Jill Fraser reports 

The cornerstone of wealth creation is the ability to save money and the only way to save is to spend less than is earned.

There are many ways to cut down on spending on even the tightest budget.

Here are some tips:

• Cut up credit cards and only use cash. It’s much harder to fork out ‘real’ cash than to charge to a card. We’ve been conditioned into viewing plastic cards as ‘real’ money. But when we pay by card it doesn't feel like spending 'real' money. Handing over cash creates a sense of loss, which drives home the value of a product.
• Review ongoing costs such as gym memberships, insurance premiums, Foxtel subscriptions, magazine subscriptions and so on.
• Reduce grocery bills by not shopping when hungry, going vegetarian several nights a week, using cheaper cuts of meat and buying generic store brands.
• Do a spot of self-analysis and understand the cause of your over-spending.
• Buy second hand, frequent markets, establish a trend for homemade gifts and send cards online for a cheaper Christmas.
• Limit the number of takeaway meals.
• Allocate one week a month when the whole family goes without something every day – e.g. television, alcohol, heating, the car, the computer, sugar, coffee, energy drinks. Gradually build this up to three weeks a month.
• Cut in half the number of times a week you go to the local shops or shop online.
• Pack your lunch for work every day.
• Design a budget that includes some fun spending and reward yourself and your family with a celebratory treat each time you reach a set savings goal. Rewards reinforce desired behaviour.

More articles from this edition of FatCat:

What is the ultimate property to buy

Good versus bad debt

Identity fraud - are you at risk?

FatCat tips for super savers

Tips to cut your spending in half

US in once-in-a century financial crisis

Pre-shopping saves consumers plenty of coin