We all know putting some money away for a rainy day, holiday or home of your own is a sensible thing to do, but that doesn’t mean it’s easy to achieve.
With rent and bills to pay (as well as the general cost of just, well, staying alive), we barely have enough money left over at the end of the month for a single slice of avocado on toast, let alone to save up for a mortgage.
So it comes as no surprise that the Office for National Statistics found 53 per cent of those aged 22-29 in the UK have no money in a savings account or an ISA – up from the 41 per cent who didn’t have savings in 2008.
We might take comfort from the fact we aren’t alone with our penniless piggy banks, but it probably wouldn’t hurt to start taking our financial futures more seriously (especially given we’re all meant to have double our annual salary saved by the age of 35...)
We asked some financial experts for some simple tips to help us get started – we don’t want advanced financial advice from those who have already mastered their interest rates and ISAs, we just need the basics.
What you can do now:
Write out a budget.
Ok, the word budget can seem scary. But all it means is keeping a record of where your money is currently going. After the big ticket items – rent, household bills, food and transport – how are you spending the rest of your salary? And be honest with yourself.
Once you’ve established where your money is going at the moment, you can start to work out where realistically you might be able to cut back.
Set some savings goals.
You’ve started to see where you’re spending and where you could cut back. Now you need to motivate yourself to do it. Deborah Vickers, channel director at Money Guru, says a good way of doing this is to set tangible savings goals.
What do you want to have at the end of this? “It could be a holiday, a car, a horse, anything at all,” she says. Visualising where you want to be will make it much easier to resist spending temptation when it strikes.
What you can do next month:
Establish small habits.
At first, saving isn’t necessarily about the money, it’s about developing a habit you can stick to, even when times are hard. You need to lay the foundations for a life of saving, rather than giving up in three months’ time.
Simonne Gnessen, founder of Wise Monkey financial coaching, says this means making small changes. “Start with small, easily repeatable steps. Like using an automated savings app to ‘skim’ your bank account – sweeping spare change [left over from purchases] into a savings account.” Or go the old fashioned route and save £1 coins in a jar whenever you have them.
Move your money differently.
Getting to the end of the month you always seem to end up with tumbleweed in your bank account, wondering where it all went. In order to avoid this repeated trap, sort your savings on payday. Pay yourself in the same way you pay your rent and your bills, and treat your savings as a priority. If you can, move them to a different bank account so they are out of sight and out of mind.
Gnessen says: “We often believe we can’t afford to save because we only think about saving what’s left after everything else. We don’t treat savings as an essential spend. A psychological trick here is to pay yourself first.”
Try to earn money for your savings.
If you still struggling to have any money left after payday (it’s not easy) then instead of thinking how to divide up your salary, consider ways to generate money.
Vickers says: “You can make a little extra cash by clearing out items you haven’t used in a while, one man’s trash is another man’s treasure after all! If car boot sales aren’t quite up your street and you’re pretty nifty with tech, try your hand at selling on eBay, Gumtree or Shpock.”
What you can do forever:
Use cash over cards.
An oldie but a goldie. Studies have shown that we spend way less when we pay with cash for smaller purchases, because we can physically feel the money leaving our possession. Vickers says: “Try to use cash if you’re picking up lunch or hitting the shops – you’ll be amazed at how much you save.”
Take packed lunch.
We know that bringing your lunch in a Tupperware container doesn’t always feel like the most inspiring thing to look forward to, but you can spend upwards of £5 a day buying a sandwich and a drink. This adds up.
Vickers says: “This seems like a simple idea but the reality is a hard cycle to break. Try to plan and prepare your lunch the night before (or on a Sunday night, if you want to be really organised). Be realistic about what you’re actually going to eat – if you try to restrict yourself too much, you might end up spending more on snacks. Check out Pinterest for loads of fun lunch ideas that’ll fill you up and keep you interested, so you stay away from that vending machine.”