10 Feb 2020
I’ve been tasked with giving some of my top saving tips – and here we are! I know how to enjoy myself and I’m not obsessed with saving, however since I’ve lived alone, I’ve always been pretty good at it. I know it can be such a struggle for people, so hopefully, these might be of practical use.
Warren Buffet said it and there really isn’t anyone else I’d rather model my financial ambitions on! It is important when you are saving to put the money you are saving aside at the start of the month or week/whenever you get paid. I have tried it every way, and any time that I don’t save straight away I always end up with less money
I read a book (The 80/20 Principal – a good read, would recommend) which said that no matter what your income if you can save 10% of your overall income over the course of your life in an appropriate compound interest account, you will be financially secure and set for retirement. Personally, I am of the view that life is too short and unexpected to worry too much about the ‘what ifs’ of the future, however, I use 10% as a guideline for myself and I find it works
I always have a fixed term account running alongside my other savings account. The interest isn’t as amazing as the maximum you can save is £250 a month, but it stops me from touching the money, which I need. I have a Halifax account which is a 2-year fixed term with 2% interest. There is an option to go in-branch and close the account which gives me some reassurance that if I really need it, I can get to it. But it is the way forward for me personally.
Help to buy was an amazing scheme, so hopefully, some of you will have it! If not, get the new Lifetime ISA to help to save towards a deposit for your house. There is literally no sensible reason not to get this as it genuinely is just free money.
Spending £3.00 on a coffee each day can be a huge waste of money if you are only doing it out of habit and with no real enjoyment. That is £1092 a year if you have one every day, which is huge in relative terms. However, if you absolutely live for your daily coffee – then maybe a grand a year isn’t too bad. When you are saving, it is all about prioritising your favourite things and being stricter in areas that you can live without. I wanted to get a new car for years but always held off because my older car worked fine, and I knew I had to make do for a while. I’m glad I did it as it helped me buy my house faster.
I have a credit card that I use, and it absolutely feels like free money and makes me spend way more easily. If you have a credit card for emergencies, just keep it in a drawer for exactly that. Having only recently used my credit card for the last couple of years and purely out of habit, I can so clearly see how people get into serious debt. By using credit, you are always behind yourself financially, so it is best to be only used to improve your credit score or maybe protect you against holiday purchases.
A great site and tool to get money back on thousands of sites/products – it is free to join, and I recently saved £100 on my latest holiday booking. Compare the Market etc are great for checking that you aren’t paying above and beyond with your insurance policies/utilities etc too.
I really can’t speak for everyone; however, I spend most of my money on eating out and drinking. I go out for dinner a few times a week and it all quickly adds up! It is my major downfall and when I have been strict with my savings previously, it has always been the thing that is first to go for me. I’d really recommend focusing on your spending in this area and reducing it by doing some more home cooking whilst even getting your friends/family involved. Even having drinks at home can save a fortune. It is better for the waistband as well as the bank balance! Everyone has their Achilles heel; it is just worth thinking about what yours might be.
As basic as this seems, it can really be useful. If it helps you to realise that the gym you pay £30 a month for hasn’t been used in 6 months or that you are paying over the odds for a phone contract which has run its course, it might just prompt you to cancel one or two and save yourself some money!
One of the hardest things to do is just to start because it feels like too much of an ordeal when you haven’t got going. Put those thoughts to the back of your mind and just get cracking. Within a year, you’ll feel so much better!