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Your accumulated savings can help you enjoy life by allowing you to take a well-deserved vacation or afford a new car or home. More importantly, having enough money in the bank for emergencies simply gives you peace of mind. 

As you may already know, saving money consistently is easier said than done. The household savings ratio in the United Kingdom in 2020 is currently at 5.9%[1]. Despite seeing an increase from the 4% that was recorded earlier this year, it is still lower than the 9.7% record set in 2015. 

Many factors prevent people from effectively saving part of their income, ranging from life emergencies to lack of financial discipline. While emergencies are largely unavoidable and unstoppable, you can at least address the latter. To give you a better idea of how to approach it, then here are four ways to start saving money today:

1. Keep track of your expenses and trim the fat

The goal of savings is to set aside money for a rainy day, not lower your living standard. It’s wise to work out how much money you need to live a comfortable life with this in mind. 

An excellent way to do this is to record your daily expenses in a spreadsheet. You want to paint an accurate picture of your monthly spending because it’s essential to ensure that you are spending as you would normally—not more and definitely not less. Record everything, from how much you spend on petrol to the daily coffee drinks that you buy, using receipts and bank statements; remember, this should be done daily for better tracking.

Once you have this information, organise your expenses in three categories: utilities, necessities, and creature comforts. 

Utilities should include everything you need to survive, such as your rent, water, energy, and food expenses. These are bills that you cannot avoid paying. 

Your necessities can include the money you spend on transportation, such as petrol or a Travelcard if you use public transport. Phone bills, any medical prescriptions, and hygienic products like soap and shampoo also fall under this category. These are expenses that keep you functional, which makes them essential. That being said, you can lower them slightly by opting for cheaper options or being more economical with your usage. 

On the last category are creature comforts, which are nice to have, but should certainly be trimmed if you want to save more money for the future.

2. Set a goal

Saving money is easier if you have a goal for it. Setting a goal also helps you treat savings as money that is already spoken for, instead of being free resources that you can use to splurge on non-essential needs. Your goal can be nearly anything you want it to be, whether you’re saving up for a vacation, a new home, a business, a wedding, or even your retirement. 

3. Treat your savings as bills 

One grave mistake that makes saving money harder is to spend first and save whatever is left at the end of the month. This tactic never works. 

Instead, you must treat your savings as bills and “pay” them as you would your utility bills. If your goal is to save 10 to 15% of your monthly income, you should set that aside as soon as you receive your income—that way, you’re assured of meeting your goals.

4. Contact a financial adviser 

Most people don’t want to work until their old age. Most people want to retire earlier than the current retirement age of 65. If you’re one of those people, you’ll want to know how much to save to hit your target retirement age. 

A financial planner can do precisely that by creating realistic forecasts about how much you need to save to retire by your target age realistically. With the help of a financial adviser, you can calculate how much you need to set aside to account for both expected and unexpected expenses. Whether it be illness or the costs of buying a holiday home, a financial adviser can help you plan your life.

Conclusion 

Saving a portion of your money is a habit that everybody needs to develop at an early age. Your savings can serve as a buffer zone to help you survive during uncertain times, especially if you go through redundancies, unemployment, or health issues. It’s best to save as much as possible and early as you can to help you tide over these uncertainties.

Harry Robinson Wealth Management is a team of financial advisers in Cardiff, UK. Our competent financial advisers can help you navigate through your options in retirement, investments, income protection, and mortgages. Contact us today to learn more about our services.

References 

1. Trading Economics.  https://tradingeconomics.com/united-kingdom/personal-savings. Accessed on 7 October, 2020. 

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