Many of us have dreams and ambitions and some of these likely need saving up for. Others simply want to get more for their money, start a savings fund for a rainy day, or perhaps for that emergency you never saw coming. Getting control of our finances is important and a good first step on the way to building a savings fund. Where do you even begin though? Let’s look into how to start saving money.
The saying of “you can’t run before you can walk” is relevant to many different aspects of life. It’s also important when you are looking to start saving money. The average person on the street isn’t going to be able to save a million pounds this year. The cost of living is increasing. Many people have been struggling with day to day finance. So starting small is realistic. There are lots of year long savings tricks, from saving a pound a day to the 1p challenge. This is when you save the number of pennies for that day of the year. January 1st being 1p, January 2nd being 2p and so on. Although this challenge traditionally starts at the beginning of the year, you could start mid-way through if you wanted to. You’ll be surprised at how quickly this method adds up! Start small and when you see the savings happening, you’ll be encouraged to continue.
Make and stick to a budget
Many of us make budgets but not everyone who makes one, sticks to it. A budget is a great way to get a handle on your personal finances. When you know how much is coming into the household and how much is going out, you can see what you have left over to play with. You might be able to figure out ways to cut back on that money going out the door which will give you a little bit extra that you can potentially save.
Pay off debts
Debts can be a big stumbling block when you are looking to start saving money. Any debts will likely be growing, the longer you leave them unpaid. The interest on these debts will push up the amount you owe and this can eat into any future prospects about saving. So the sooner you clear these, the sooner you can be debt free and not have interest mounting up for you to pay. Clear that debt and then you can focus on saving.
By setting savings goals, you can work towards those milestones. In the first six months it might be simply to start putting £20 away each month. By the end of the first year you might want £200 in that savings account. Goals are fantastic when you hit them, but don’t be demoralised if you don’t quite get there. Life happens and you might not need to buy the kids new trousers instead of putting your £10 aside. Work towards targets, make goals sustainable and change things as your money pot grows.
When you start saving money you need that money to be in the best place. If it is sat in a bank account earning 0.1% interest, that’s not great. It would be much better in an account earning 1.2% interest. You might not think there is much difference but you might as well be getting the most you can. If you are able to lock your money away for a year or two you can get much higher interest rates. However many of us want easy access to our savings. If that is you, shop around and shift your money into the highest interest savings account you can find. Make your money work for you.
Hopefully you now have some ideas of how to start saving money. It can feel hard at times, sometimes impossible. Many people even find it scary to start saving money. But you just have to begin.