It is never too late to start saving and with prices of goods and services going up, financial stability is key.
The COVID-19 pandemic has highlighted the value and importance of emergency savings as a lifeline in unforeseen circumstances, especially in times when both government and employer furlough money was uncertain.
Legendary investor and philanthropist Warren Buffett is often quoted saying: “Don’t save what is left after spending; spend what is left after saving.”
Despite this, according to comparison website Finder, 1 in 10 Brits have no savings at all. Some people think they need a significantly higher income to be able to save, but in reality, good money management can take you further than someone who has more but squanders it all.
Watch: How to save money on a low income
Here are some ways you might be able to follow Buffett's sage words:
1. Go through your bank statements
In an increasingly cashless society, you don’t see the money physically leaving your hands, so sometimes it can be a shock to open up the mobile app and see how much you have actually spent.
If you don’t have awareness of your personal finances you won’t know where to begin with managing your money.
2. Decide what your financial priorities are
Basically, have budgets. Do not spend more than you need to on things that won’t last for example.
It is also helpful to decide on an ideal amount of money you don't want to dip below as a cushion for non-negotiable expenditures like a mortgage, bills, and emergency funds.
3. Unsubscribe from what you don’t use
Now that you have seen how much is going out, you may find some surprise subscriptions.
At first it didn't look so bad because it seemed easily affordable to maintain- maybe £5 a month. Then something else grabbed your eye and it was £10 a month.
Without realising, this can build up quickly over time- if you have £50 worth of subscriptions per month that you do not use, that is £600 a year that could stay in your pocket. According to Finder, a third of Brits have less than that in savings.
4. Strike a balance
We all know that during sales and clearances we can save more money on one item than if we bought it full price. The problem however is when you keep buying things in the sale that you don’t really need, and therefore won’t get as much use of.
Or you know you will use what you bought so you buy a lot more of it and end up spending more than you would have, if it wasn’t in the sale.
Retail psychology is used in an effective way to tempt you into buying more than you initially planned to. Ask yourself if you truly need everything that you are buying and if it’s worth it- those pennies and pounds do add up.
Individual Savings Accounts are another way to help because what you save is contributed to by your bank.
Although the Help To Buy ISA is no longer available as the government ended it in November 2019, there are others. Ask your bank about the specific ISAs they offer and watch your savings grow over time.