How to save money: 6 habits that can make you better at saving
Picture the scene: You’re nearing payday. Your funds are low but the mood is high… It’s almost the weekend, after all! You dare to check your bank balance and you can’t believe it it - there’s an unexpectedly juicy £50 left! What do you do?
If you wanted to say ‘save it!’ but knew you’d probably splash out on some Friday fun, you’re not alone. But don’t worry, you just haven’t discovered your saving side yet. To master anything, you need three things: the right attitude, the right tools, and the right info.
The fact that you’re reading this blog tells us that you’ve already got the right attitude and you’re thinking about making positive change! But where to get started? Saving is one of those topics that can make the best of us a bit anxious, but there’s nothing to fear. From baby steps to big wins, in this edition of our Saving Sensei series we’ve got six saving tips that could take you from money splasher to money stasher. .
Saving habit #1: Checking your balance regularly
You can’t save what you don’t have. So, if you’re overspending and losing money to things you don’t need or enjoy, that’s one of the first things you can tackle. Set yourself a healthy money routine by checking your bank balance at least once a week. This forces you to face how much you’re really spending and where you’re spending it. You can also analyse what’s working and where you can afford to cut back. A daily cappucino from your favourite coffee shop really can add up over the course of a year.
It also prevents leaky spending. You could easily be losing money to forgotten direct debits and subscriptions (you could seriously still be paying for that online doodad subscription from 2010).
Staying on top of your outgoings and incomings can get a bit tricky if you have multiple bank accounts, so it’s definitely worth using some technology to make that a bit easier. You might find Yolt’s Total balance feature really handy for this - it shows you your total balance across your various accounts and credit cards (minus any upcoming bills!).
Saving habit #2: Using a separate account for your savings
We’ve all been there. You’ve been working hard to try and hold back some extra money every payday, but it just seems to vanish. Little by little, you find yourself dipping in here and there until suddenly all of your savings have magically disappeared. An easy way to tackle this is setting aside some money into an entirely separate account, making it harder to access - and spend! Cue: savings accounts. Not unlike your cute childhood piggy bank (we all had one!), making your money just that little bit less accessible can go a long way, especially in the age of contactless cards and online shopping.
Of course, you can use a separate current account from your main spending account, but it’s worth investigating savings accounts to take advantage of any interest. We know that finding the right savings account can seem a bit daunting. From online savings accounts to high interest savings accounts, there are lots of different types. When picking a savings account, there are a couple of points to consider, like whether you need easy access to your money (for example, you might want to go with this option if you’re building an emergency fund) or if you’re looking for the most enticing interest rate. Give yourself some time to research and find the best option for you!
Saving habit #3: Paying yourself first
Does the following sound familiar? Payday arrives and you have your plan: pay off any bills, follow your budgets, tick along day by day, and at the end of the month, whatever money is left over can go straight into your savings. The problem is, that rarely seems to pan out the way we hope it will. Things come up, plans change, bills grow and suddenly you reach the end of the month and all of that money you planned to put into savings is gone!
Try reversing the routine: pay yourself first. As soon as you get paid, set aside a realistic amount into your savings right away. Even £40 of your monthly salary (£10/week) saves you £480 by the end of the year.
Saving habit #4: Automating your savings
Once you’re comfortable with habit #2, you can also ramp things up with a little automation. Luckily, there’s lots of technology out there to help you with that. For example, you can easily set up a direct debit with your bank to automatically move a set amount of money to any designated saving pots - whether that’s another current account, savings account, or pension pot, whatever is right for you. There are also some great apps out there that automatically round up your purchases to the nearest pound and move that money into your savings.
Saving habit #5: Building an emergency buffer
Life is anything but predictable, so it never hurts to set aside some money that you can easily access in case things go a little off plan. We get it - no one likes thinking about the possibility of something bad happening, like losing your job. But just think of it as a contingency fund for your life, something that gives you that little peace of mind that if life does throw you a curve ball, you can hit it out of the park. Savings expert, Maria Nedeva recommends saving up enough money to cover your salary for three months. That may sound like a lot, but you can start by putting aside as much as you can. Remember the mantra, every penny goes a long way.
Saving habit #6: Setting a savings goal
You’ve made it through tips 1 to 5! Now, for the fun bit: Setting a savings goal! Whether it’s buying a home or saving for your dream honeymoon, having a goal to work towards can help you go that extra mile. Write it down, create a mood board, scream it to the roof tops, if you really want (we do love talking about money!)… Just pick a goal and make it official by documenting or visualising it somehow. Once you know what you’re saving for, you can determine how much you should be setting aside each month. Plus, it keeps you from dipping into your savings for less important reasons.
So there you have it, six saving habits done and dusted. All you have to do now is put them into practice, and you’ll see for yourself how awesome feels to save just that little bit more.
Now, back to those three things you need to succeed. . .
Attitude? You’ve got it!
Some new knowledge: Check! And we’ve got even more where that came from!
The right tools? We’ve got something for that, too! Check out this handy list of all the ways you can ramp up your savings routine with Yolt, the smart thinking money app.
At Yolt, we’re on a mission to empower you with your money, but our blog is not official financial or professional advice. If you're not sure how to invest or what to invest in, seek independent financial advice.