In recent years, I have really started to get serious about the amount of money that I’m putting into savings and perhaps more importantly to begin with, how much I’m spending and earning. This year, I have been determined to get my finances under control so that I can seriously focus on paying off debts and building my savings. Putting money aside for a rainy day as well as saving for specific goals such as a car, holiday, Christmas or a property is so important as the very vast majority of us do not have an endless supply of money, nor a crystal ball to see what money we will need, perhaps unexpectedly, in the future.
In today’s post, I wanted to share some tips and thoughts with you on saving in the hope that it’ll inspire you to maximise yours or even just to get started.
GET A CLEAR PICTURE OF YOUR FINANCES
The first step when you’re trying to save is to get a really clear picture of your finances overall. Write down what comes in and what goes out. Include within this all sources of income and all sources of outgoings from monthly and annual bills to food, fuel and vehicle expenses, clothings, shopping, entertainment and any other miscellaneous expenses. Also look at all of the debts that you have from store cards and catalogues to loans, credit cards and anything else that you owe money on, even if you’ve borrowed from family. In almost all cases, it is a good idea to pay off debts before saving as you’ll never usually earn as much interest on savings as you would pay on a debt, however still having money put to one side for unexpected expenses is a very good idea so that you don’t end up needing to borrow more money should something that you haven’t accounted for happen.
SET REALISTIC SAVINGS GOALS
Once you have a clear picture of your finances, set realistic savings goals based on what you have left after you have been paid and all of your expenses have gone out. While it would be lovely to save for the sake of it, many of us can’t afford to so setting yourself a savings goal FOR SOMETHING is a good place to start.
I like to think of saving in three separate categories:
- SHORT TERM GOALS – included in this are things that you have coming up in the next 6 to 12 months, such as Christmas or birthdays, a new item or the spending money for a holiday.
- LONG TERM GOALS – this could be for a property purchase, new car or retirement.
- ONGOING SAVINGS GOALS – this is money that you’re putting away on an ongoing basis, perhaps for nothing in particular or for a payment that you always have to make every year. It could be saving towards your tax bill, insurance or car tax or for a rainy day and unexpected expenses.
For me, I have been saving for the spending money for my forthcoming weekend away in Benidorm as my short term goal, for the deposit on a property as my long term savings goal and for my tax bill and monthly bills as my ongoing savings goal. So many times I’ve sat worrying that I hadn’t put enough away for my tax bill so now I make sure that I put over and above away so that I always have enough saved and since I’m self employed and my payments into my account can be sporadic, I always make sure that I’m saving for the next months bills before I put anything else into savings so that I can always meet my monthly outgoings on time.
WORK, WORK, WORK
Your savings can’t work hard for you unless you do so work hard on setting and visualising your goals, cutting back, earning more and saving more. I’ve been more of a silly spender than a savvy saver in the past and its something that I’m working hard to change. While I’m sure the same can be said for many people when they’re young, I know that I’m 30 now and that comes with responsibilities. I owe it to myself to create the life that I want and to continue living a life that I love and I know that having savings will enable me to do that.
I’m even getting more savvy with my spending choices, especially when it comes to fashion for work. I’m knuckling down hard on earning more deals and maximising my opportunities and while I can still wear what I want for work, its getting a little smarter and more business like, with a fun twist. My houndstooth coat from Simply Be is a savvy new addition to my wardrobe as it’ll see me right through spring and since this is a print that never goes out of fashion, I’ll be wearing it for years and years to come too so the cost per wear will be so minimal!
KNOW THAT YOU’RE NOT ALONE
Saving isn’t easy and while it is something that we should ALL be doing, the reality is that we’re not. Up and down the country there are so many people who feel as though they can’t afford to save or are actually able to save but are just not doing it.
This article from Cashlady gives a an eye opening insight into the division of savvy savers and serious spenders across our nation. The truth is though, we will all benefit from saving and we all have to start from somewhere.
BE PATIENT, KEEP YOUR EYES ON YOUR GOALS & KNOW WHY YOUR SAVINGS ARE IMPORTANT
Saving takes time so it’s always important to remain patient while you’re building up your savings, especially if you’re working towards saving a large sum of money, perhaps for a property purchase.
