Before you can start putting away money for a rainy day – ideally three to six months net annual income, you need to make savings in your day-to-day spending. The key to saving is breaking old habits and fostering new ones, so you must be willing to adopt a new approach to spending to start seeing savings. Remember personal finance is 20% knowledge and 80% behaviour. Here is the A to Z of a saving mentality:

A is for Assessing the situation
Before you can start getting your financial house in order, you need to identify the cracks. 

Do you frequently run out of money just before pay day? Do you tend to splurge on things you never use? The only way to identify your financial foibles is to record them. 

Write down what you spend and track the trends.

B is for Budget
Once you have identified what you actually spend, calculate what you should spend.

First make a list of all your monthly bills and deduct the total from your income. It’s a rough estimate, but should give you an idea of whether you are living within your means or not.

Now look a month ahead - what expenses are coming up?

Apart from the basic costs, include less frequent bills, like insurance, school fees and so on, when working out your budget.

A successful budget is a realistic one and includes all your expenses.

Try to estimate your monthly budget

C is for Comparing
Not only do you need to cut out purchases you can’t afford, but also you need to make the right choices on necessary purchases.

Arm yourself with the maximum information before making a purchase.

Where is the item available? How much does it cost elsewhere? Are there any special deals or discounts? Can you buy it more cheaply online?

Shopping around might seem like a cliché, but by comparing the options before you buy, you can ensure you get the best possible deal.

The Competition & Consumer Protection Commission (CCPC) produces regular cost comparisons and price surveys on www.consumerhelp.ie.

D is for dealing with your Debt
If you have a big balance on your credit card or are crippled with other debts, look at these areas first to halt the build-up of more debts.

If you are struggling to repay your loans, let your lenders know and engage with them to devise alternative payment plans. Credit cards especially have very high interest rates, and failing to chip away at that debt can have major consequences for your pocket.

E is for Energy
Does your gas or electricity company offer good value?

If not, consider using a different tariff to reduce your bills, or switch to a new provider.

Electric Ireland, formerly ESB, recently announced a range of new price plans and dual fuel offers and quickly followed by competitors. The company said its electricity price cuts would save households about €120 a year.

Recent changes in the gas and electricity markets mean more choice for consumers.

Typically, utility firms will give a small discount if you opt for online billing and pay by direct debit.

Switch to a new gas provider could make you save money

F is for Fares
Some travel spending, such as the commute to work, is hard to avoid.

If you use public transport to get to work, buying your travel tickets via the government’s Taxsaver scheme can reduce your annual bill by more than half.

Similarly, the ‘bike to work’ scheme can reduce costs for cyclists, by allowing them to buy a bike in a tax-efficient manner.

Before you take a national train or bus service, check the offers available on the bus or rail operator’s website.

When booking a flight, beware the fees and charges that can add a hefty chunk to what initially seemed like a good deal. Baggage charges, taxes and priority boarding can all inflate the cost.

G is for groceries
In the past year, food and non-alcoholic drink prices have increased by 1.6 per cent, according to the Central Statistics Office.

Shaving a few euro off your shopping bill each week could make a big difference to your finances. Simple changes like switching to own brands for certain products, availing of special offers and making shopping lists to avoid impulse buys will all help to keep your spending in check.

However, don’t be fooled into buying in bulk if you won’t actually use the product. Volume discounts are only good value if you have a real need for the additional items.

Another way to save is to use a retailer’s loyalty card system, which allows you to earn points as you shop. Download the free app BeepnGo to house ALL those loyalty cards instead of having to carry them around. No missing out on discount vouchers.

H is for Homemade
It might seem too obvious to mention, but making your own lunch is a guaranteed way to save a few euro.

A working couple who eat out at lunch or have a takeaway sandwich each spend at least €9 a day on lunch - around €2,160 each a year.

Think how many sliced pans, cheese slices and packets of tinfoil that would buy.

