Let’s face it, it’s one of the last things we think about when we’re in our 20s. Maybe it’s the job that I do that has made me realise the importance of saving. Or maybe it’s the fact that at the
beginning of last year I decided I’d like to buy a house soon, but hadn’t been making any real effort to save towards moving out (hence my ISA article for first time buyers in the last newsletter).
Some 53% of those aged between 22-29 have nothing in a savings account or ISA, a recent study by the Office for National Statistics (ONS) highlighted. That’s a lot of young people missing out on financial security in the future.
The following is designed to give you some basic, but fundamental, steps to get you into a routine of saving regularly. You’d be amazed how effective these actions can be.
Remember to think long term
Before looking at how to save, it’s worthwhile mentioning this. Saving works when you do it little but often. By no means am I suggesting you need to start taking out hundreds of pounds each month to put into savings. You know how much you earn and therefore you have to be realistic with what you’re comfortable. Even a small amount of savings can help keep you out of the red when something unexpected happens.
At this stage, it really doesn’t matter what you’re saving for, as long as you get into the saving habit ASAP.
Automate your savings
The simplest way to make sure you’re saving each month is to have a direct debit in place so that you don’t have to think about it. The likelihood that you would manually transfer the money into your savings account after each payday is small, otherwise we would all already be doing it.
If you’re fortunate enough to receive a pay rise from your employer, then why don’t you try putting the additional money into your savings each month. After all, this is money you wouldn’t have had otherwise, so pretend that you still don’t!
Create a separate ‘place’ for your savings
By holding your savings with a different bank to your current account you’re reducing the temptation to dip in and out of your savings.
In addition, apps such as Monzo and Yolt have become increasingly popular over the last few years. These apps have spending trackers so that you can see how much you spend on food, drink, petrol etc. each week. Through Monzo you can set up different pots for bills, holidays and rent, for example. This way you can budget more effectively each month, and be more confident that you have the funds to pay for the necessities, but also the other little extras too.
Use cash when you go out
Saving and budgeting means being disciplined. It can be a downward spiral always relying on your debit card when you’re out and about, especially with the ease of contactless payments now. So take cash when you go out – and leave your card at home!
The New Year is a great time to set new goals.
This straightforward challenge from parenting site PlayPennies.com will save you over £600 by the end of 2020. And you won’t even notice it coming out of your pocket.
You start by saving 1p on day one, 2p on day two and by the last day you will have a total of £667.95 if you started on 1st January! So there’s still time to save a big chunk by next Christmas. You can save your pennies into a piggy bank, the good old-fashioned way.
Download a checklist from their website so that each day you can tick off the pennies you’ve saved. Google ‘PlayPennies 1p Saving Challenge’ to find out more.