Sometimes it feels like there’s too much month left after you’ve spent your paycheck, making it impossible to save any of it — but this isn’t always because you don’t earn enough money. You should look into your spending habits to see if there’s things you can cut out without decreasing your standard of living.
Create a budget
Budgeting might feel like a bore, but it’s a really helpful way of keeping track of where your money goes, and ensuring you’re not whittling it away on meaningless items – have you ever looked at your bank statement, disappointed at the balance, and not been able to pin down a couple of large transactions where you blatantly overspent? This is the key sign that you’re whipping your debit card a little more often than your bank balance will thank you for. While doing so, it’s important to be honest with yourself. When creating a budget, people tend to underestimate their actual spending — do you pop out for coffee and cake a little more often than you think? The chances are, you’re not really aware of your own habits. Budgeting apps, or digital banks with great budgeting tools like Monzo, Revolut and Starling can help you get an idea of how you actually spend. You can use this to work out easy places to cut out some of your spending.
Don’t be too ambitious
When creating a savings plan, a lot of people suddenly decide to put away large chunks of their monthly income, telling themselves they’ll spend hundreds of pounds less going forward than they are used to. It’s similar to making a drastic change to your diet, like giving up chocolate. It might work for a short time, while you’re feeling motivated, but eventually, your cravings will take over and you’ll go back to old habits. Set yourself up to succeed by setting savings goals you think you’ll be able to achieve – you can then increase this over time, always sticking with achievable goals.
Put away money early
Some people decide to put away whatever’s left in their account at the end of the month, but the issue with this is that you could be tempted by it. If you put money away when you’re paid, then you’ll be less likely to notice that it’s missing. Some digital banks can do this when you’re paid, so you don’t even have to intervene.
If you get a bonus or raise, save some away
This one is key. Everyone likes to hear that they’re receiving a bonus, and you might have found yourself spending the money in your head before you’ve even received it, but it’s worth planning to put some away. You could decide to put away half of any extra income you receive after a raise. This way, you’ll still get a little boost each month, but you’ll also be saving a little away. In the case of a bonus, you could decide on how you’ll spend it ahead of time.
Consider investing your savings
Putting your savings into investments allows you to put your savings to work, after all, interest rates are hovering around the 1% mark, and aren’t improving significantly. However, it is important to remember that your investments can go down if specific stocks or the markets dip. You don’t have to be an experienced investor to get started, you could simply put it into a ready-made portfolio with a robo-advisor or invest in some exchange-traded funds (ETFs). Investing in shares can also be quite exciting — some investors choose to invest for fun, as well as to make money. You could choose some stocks to invest some of your portfolio into and keep track of how they get on, such as companies that are as large as countries, or stocks that people are talking about on Reddit.
