- Being financially savvy is more about controlling our spending habits rather than the numbers themselves
Saving can be a really tough thing for many of us to do. We always have something to spend our money on which leaves us with not much to save. But if we did it the other way around we’d respect money more and the things we buy a lot more. Saving means giving something up today to save for something in the future, which could be uncertain.
Not being drawn in by keeping up with the Joneses and falling for special offers when we don’t need them are ways to change your mindset.
- Save for the big things
Getting into the mindset of saving for a big thing, such as a holiday, is a great way to manage your savings. Find out how much the holiday will cost, how much spending money you think you’ll need each day – for each meal, day trips, insurances and new clothes etc to take, as well as when you want to go. You’ll be surprised how much money you can save each month towards it when you only have a finite amount of time to do it. Rather than put it on a credit card, as most of us do these days.
- Saving for the smaller things
If you have your eye on a smaller item such as an electrical item for the house, a small personal item such as a watch or a home improvement project, whatever it is, save a little each month for that. Why not set up a separate account in your bank to do this, name it and set up automatic transfers to it? It’s much easier to save towards more practical things. When it comes to saving for bigger things for your future, such as your retirement, then you’ll get into a habit of valuing what you are saving for. Even if you think that retirement is so far away that you can’t or don’t want to save for it just yet, set aside a percentage each month. You will be surprised by the extraordinary power of compounding has to help your money grow. The earlier you save the more you’ll have. It’s the law of accumulation.
- Limit your long-term goals and keep track of short-term tasks
Don’t get overwhelmed by setting too many long-term goals at any one time or you may not achieve any of them at all. It’s human nature that, if we set too many goals, we spread our attention too thinly, and we’re less likely to accomplish any of them. By concentrating on fewer goals we are more likely to achieve them.
If you don’t have many long-term goals you may have a handful of short term tasks that are easier and quicker to manage which may give you the impetus you need to focus on the longer term ones.
- Do you need all your subscriptions and memberships?
Why not try this for an exercise?
- Do you use your gym on a regular basis? If not cancel it. Take to the ‘green gym’ i.e. your streets, local park, coast. You could be paying anything from £30-£80 per month. That’s anything between £360 and £960 per month that could go towards something else.
- Cancel your newspaper and magazine subscriptions. It may be a small amount but it all adds up.
- Do you have a premium TV film package? Do you really have enough hours in the day to watch everything? Cancel it….
- Do you have any other subscriptions like online video games. Again they may be a small amount but it all adds up…..
- Cutting back on the little luxuries – Do you buy a takeaway coffee every work day? Try cutting it out, you could save yourself around £650 a year! If cutting it completely is too drastic, try cutting back and get into the habit of ‘treating’ yourself a couple of times a week instead.
- Do you buy your lunch every day? You could be spending around £5 a day! Over a week that’s £25 when a homemade lunch for the entire week could cost you less than £5-£10! So instead of spending £1300 on shop bought lunches over the year you could be spending as little as between £260-£520!! Potentially saving yourself £1,040 over the course of a year which would go nicely towards paying for a holiday!
Bartholomew Hawkins are independent Chartered Financial Planners with a high level of knowledge and relevant experience who will provide you with appropriate financial plans and advice. Contact us on 029 2050 8000 or firstname.lastname@example.org