Saving money is important for anyone! It doesn't matter what kind of job you have, how much disposable income you have, or which tax brackets 2023 you fall under. Saving money helps create financial security and a sense of safety, avoid debt and create an emergency fund. With the COVID-19 pandemic, rising living costs and food suppliers struggling to meet demands, there has never been a better time than now to make your savings a priority.
You never know when your savings will come in handy. If you have a goal in mind, such as buying a house or a car, you should get saving as early as possible, so you can meet your goals. But you don’t have to have a goal in mind to save your money. Saving is a great way to prepare yourself in case of an emergency, or just to enjoy on a rainy day. You can feel relaxed in life knowing that if anything comes up, you can cover it, and you can open yourself up to more opportunities and increase your quality of life with nice things and experiences.
Saving can be difficult, not to mention the challenge with the rise in living costs and the slowly increasing living wages. But saving is not impossible. Once you have established some ground rules and start taking action, you will be able to create a new habit and saving will become much easier to do. You will find that when you get started with saving, you will quickly build momentum and see it grow beyond your expectations.
To help you get started with saving money or increasing the amount of money you have in your savings, here are some top tips you need to follow.
#1 Set goals
If you are saving for a big ticket item, such as a holiday or a home, you should start by researching your goals and find out how much money you need to save to meet your goal. For example, if you want to buy a house, you will need to save a house deposit, taxes, legal fees, real estate agent fees, and more. Once you have a figure in mind, you will know what you are aiming for.
If you don’t have a big ticket item to save for, then perhaps you can think of a figure you would like to aim for. For example, you can set a goal to save five thousand or ten thousand.
Having a clear goal in mind can make saving much easier, as you can see what you are working towards and the progress that you are making.
#2 Earn on your savings
When you start saving with a basic savings account, likely, you will not be earning any money on your savings. Saving accounts tend to have no or very low-interest rates on them. This is a good opportunity to research other savings accounts that have higher interest rates, so you can earn money on your savings. This way you can save more money. There are different types of accounts to help you earn on your savings that you can choose from, including investments. The lower interest rates will be offered on accounts where you need to take money in and out and use the money within 2-5 years. There are plenty of ways to get a higher interest rate, but this often comes with a long-term commitment, such as locking the money into an account that you cannot access for a certain number of years, or it will come with higher risks. Some of the products that you can look into are high-yield savings accounts, certificates of deposit, tax-advantaged retirement accounts, exchange-traded funds, mutual funds, index funds, stocks, shares, bonds, cryptocurrency, real estate investment trusts, and more.
These kinds of accounts will put your money to work for you and will help you build long-term wealth. In successful cases, you can earn a lot of money and increase your savings.
#3 Act like a saver
It’s not enough to just want to save money, you have to act like a saver. Taking action is key when it comes to growing your savings and meeting your goals. When it comes to taking action, you need to ensure the action you take is realistic and relevant to your circumstances.
It is a good idea to start by reviewing your current financial situation. Take a look at how much money you earn and what you are spending your money on. It can be helpful to categorise this, so you can easily see where your money is going. See how much disposable income you have left after your important outgoings have left your account, such as rent, utility bills, food, petrol and more. You should also take note of the outgoings you have that are not necessary. If you are paying for subscriptions or memberships that you no longer require, then cancel them. If you want to reach your goals quicker, you should also be careful with your spending.
If you find you are eating out a lot and buying coffee, you might want to change your ways and meal prep your food and make your coffee at home. Small lifestyle changes like these can make a huge difference, as all the money you can save will make a huge difference and help you meet your goals quicker.
Other ways you can act like a saver and make lifestyle changes are:
- Always looking for cheaper alternatives when you make a purchase
- Ask yourself if you really need the item you are intending to purchase
- Avoid buying items out of impulse or habit
- Break bad spending habits
- Make a shopping list before you do a food shop
- Avoid credit cards and only spend what you have each month
When acting like a saver, it doesn’t mean you can’t do anything for yourself. You can still go out, and go on holiday. When you plan things like this, you should do some research to see where you can save yourself some money, for example, with NetVoucherCodes.co.uk.
#4 Set up a standing order or direct debit to your bank account
Once you have reviewed your financial situation and have a better idea of how much you spend each month and how much money you have to spare, you can choose an amount to save each month. Sticking to the same amount each month can be helpful to create a new saving habit and increase your savings. You can make sure you are consistent with putting the money into your savings account, by setting up a direct debit or a standing order, so that it goes automatically.
When choosing an amount to save, you should make sure it is realistic and doesn’t put you in financial difficulty. This will only make saving stressful, and you will set yourself up to fail. Make sure you have enough money to live your life and a little to spare to spend on something you enjoy. You must be able to live comfortably and make yourself happy. If saving is draining your happiness, it is going to be much harder to stick to. If you have any spare funds left over for the month, you can then transfer the money manually if you like.
#5 Pay off debts
Many individuals will focus on saving, and ignore any debt that they have. This is because you can see the amount of savings going up, and it can be hard to let go of that. However, the longer you have debt in your name, the more money you are wasting that can be topping up your savings. While it might sound counterintuitive, it is important that you prioritise paying off any debt that you have before you save. This can be difficult to do, but if you pay off your debt, you will not be wasting money on interest rates. You will be able to clear your debt, which can release a lot of stress, and then you can put more money into your savings and put it towards your goals. Clearing your debt can also be helpful in boosting your credit score, which will be helpful for any goals that involve buying a house, a car or other big-ticket items.
#6 Tell a friend and stay accountable
It can be helpful to tell a close friend or a family member that you can trust, so that they can hold you accountable while you try to save. This can be helpful, especially when you are having a bad day or trying to resist spending money unnecessarily. You can ask them to help you stick to your spending plan, in any way that will be good for you. For example, you might ask them to check in regularly with you to see how you are getting on. Alternatively, you might talk to them when you are struggling or want some advice. Make sure you only speak to someone that you can trust, as you will be sharing sensitive financial information. You also want to make sure that they have your best interests at heart.
Increasing your savings can be hard. Follow these top tips to help you reach your goals.