Money is tight in the UK, it seems. The cost of living remains precipitously high, as common household expenses continue to inflate in value well above the average rate of interest. This economic climate is a difficult one in which to start your savings journey, but should not deter you from getting a better hold of your finances. Whatever your goal, what are some simple tips for getting started as a saver?
Set Clear Goals
Before you start to make any major steps towards saving or otherwise managing your money, you need to have a clear and relatively specific idea of what you’re hoping to achieve. Saving is fine for saving’s sake, but without a direct goal your efforts might not be as efficient as they could be. For example, certain approaches that work incredibly well when saving for a house will not work at all for building emergency funds.
In a nutshell: are you hoping to make yourself debt-free, or do you have something you want to save towards – like a holiday, car or home? Or are you simply trying to reinforce your finances for the long-term? Each answer might inspire a different route to saving – and will also help you keep focused when it comes to acting in service of your goals.
Separate Your Money
Next, you need to start thinking about structuring your money. Again, the way in which you do this will necessarily differ from goal to goal, but there are some basic things you can do to get started. If you’re saving money, you will of course benefit from opening up a separate savings account. Any money you intend to save can be effectively partitioned from your spending money, and also enjoy higher rates of interest in the process.
If you are saving for a home, any money put directly towards your deposit should go in a Lifetime ISA, or LISA. These are government-supported financial products that add a 25% bonus (up to a maximum of £1000) each year. This is a significant boost to your savings, and a clear route to speeding up your timeline.
Track and Review Expenses
Of course, in order to have anything to save, you’ll need to identify opportunities to save. This means engaging with your outgoings, and looking for opportunities to create extra savings. By subtracting essentials like rent and utilities from your monthly income, you can find your savings ‘ceiling’, and hence your limitations.
From here, you can get finer with your expense tracking. Recording the cost of grocery shops and every impulse purchase will show you how much less opportunity to save you have, and perhaps even give you pause before making certain purchases. You might also take this opportunity to re-evaluate regular costs, whether subscriptions to things like Spotify or the cost of utilities like your internet connection.
