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Saving money while you’re young might seem like an impossible task - it might even be the last thing on your mind right now! However, it is never too early to start saving and building towards your financial future. Here are four tips to help you get started with saving.
1. Figure out your circumstances
The first step towards saving is to assess your current circumstances. This means understanding how much money you earn (income), how much you spend (expenses) and calculating any debts you may have to pay off.
It might seem like a boring task at first, but it’ll be worth it! Take some time to sit down and go through your financial situation. Calculate your income, including any allowances or salary you earn. Then, list all your monthly expenses, such as food, subscriptions and bills. Don't forget to include debts as an expense! Once you understand your financial situation, you can start making adjustments and creating a plan to save.
2. Create a budget
The next step is to create a budget. This helps you track your spending and is an essential tool for saving money. Identify your necessary expenses (these are things you HAVE TO pay for such as rent, food, and bills. Then have a look at any other expenses you make regularly and see if there is anywhere you can make cutbacks.
For example, getting a takeaway multiple times a month can add up! By making small changes, such as cooking at home, you can increase the amount of money you send to your savings!
3. Start Small
Saving can feel like climbing a mountain when you are just starting out. However, remember that every penny counts. Don't be afraid to start small. Once you’ve rested a budget, you’ll know how much disposable income you’ll have left after paying off the essentials.
As a rule, the best day to save money is the day you get money! Waiting until the end of the month could mean not having much left to spare.
Consider putting away a small percentage of your income into savings every month, even if it's just a few pounds. By consistently saving small amounts, you'll build up your savings over time.
4. Set Goals
Setting savings goals can help keep you motivated and give you a target to work towards. Set a specific goal for yourself, such as saving £500 in a year, and then create a plan to achieve it. Make sure your goals are also realistic and achievable so that you don't become discouraged (see our video on SMART goals to help with this!). Breaking down larger goals into smaller milestones can help you measure your progress and celebrate your successes along the way.
Saving is an essential skill that everyone should learn. By taking these four steps, figuring out your circumstances, creating a budget, starting small, and setting goals, you can start saving money and working towards financial stability. Remember, the earlier you start, the more time your money has to grow, and the better your financial situation will be in the future. Happy saving!
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