How to save some serious cash today
Saving is hard, everyone knows that. If you find you’re constantly struggling to put money aside for the future, don’t worry, you’re not alone. The good news is we’ve gathered together five great saving tips that might just help you get into the habit of saving.
Why is saving money so hard?
First off, let’s try and understand why saving money is so difficult to do. While it’s easy to dismiss an inability to save as a simple lack of self-discipline (although that certainly doesn’t help), there’s more to it than that. In fact, according to a white paper put out by the FMA (Financial Markets Authority), our judgement when it comes to making financial decisions, is a complex process that’s influenced by our emotions and experiences. Because saving money requires people to make trade-offs between the present and the future, it’s always easier to look after the present (a brand new phone, for example) than worry about a distant future (saving for retirement). A Harvard University economics professor calls this a “scarcity of attention”. To help you beat this scarcity of attention, here are those tips we promised.
1.Open a savings account
This is an easy, yet essential first step. Most banks will have a range of savings accounts to choose from, all of which will be designed with different savings habits or goals in mind. Some savings accounts offer easy access to your money, while others are a bit more hardcore and actively discourage their owners from dipping into their savings by, for example, charging a fee if you make more than one withdrawal per month. Sometimes a spot of active discouragement is all that’s needed to keep the savings headed in the right direction.
Tip: Set a realistic savings goal to help give you focus. Often, by breaking a larger task into smaller, more manageable pieces, it makes it seem less daunting. The same goes for saving.
2.Set up an automatic payment to yourself
This is the old “out of sight, out of mind” trick. Set up an automatic payment for every payday that puts a small portion of your pay into your savings account. Chances are, you’ll never even miss it once it’s gone. Then remove temptation by hiding that savings account as best you can by not including it in your “Instant Balances” in Mobile Banking and using a purpose built savings account that encourages good habits.
Tip: Do it yourself to save money. Some banks will charge fees for setting up things such as automatic payments for you, however, many of these things can be done for free using internet banking.
3. Use technology to watch your savings grow
If hiding your savings doesn’t do it for you, try tracking it instead -- everyone is different, after all. If you’re the type who gets motivated by seeing it grow, do everything you can to put that savings progress front and centre. If this sounds more to your liking, make the most of modern technology to keep a closer eye on your money.
Tip: Mobile banking apps and internet banking are great ways of doing this -- some even let you set savings goals that have a progress bar to visually represent just how far away (or close) that savings goal actually is.
4. Give yourself a financial makeover
This has nothing to do with a new wardrobe, but everything to do with making sure you have the right banking products and tools for the job. If it’s been many years since you’ve paid attention to the kinds of accounts and credit/debit cards you’re using, there could very well be better, more suitable options out there. Get online and check your bank’s website, or better still, call them up or visit a store, tell them your needs and see what their advice is.
Tip: This is a good time to make sure you’re not paying any unnecessary fees. While you’re talking to your bank, they can often see exactly how you can avoid fees and put that money into savings instead.
5. Create a budget
Budgeting can seem daunting at first, but it can be incredibly helpful when it comes to pinpointing spots where savings can be made. From food, to bills, to tax, it helps to put it all down on paper (or, at least, virtual paper) so there are no nasty surprises that might derail your hard earned savings. Knowing where to start with a budget is probably the hardest part, fortunately, we’ve done the hard yards for you with this five-step guide to budgeting.
Tip: Budgeting is great for getting the lay of the land when it comes to saving, but for a bunch of really specific tips on places to save money, check out this great saving advice from Leonie Barlow, and then check her tips to stop overspending.