I is for Insurance
By law, consumers must have at least third-party insurance if they own a car. Cost comparison surveys have repeatedly shown that shopping around for motor insurance can save drivers more than €1,000 annually, making it the type of insurance with the biggest potential savings.

Home insurance is not a legal obligation, but may be stipulated by a lender. Cut costs by making sure your home is not over-insured. Your home should be insured for its reinstatement value - the cost of rebuilding it - not the market value.

This can make a considerable difference to the premium. If you decide to change your cover to get a better deal, don’t base a decision on the premium alone, as the level of cover can vary considerably. A standard benefit with one insurer might be an optional extra with another.

Compare car insurances could help you save money

J is for Joining Clubs
J could just as easily be for January, the month when people sign expensive contracts for gyms, or June, the month when people realise they haven’t set foot in their expensive gym in weeks.

Do you fork out hundreds of euro a year for your gym or swimming pool, but don’t feel you get your money’s worth?

If your monthly membership is merely a guilty reminder of lost euro, either use it frequently or cancel your contract and opt for a cheaper pay-as-you-go deal. Beware of tricky terms and conditions that can apply to cancelling gym contracts. Remember local parks are free to jog around.

K is for Kids
Parents have been squeezed by reduction in child benefit, but still face huge expenditure on creches, school books, extracurricular activities and so on.

Childcare costs have stayed relatively static in the last year, with the latest figures from the Central Statistics Office showing only a marginal increase of 0.3 per cent.

But a recent survey by the CCPC revealed huge variations in childcare costs nationwide. Average prices for full-time care for a toddler ranged from €145 per week in Sligo to €220 in Dublin 6. 

Obviously parents don’t want to compromise on the quality of service available where they live, but comparing prices is a no-brainer.

L is for Luxuries
A savings habit does not have to mean the end of fun. However, if you are trying to cut back, spending on discretionary items is the first to face the chop.

Force yourself to keep a record of treats and indulgences and try to factor them into your budget. If you want to go away for a weekend, try to set aside money for it, rather than booking it on a whim and abusing your credit card.

Force yourself to keep a record of your treats

M is for Mortgage
The European Central Bank interest rate is at its lowest – 0%. Rates can really only go one way BUT may not go up for quite a while. Make hay while the sun shines and check
- Are you getting the best rate
- Could you switch and save? 
- Have you still the income to justify your current mortgage?
- Is your loan to value 80% or less?

You could be on 4.5% standard variable rate and qualify for the lowest rate on the market 3.15% - a massive saving each month and well worth checking out.

N is for negotiate
Haggling might seem crass, but take your inspiration from the most savvy amongst us and try to negotiate the price. 

For certain types of purchase, such as buying a new car, this is already common practice. Car dealers expect a bit of to and fro with potential customers. Apply this to other purchases, particularly big ones, and see where it gets you.

Retailers and service providers want your money, so make sure they give you the best deal.

Bargaining might not get you a better deal on a hotel room, but the hotelier might throw in an extra. Likewise, delivery charges could be waived on home purchases if you play hardball. If you don’t ask, you’ll never know.

O is for Other people
Consumers should realise that information is their friend, so make use of your networks and share information. Did your friends get a great deal on their latest car service? If so, find out where.

In a world of Facebook, LinkedIn, Pinterest, Google+ and Twitter, information has never been so instant, making it easy for consumers to vote with their feet. If you learn that you are not getting good service, or better options are available elsewhere, act quickly.

P is for Petrol

Use the website www.pumps.ie to find the cheapest forecourt in your area for petrol or diesel.

A difference of a few cent per litre may seem like nothing, but when you work out the cost based on a year’s supply, it can be considerable. Petrol prices have hit lows this year but seem to be back on the rise again. Better in your pocket.

Check where is the cheapest petrol in your area

Q is for Questions
Before you buy something, understand exactly what you are getting for your money. Questions might not save you money immediately, but can certainly stop you wasting it in the long run.

For example, make sure to ask when vouchers expire, otherwise you could be wasting the money you have spent if they run out before they are used. If something looks too good to be true, it probably is - always ask what conditions apply to special offers.