Being a first time buyer will be an exciting experience, I’m sure. So many of my friends are now on the property ladder and its amazing to see them bringing their Pinterest home inspiration to life. If laying down roots in a particular place is your dream, perhaps coinciding with starting a family, if you’ve worked hard at your job and saved to be able to buy, you can feel as though you have your whole life laid out in front of you and the prospect of owning your own home can be thrilling. If that’s not for you, that’s absolutely fine too; I’m through with the pressure from the older generation to own your own home; how you live your life and where you spend your money is entirely up to you.
Over the years, I have certainly been more of a spender than a saver and when I look back, I am shocked at the amount of money that I could have saved! I definitely am one of those who would really love to buy their own property as since I moved out into my rented apartment and made it feel like home, I’ve really felt the value in coming home to my own space and I’d love to have something that I actually owned so that I could fully decorate it the way that I would like.
However I know that, as exhilarating as passing this milestone in life and owning my own home would be, it does still come with its fair share of trials and tribulations. Owning a property is so expensive as if anything breaks down in the home such as white goods or a fence blowing over in the wind, its down to you to pay to get it fixed and that can be very costly so even once I have bought my first home, saving will still be something that I’ll need to continue to do. Renting taught me why having some savings put by is really important, especially when it comes to unexpected bills and when you own your own home, this is increased by redecorating and maintenance costs, annual bills, etc.
START SAVING AS SOON & AS EARLY AS YOU CAN
It goes without saying that you need to save as much money as you can when you’re looking into buying your first home and the best way to do this is to start saving early. The same goes for saving for retirement and for other large purchases. I recently posted all about the benefits of saving from a young age and I can only wish that I had practised what I preached sooner.
When it comes to buying a home, even before you start considering where you want to live or what your budget is, you should start putting money away into a savings account each month. It’s amazing how quick it’ll mount up.
Try to split your financial outgoings into the following areas:
- ESSENTIALS – these are the things that you need each month
- LUXURIES – these are the things that you want but don’t need each month
- SAVINGS – these are the pots of money that you’re paying into to meet your short term, long term and ongoing savings goals.
Essentials will cover outgoing costs such as rent/board, bills, food, necessities, fuel for your car, and any other payments that you might pay monthly or annually such as your car, home and life insurance, road tax, TV licence and the like.
Luxuries are items that you can live without, be it that Starbucks trip you want but really don’t need, eating out, new clothes just because, cinema tickets and anything else that isn’t essential spending. Try and spend as limited an amount as possible on luxuries and you’ll quickly notice a difference in the amount of money that you’re then putting into your savings; I know I certainly am.
Savings involves all the money that you put aside for future investments, such as your new home.
EVERY LITTLE HELPS – MAXIMISE YOUR OPPORTUNITIES
Finally, when it comes to saving as well as working towards other goals in life, forwards is still forwards. Every little bit of money helps regardless of whether its 1p or £1 so even if you can only afford to save a very small amount each month, keep on going and you’ll get to where you need to be eventually. Feel grateful for every amount that you’re able to save and I believe that more will come to you in abundance.
Save money wherever you can. Take your lunch to work, skip buying that morning coffee when you could make it yourself at home and take advantage of any offers, deals or discounts you can, but only if they’re relevant to you. It is pointless spending extra money on things that you don’t need as that will completely defeat the object of saving!
Maximise any opportunity that you have to save money and check out the facilities that are available to you to help you to do so. Depending on who you bank with, there is technology that you can activate such as Save The Change that will round up any card purchases you make to the nearest pound and move the change into a savings account for you, should you have the funds available. For example if you had £40 in your bank account as cleared funds and you spent £20.19, the amount would be rounded up and 81p would be moved into your savings account. It sounds like only a very small amount but it sharp mounts up and since the amount that’s moved over is so small, it’s likely that you’ll not even notice it.
If your bank doesn’t offer a facility like this, you could always do it yourself. I have a bank account with another bank and periodically whenever I check my current account, if I have a few extra pounds in there be it at the end of the month once my bills have gone out or if I have an odd figure in my account (e.g. £107.00) , I will move it over into my other account (i.e. I’d move the £7 so that I had a straight £100 left). If you’re someone who prefers to deal in cash, make sure that you have a tin at home that you can save your change in when you get home at night. Every amount matters, however small.
Good luck with your savings goals ladies; set your goals and smash them! I know that it’s hard but no matter how much we can afford to save, having something put by will always be able to benefit us in the short term if we need it and most certainly in the long run.