It’s a sad (but true) fact that wages are showing a slow increase while our outgoings are increasing. Earnings are now only 1.8% higher than a year ago – the slowest rate of increase since late 2014 – which has contributed to a cut in real incomes because the rate of inflation has been higher.
So while we all might be feeling the pinch, there are still ways that we can start adding to that savings pot. Each month, it seems like the day vs money ratio isn’t quite balanced, and that is one of the reasons that people across the UK are facing such a lack of savings; the Money Advice Service recently found that 40% of the working population have less than £100 in savings.
But, there are ways to fix this – and having a financial pot there to soften the blow when those unexpected costs rear their ugly head, can prevent the stress and worry often associated with money and debt. So here is how to build up that pile of money without sacrificing too much fun!
Get Realistic
It’s time to be brutally honest with yourself and your spending habits; do you use that monthly gym membership or could you embrace the great outdoors? Are you planning your meals for your food shop to make sure that there is no wastage? And are you frittering away money each month on items and social occasions that you could scale back on?
To put your habits into perspective, go back through your purchases each month and track how much they amounted to – you might be surprised where your money goes each month without realising it! Take great care with the way that you spend your money and try to analyse WHY you spend in that way.
Also remember that while a pay rise would be great for giving you some financial freedom – you have very little control over that, but you do have control over reducing your outgoings, so that’s the best place to start.
Make a Savings Plan
Setting yourself an amount each month that you want to save can have a big difference on your ability to do so. Having a manageable target to achieve can influence us to make saving a habit.
Whether the target is the beginning of a nest egg to provide you with financial peace of mind, or you are saving for a holiday, having an amount that you want to achieve puts a competitive element on it and makes us more likely to achieve the goal.
The best way to make sure this happens, is simply to set up a direct debit into another account so that you don’t even see the money leave. Be sure to read up on which accounts are going to provide you the best returns for your money. Admittedly, there are no accounts that are offering impressive rates right now, but do your research first.
Have A Clear Out
This might seem like basic advice, but if you went through your possessions and were ruthless in what you could get rid of, you could probably make a lot of money!
Challenge yourself to sell what you don’t use in 30 days; if you can do without something for a month, the chances are you won’t miss it if it’s gone. We’re not talking about sentimental items, we’re talking about those things we buy on a whim, wear or use once at a party….and then it sits unused.
Also, a cluttered home makes for a cluttered mind, and you will be amazed how much clearer and lighter you will feel after purging the items that you don’t really need.
Embrace Technology
Technology has infiltrated our lives in so many ways and we trust its ability to do everything from tell us how many calories to consume, to market our businesses and manage our shopping.
So why not let an algorithm calculate a manageable monthly saving amount? There are savings Apps such as Chip, and automatic savings applications that analyses our spending, and uses the figures to work out what we can afford to save. It then transfers money into a savings account every couple of days based on the figures.
Another app is Plum, this works in the same way by monitoring spending and setting aside money on a weekly basis, you can also communicate with it using Facebook Messenger, where it will provide you with updates.
Be Smart on Payday
Repeat to yourself, “Payday is not a celebration, Payday is not a celebration”. And make this your daily mantra!
Did you know that the first Saturday after payday is known as ‘Millionaires weekend’? Because we spend like wildfire at the beginning of each month. As mentioned previously, work out how much you can realistically afford to save each month, and set up a direct debit into a savings account, instead of waiting until the end of the month, where if we were honest with ourselves, it probably won’t happen.
Even £50 each month works out to £600 a year – not a bad start towards a rainy day fund.
Other Revenue Streams
Although this might mean a second job, you are not limited to this because there are many ways for you to make some extra cash!
The sharing economy has opened up an avalanche of possibilities, and options range from renting out a furnished room in your house, loft or storage space, parking spaces, garden space – if you can think of it, there is probably a market for it.
If we think back to reducing outgoings – start with lift sharing, petrol is a big spend for most of us, so why not see if you can share that cost with someone else.
Cut Debt
Martin Lewis has said before that if you have debt, this should be your focus before saving. But what if you could restructure your debt so that it was more affordable, allowing you to do both?
Be sure to transfer the balance of your credit card once the interest-free period has run out, or see if you can re-finance loans to lower your monthly outgoings. Make financial shopping-around a yearly exercise to make sure you are getting the best deals.
Move Money
Just like we urge you to shop around for the best deals for your debt, you should do the same for your savings and current accounts too.
Go where the interest rates takes you, for savings and look for the best cashback deals on your current accounts, where you could earn money back on your direct debits, (think the Santander 1,2,3 account).
Many banks and building societies offer cash incentives for moving your account with them, so why not move your current account and direct debit to them and keep the other account open for your spending each month?
Keeping the other account open will aid your credit score, as moving accounts can affect it.
And there you have it, some easy ways that you can start a rainy-day fund and ease your stress levels when it comes to your finances! Happy saving!
Written by: Andrew Wayland
Andrew Wayland is the Head of Marketing at Everyday Loans. The team at Everyday Loans offer everyday loans for everyday life from £1,000 to £15,000 over 24 to 60 months (for almost any purpose). www.everyday-loans.co.uk