And if you sign up to a new service, ask what fees apply if you break the contract.

R is for Relief
Or more specifically, tax relief. Medical bills and mortgage payments are just some of the day-to-day expenses on which you can claim tax relief.

Tax relief on medical expenses is granted at the standard rate of 20%, with no threshold applying. This means that, for every €5 you spend on medical bills, you get back €1.

S is for switching
Do you moan about your bank, insurer or mobile phone company, but never bother to take your custom elsewhere?

Tackling your inertia could be the first step towards saving some of your hard-earned cash. If you find that you are not getting value for money and good service, put your money where your mouth is and move.

Switching provider is easier than it seems, and there are statutory provisions to help you. 

For example, under the terms of the Central Bank’s code of conduct on current account switching, your bank is obliged to make the process easy for you and liaise with your new bank.

T is for Technology
Saving money on technology is twofold.

Do you need that gadget?

Sleek marketing and shiny new gadgets have turned us into a nation of magpies, craving everything we see. But think first - do you need a new phone or laptop? Or does your old one still meet all your daily needs?

If you use broadband at home, have a phone line and watch television, you might be able to reduce your home communications expenses by bundling your bills. Check out callcosts.ie, a website from the communications regulator, to see if you can get a better deal.

U is for Using your head
Saving money is not rocket science. Simple steps, clever choices and very little effort can make a big difference to your bottom line - so make the effort.

V is for Value for money
Two-for-one offers, 20 per cent-off deals, special discounts. Before you jump on a bargain, make sure that you need it, and that the offer is what it seems.

It’s easy to fall victim to sales psychology and stock up just because you can, but then you end up with items you never use and a hole in your wallet. If you are going to buy, make sure you are getting real value for money.

Make sure that you need what you buy

W is for Wills
Not quite a cost saving, but something to keep in mind. Developing a new frugal approach to cash, saving lots of money and putting it aside for your family’s future is laudable.

But make sure you have control over what happens that money on your death. Make a will. You can keep the original will too but let the executor know of its whereabouts.

Also give some thought to inheritance tax, and the most tax-efficient way to pass on whatever wealth you accumulate to your chosen beneficiaries.

X is for X marks the spot
Or so say the treasure hunters. A dream of winning the lottery might seem like a perfect financial plan - but realistically, it is not.

Remember, your financial future is in your hands. Your circumstances may change beyond your control, but how you adjust your budget and how you spend your money is up to you.

Be practical, don’t expect a miracle, and recognise that changing your spending habits takes time.

Y is for Yield
When you have built up a savings pot, make sure it works for you and gives you a decent return – difficult at the moment given the rates (Nationwide UK have the best demand account at 0.76% - net 0.4484% after DIRT tax…)

There’s no point, though, leaving your money in an account that pays 0.000001% interest, when you could enjoy a better return without sacrificing access to your cash. Remember also if you do want any kind of growth, you MUST take some risk – but that risk can be measured.

Your goal should be at least to maintain the purchasing power of your savings. 

So you want an interest rate that, at best, beats or, at worst, keeps pace with, inflation. 

Not always possible, especially when banks are scrambling to improve their balance sheets, but certainly worth keeping in mind.

Z is for Zero
Not the amount that you want to see in your bank account at the end of the month, but definitely the balance you’d like to see on your credit card bill.

Spend within your means, and always leave some room to manoeuvre – that’s where the Rainy Day Fund comes in (for those emergencies, sudden loss of income or investment opportunities).

Save well – save now.

John Lowe is a Fellow of the Institute of Bankers, founder and managing director of Providence Finance Services Limited trading as Money Doctor and regulated by the Central Bank of Ireland (www.independentfinancialadvice.ie ), plus author of the best-selling Money Doctor 2016 – 100 Way to Save Cash For consultations and corporate seminars, call T: (01) 278 5555 or email jlowe@moneydoctor.ie  Follow John on Twitter (@themoneydoc)  Linkedin Pinterest Google+ & Facebook.