17 November 2018

How to start saving money

3 min read

 
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Katy Kicker

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Saving money for the first time can be daunting. Your budget may already feel stretched, but by making a few small adjustments to your daily life you can start saving, with minimal changes to your lifestyle.

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Skim bank accounts

Skim your bank account regularly, each day or every week - it’s very straightforward. Sign in to your bank account and round your balance down. You could round your balance down to the nearest £1, £5 or even the nearest £10. Move the odd pounds and pence to a savings account and you’ll see them start to accumulate. These small amounts of money will be barely missed and will grow into a huge savings pot over the year.

Create a budget

Begin by noting down all of your income. Record everything – including savings, wages, benefits, investment dividends and pensions. Then note down all of your fixed outgoings:

  • your rent/mortgage
  • insurance
  • council tax
  • utilities
  • car expenses
  • pet expenses
  • medical expenses.

Then list any variable outgoings, which could include:

  • your mobile phone bills
  • broadband bills
  • grocery shopping
  • entertainment expenses such as Netflix, clothing spend and any other expenses you pay for frequently, including haircuts, beauty treatments and meals out.

Once you have a note of all your incomings and outgoings, you can begin to create a budget. Work out how much available income you have left by comparing your outgoings to your incomings, then set aside a percentage for savings. Ten percent to 20 percent of your available funds is a great amount initially. You can increase this over time as you hone your budget and make further savings.

Declutter your home

Your home may be a treasure trove of past purchases, unwanted gadgets, old clothing and gifts you never quite got around to using. Decluttering your home frees up space but also provides you with items that you can sell to help achieve your savings goals. When you upgrade your mobile phone, don’t leave the old one languishing in a drawer for all eternity; instead list it on an auction website such as eBay, sell it via a local Facebook selling group, the Facebook marketplace, or see if a friend wants to buy it from you. As you declutter your home you will spend less time cleaning and organising and have more time available for money-saving ventures.

Use cash instead of credit

When you set yourself a spending budget for the month, withdraw this money in cash. When you go shopping, leave your credit cards at home. If you do not have enough cash available in your spending budget, do not resort to using credit or withdrawing further money. While many credit lines start off free, with 0% interest free deals, these offers are introductory and in time any credit you use will come with a fee attached. By sticking to using cash over credit, you can stick to your budget – allowing you to meet your savings goals.