Saving money is a very common New Year’s resolution, so if you’re hoping to build up your savings this year, you’re not alone. But if you’re a natural spender, you’ve lost your motivation with budgeting, or you’ve picked up a few less than ideal money habits lately, getting on the saving bandwagon can be difficult.
With the rising prices and cost of living, it can be really difficult to say anything. You may even think it’s not even worth saving that spare £10, but it definitely is. Getting into the habit of saving is much more important than the amount we’re putting away every month, or at any time we’re able to. Here are seven top saving money tips for beginners looking to overhaul their finances.
Remember your ‘why’
They say it takes an average of 66 days to form a habit, and your savings habit is no exception. Achieving big savings goals isn’t usually quick so there will be times when your motivation wanes, you’ll feel stuck in a rut, and moments of wanting to make big impulsive spending decisions. So, remembering why you set the goal in the first place is important. There will be times when you want to spend every last dime you have, and ask yourself: “how far will this set me back from my goal?” It’s not to say that we can never buy anything ever again, but if it’s going to set you back a month or two, consider whether it’s really worth it (and only you will know the answer to that).
Give your savings a purpose
When you assign your savings to a goal you’re hoping to achieve, your savings efforts become tangible and you give them purpose. Consider whether you can split out how much you’re allocating to each goal or purpose. For example, if you have £5,000 in savings, you might choose to split this as £2,000 as an emergency fund, £1,500 towards your wedding, and £1,500 for a honeymoon. Not only does this help when you need to pay for something from your savings as you’ll know exactly how much money you’ve assigned it, it might make you question whether it’s something you really need to dip into your savings for. It’ll no longer be a case of transferring £100 for a weekend of retail therapy, but £100 that is supposed to be spent on your wedding.
Set a goal and break it down into smaller chunks
Saving can feel incredibly daunting at the beginning so break it down. Whether your goal is to save £1,000 or £10,000, break it down into manageable chunks so you can see your progress, and so you know how much you need to save each payday if you’ve set yourself a deadline for achieving it.
Get in the habit of saving any extra money you receive
There are quite a few different ways to make extra money, but instead of frittering it away as soon as it lands in your account, get comfortable with saving extra money you receive. There will be times when you want to use the money you’ve made towards a treat and that’s perfectly fine but make that the exception rather than the norm.
Keep your savings accounts separate from the money you use for your day-to-day spending
Not only will savings accounts help you earn some interest, having your savings and spending money separated can make it harder for you to spend your savings as there are no blurred lines. You’ll also know exactly what you have to spend and what’s off limits. This can be as simple as having your current account and savings accounts with different banks so your login details are different.
Have some savings in an easy access account
While you’ll want to be earning as much interest as you can on your money, consider having some savings in an easy access savings account. These are usually lower interest rates but they give you the added peace of mind that you can get an instant withdrawal of your money without any penalty. Accounts like these are perfect for your emergency savings – you’ll want to be able to get the money as soon as possible and it makes an already stressful situation a little less stressful knowing that you can transfer the money instantly instead of waiting 3-5 days.
Pay yourself first
Treat your savings like any other bill and transfer money to it as soon as you get paid. When we get paid, it’s easy to have big ambitions on how much we’ll be able to save but being restrictive with yourself won’t work. You’re likely to lose any motivation with your personal finances quicker, become deflated and end up dipping into your savings anyway. When you budget for fun and save money, you’re telling yourself that you can have it all. It’s a small psychological boost you need, especially if you’re budgeting for the long-term or you’ve got a big goal you want to achieve.
Finally, a question I get asked a lot is “how much should I be saving?” Without knowing all the circumstances around your finances, or what they even look like, it’s hard for me to tell you. But truthfully, the amount you can afford to save is the right amount.
If you’re looking to save money this year, implement all of, or a combination of these tips to help you succeed and help you achieve your goal in an easier way.
