumption. But there are small corrections you can do that add up to big savings.

You can save about $100 a year by making sure the TV, computer, and other appliances are turned off when not in use. Putting these appliances into standby mode is not the same as turning them off completely. Over the course of a year leaving items such as your TV and other electronics on standby could account for around 10% of your power bill.

You'll be saving money if you find ways to trap heat inside the house in winter. For instance, making sure doors get shut, windows are properly sealed, and bare floors are covered can help. You could save as much as $200 a year by ensuring proper insulation on your ceilings, walls, and floors.

4. Compare energy costs:

As well as using appliances less and turning them off you should look to cut your bills further by comparing gas and electricity energy plans available in your area. Comparison websites can help you evaluate plans and prices, while electricity retailers publish online guides on energy consumption and estimated running costs of various appliances.

You need some patience in comparing prices because many variables are involved. The comparison websites provide many tools to assist you in this regard. It is useful to remember that the most expensive rate in your area is likely to be the default tariff.

5. Avoid unnecessary fees:

It is good to keep a sharp eye on your checking and savings accounts, loans, and other items which can be subject to bank fees and charges. An overdraft on your accounts will automatically cost you $30 in over-limit fees per transaction; sometimes, a penalty fee is charged. You can avoid these charges by making sure you have enough funds in your accounts. Look around for low-fee or no-fee accounts on offer from some banks.