“Save money” is back in style as more Brits look to saving to weather potential financial problems in the future. A survey from the National Savings & Investments (NS&I) found that savings levels are increasing every year, and that women in general save more money than men.
If you are a spender and you want to learn about the power of saving money, you have come to the right place. Savers have a different way of thinking about their money and this is something that spenders could learn from. Take a look at some of the things that savers do that spenders can learn from:
Create dedicated savings accounts
Using your current account to save money is not a good idea because you will not be able to see your money growing. Your current account where your wages are paid is used frequently and probably every day which will make it extremely hard for you to save money. A dedicated savings account is a better idea. You could get a savings account that you cannot touch or you can opt to get one that that you can access. If you are financially disciplined, an account that you can touch is fine but if you are a true spender at heart, you need a savings account that you cannot touch for a set amount of time, such as a year.
Pay yourself first
Set up a direct debit from your bank account where you receive your salary. This is known as paying yourself first. You could opt to save 10% or 20% of your salary that you pay into a savings account as a direct debit. This is a better idea if you want to teach yourself financial discipline as opposed to trying to remember to save all the time.
Savers create separate budgets
Supersavers are dedicated to saving as much money as possible. This is done by having a budget that is for a specific reason. Savers find more ways to save money with set budgets such as a holiday budget, emergency budget and a food budget depending on the week. Even though food trends have changed, a set budget per week for food is something that savers stick to in order not to overspend when it comes to food. You should not have one big household budget where food is just a line on your spreadsheet. You should have a dedicated food budget that you stick to week to week depending on what you want to eat, for example.
Savers think about investing
Investing and saving are two important parts of personal finance but they are not the same. Investing is about looking into the future to secure your personal finances. Saving is about creating financial liquidity for yourself at the moment. Savers do think about investments such as stocks and shares. You should look into this once you have created a safe financial cushion for your personal finances. Investing is not for the faint hearted – make sure you do your research or contact a financial adviser before making investment decisions.
Savers do not like plastic cards
Stay away from credit card debt if you want to build a cash pile from saving. Many savers stay away from overusing credit cards in the fear of falling into debt. If you are trying to be a good saver, only go for credit such as a mortgage or a short term loan that you can repay instantly.
Decide if you really need a car
Most cars in the UK are purchased on finance which means many Brits spend a lot of their income paying off cars. Savers would look at the benefit of having a car versus the debt repayment that needs to be made. Make a solid decision whether you really need a car or whether you can do without so that you can save more money.
Stop impulse shopping
Impulse shopping constitutes a big portion of how people shop in general. Savers steer clear of impulse shopping and only make purchases based on what they need, not just what they feel like buying in the moment. Get creative like savers by using voucher codes or shopping around for the best deal. If you are a spender who loves shopping, start approaching it the way that a saver would.
Overdrafts are extra costs that can instantly create havoc on your personal finances. Approach overdrafts the way a saver would by avoiding them entirely. By saving money regularly, if you have a financial emergency you will not need to have an overdraft. Overdraft fees and costs can be expensive depending on what your bank account’s conditions are.
Stay away from contract phones
In order to save money, it is a better idea for you to get a pay as you go phone so that you can budget easily for your phone. Contract phones seem like a good idea but if you overspend, you will have a big bill to pay at the end of the day.
Save for holidays
If you are like most of us, you probably love holidays. If you are a spender, you cannot just go on a holiday because you feel like it. You need to save within a plan and you need to give yourself adequate time to plan. If you are going to long-haul location, give yourself at least three months to save. Don’t pay for a holiday if you have not thought through all of the costs that you need to pay for such as the hotel, transport, food and shopping during your holiday.
With these tips in hand, spenders can get an insight into how savers think about money. It is important to have a balance and not deprive yourself but at the same time, it is critical to save money if you think that your spending is too much. By saving, you can live the life that you want to live by reaching the financial goals that matter the most to you.