We all know we should save something, putting a little aside each month/ after every pay cheque, but it is easier said than done. There is always something you would rather spend your money on which gives you satisfaction straight away.
My personal downfall is window shopping turning into a splurge, especially after a long week at work. Saving can be even more difficult when you live in London, pay sky high rent and struggle to keep a small semblance of a life.
At this point I have to say, before you start saving pay off your debt first, credit card or otherwise this is going to be costing you more than you will earn on any savings.
Key things to think about:
1. Motivation
Motivation is personal. I have the need for a safety net, as I have previously lost a job and I want to make sure that I always have something put to one side for that rainy day. It maybe you are saving for something big; your deposit for a house or a wedding, even a holiday.
Starting with a small target can help, if you think you need to save £30,000 and you are hardly managing to pay your rent then it can be easy to fall into the attitude of ‘why bother?!’. Start small and once you see the pot growing it will be easier to motivate yourself, you know you can do it. Start with a smaller target and if saving can become a habit then it will grow over time.
Things in life shift so even if you only save a couple of hundred pounds a year, over the years it can grow into a nest egg. You may get a pay rise meaning you can save more in the future so don’t let a large target put you off.
2. Small changes, big impact!
Let’s get something else out of the way: saving money does not mean you’re cheap, and it does not mean you have to deprive yourself.
Saving money can mean you need to tweak your habits/be more mindful about your spending. Eg:
- Go for brunch instead of dinner,
- Have 1 coffee a day instead of 2…
- Do your research…compare prices…
- Surround yourself with people who support you in this initiative and ditch those who don’t..you are not being boring… you have a goal and you want to achieve it.
You may have to sacrifice something to achieve your goal, this could be turning down a holiday, buying a cheaper pair of shoes, stop buying your latte each morning. Either way, if your income isn’t going up then the money will have to come from somewhere. Having your goal in mind and why it is important to you can help you make these sacrifices however small.
As an example: You are aiming to save £1000 in a year, this is £83.33 per month, just under £20pw, to put that in context you could easily spend that in starbucks per week. Give up your two lattes a day and you can reach your goal.
Adjust this to your means, £20 for some is a lot and some of you could save even more. Look at your spending honestly and frankly. See what you could reduce/cut back on and you can then see how much you can save by making small adjustments.
3. Save before you even notice the money in your bank account.
Set up a direct debit to transfer this out of your account as soon as you are paid, that way you won’t miss it quite as much.
Any increase in pay you can adjust the amount you are saving, you will still see more money in your account each month but you will also see an increase in your nest egg at the end of the year.
4. Make saving a habit
It is easy to get into habits that cost us money, and these may be things you can change. But if you make the cut of your morning latte, make sure you put that money to one side so you start to notice the rewards from your sacrifice, this will help motivate you and also start you making good habits. Put money aside when you can, just after payday or even at the end of the month when you notice you finally have a little left.
5. It is personal
The bottom line is, you have to start somewhere. It is always difficult to change your habits and create new ones. It is always a tradeoff and what trade off you are willing to make to achieve your goal is personal, but always worth considering. We all have different spending habits, different motivations and different incomes, so find what works for you and stick with it.
There are loads of apps and tools out there to help you save. Look out for another blog where we run through a few of these.
