How much can you save out of a weekly budget and how much would you like to live on when you retire? Over 30% of us in the UK are failing to save, according to a report from Scottish Widows, but I’ll show you how to spring clean your finances.
You could ask yourself some important finance questions you may have been avoiding.
- Would you like to retire early? If so, when and how much would you like to have each year when you retire?
- When would you like to pay off your mortgage?
- Fancy family later? Do you have one and want to start to save for their further education?
Your financial goals can be realistic and achieved with a little planning, cutbacks plus setting aside small regular amounts of your cash. Week by week you may be amazed at how much you could save.
I’ll show you how you can achieve this with some top tips.
Analyse your spending
Check through your bank statements for the past three months and see if there are any direct debits flying out your account that you don’t even use – gym membership springs to mind!
Either carry a notebook and jot down everything you buy or keep all your receipts for one month. Even though you don’t think you fritter away your cash, the results will probably surprise you.
There’s a big difference between grabbing a cup of coffee or popping out for lunch every now and again, then realising that you’re shelling out hundreds of pounds month on Caramel Macchiatos and Pret sandwiches.
Monthly saving: up to £100 – based on an average spend of £5 every weekday.
Stick to your list
When you’re heading out to do the weekly grocery shop, don’t just walk into the supermarket without any idea of what you need.
Always create your shopping list around the meals you plan to eat that week and check the cupboards before you leave. Take advantage of any special offers, particularly on fresh meat, which you can always divide up into separate bags and then stash in the freezer.
Monthly saving: up to £120 – according to research suggesting consumers could save £10-£30
Keep energy bills down
With gas and electricity seeming like it’s constantly on the rise, it’s silly to waste energy around the house.
There are plenty of things you can do to try and keep those energy bills to a minimum, such as turning appliances off at the plug and switching off the lights; turning the thermostat down; washing at 30?C; only filling the kettle with just enough water and so on.
Monthly saving: up to £16 – according to the UK Energy Trust, doing these few things could add up to savings of £195 a year.
We’ve established that you’d probably shave at least £200 off your monthly expenditure, so what are you going to do with it all?
If you stash your cash under the mattress every month, it won’t be worth as much in 10 years as it is today.As such, I’d recommend opting for a savings account, rather than a standard current account. There are a few options available to you – all of which will ensure that your savings are protected against inflation.
When saving it is always worth being realistic with your financial goals, but that doesn’t mean you can’t aim for a high rate of inflation.
Everyone is entitled to save up to £5,640 in a cash ISA, so to maximise your return, take advantage of this tax-free savings option before looking elsewhere.
NatWest, RBS & Nationwide are all currently offering 2% AER on their instant access cash ISA.
If you’ve exceeded your tax-free allowance, the next best option is a regular saver. You’ll need to commit to monthly deposits, but will often be rewarded with cash bonuses and a high rate of interest.
First Direct has a fantastic 6% AER for the first 12 months with its Regular Saver account. You’ll need to sign up for a current account too as deposits are made via standing order.
Just think after one year, you could be sitting on a nest egg worth nearly £2,500. Unfortunately, this introductory interest rate doesn’t last forever, so assuming you manage to get 2.5% AER thereafter, in ten years you could have amassed a whopping £25,000 – not bad for someone that thought they couldn’t afford to save.
|Written by :|
|Jemma is a news & research reporter for compareandsave.com.Having worked as a journalist on a number of personal finance websites; she now spends time researching and commenting on UK personal finance stories and investigating new ways to help our readers save money.For press enquiries, please visit our Media Centre page.|