Do you have more than £100 in savings? If not, you’re joined by nearly 17million fellow Brits who struggle to save money. But you CAN do something about it. It goes like this:
- The UK government plans to help those British people who struggle to save with the Help to Save Scheme.
- A good way of helping to build up savings is to use an app to set up standing orders to a savings account.
Shocking research from late 2016 shows that nearly 17million people of working age in Britain have less than £100 in savings. Roughly two-fifths of adults in Britain are living without a savings buffer.
What is more, they have less than £100 available in savings at any one time, according to a poll run by Money Helper (previously the Money Advice Service). This equates to 16.8million people throughout the UK. In Northern Ireland, the North East of England, Wales and Yorkshire, over half of people had less than £100 in savings.
Low Income Earners & Brits who Struggle to Save
The Money Advice Service said that these worryingly low levels of savings render many people vulnerable to unexpected bills which could have a massive impact on their personal finances and leave them vulnerable to short term borrowing. Other research has revealed that nearly 75% of people experience at least one surprise expense per year.
For low-income earners, savings presents a major challenge. The government plans to help those British people who struggle to save with the Help to Save Scheme. It is due to come into effect in April 2018. Aside from having little disposable cash to put away, low-interest rates on offer from banks are also keeping people from adopting healthy savings habits. In September 2016, the best easy-access savings rate was a tiny 1.07 percent.
How can you save more?
Obviously, these figures are extremely worrying, and you may be one of the people included in the statistics. You don’t need to be an economist to know that most people don’t have enough in savings, and could be doing a lot more to build up their “rainy day funds”. Unfortunately, there’s no magic spell you can use to make all your financial worries disappear. However, there are many ways you can make yourself more organised, change your habits for the better, and build up your savings in a shorter space of time. If you’re one of the millions feeling the sting, here ad up your savings and maintain them.
Make a Realistic Budget
Setting out a realistic budget isn’t that difficult. However, it can seem very daunting if you know your finances are in need of some major changes and you’re desperate to build your net worth. There are a lot of tools you can use to get yourself moving in the right direction if you struggle to save, but one of the most important things to bear in mind is that your budget needs to be realistic. When you’re trying to decide what you should cut from your general spending, start off with the things that you know you can live comfortably without. For example, magazine subscriptions, your home phone, Netflix, and various other things that you want rather than need.
After you’ve made these changes, follow up by dividing your income into three sections: one to pay your bills and other necessities, one for savings, and another for recreation. Hopefully, I don’t have to tell you which sections take priority! The change won’t feel great to begin with, but soon enough you’ll start to take more satisfaction from smaller, more affordable rewards for yourself.
Set Specific Savings Goals
Even if you draw out the best budget in your tax bracket, you’re going to be pretty hard pressed to stick to that budget if you don’t have any specific goals to work towards. Would you love to buy a house but you struggle to save up for the down payment? Pay down your student loan or credit card debt? Quit your job and spend a year travelling the world? Buy that classic car you’ve loved the look of since you were a kid? Whatever your goals are, you should give them all specific price tags, and deadlines for when you want to be able to afford them. Having these measurable goals in place will keep you much more motivated.
Set It, Forget It – Using a Savings App
There are a lot of apps and tools out there you can use to keep tighter control of your personal finances, but one of the most powerful is your standard online banking app. One of the best features of these tools is that they allow you to automate virtually anything. For example, if you wanted to allocate 5% of your total income to a down payment on a house, and 10% to retirement savings, set up transfers for every payday. This will take all the work out of getting into the habit of paying yourself first, saving you time and effort. When contributing to your savings runs like clockwork, working towards your targets will feel less like a good habit, and more like a rule.
Start Thinking About Deductions and Saving Money
When tax season is some time away, write-offs may be the last thing on your mind. Still, if you want to maximise your refund by the end of the tax year, you should get into the habit of thinking about possible deductions more. For instance, if you take public transport daily, it’s a good idea to buy a monthly pass or season ticket instead of individual trip purchases, as these passes can be written off. The same goes for charitable donations, provided that the charity is government registered and you hold onto the receipts. By paying more attention to the tax deductions you’re entitled to, and taking advantage of more of them, you’ll be able to give your savings a nice little booster at the end of every tax year.
Make Some Savings Sacrifices
Making some sacrifices to free up more money is the oldest trick in the book, and there’s a good reason for this: it works! This might mean cutting out subscriptions to TV services or online gaming accounts, making date night less frequent, or turning down your friends’ invites to nights out a little more often. At the end of the day, no matter how much you miss them, all of these sacrifices will be worth it. You’ll not only be significantly richer through making these sacrifices but also make your budget so much simpler and easy to manage.
Know What You’re Worth, and Earn It!
If you’ve ever spent a long time in unemployment, then you’ll know how tough it can be and you most probably will be among those who struggle to save. It’s totally understandable to be grateful for a job, any job. Having said that, it’s important to be aware of what your skills and experience are worth and to make sure your job pays you fairly.
Look up the median salary for the role you’re currently in, and see if your employer pays you that much. If you’re not, ask your boss for a raise, or start looking for a new job that pays you what you’re worth. When you get this pay raise, just make sure you don’t let it go to your head, and stick to whatever saving habits you’ve set for yourself. The more you earn, the more you’ll be able to save, but this won’t make much of a difference if you go straight back to squandering it all.
Do Something on the Side to Earn Money
An increasing amount of people work an extra job or some side hustle to supplement their primary source of income. Aside from being able to explore new fields that could give you more job satisfaction, this can be an excellent way to accelerate your rate of savings as well. Do you make crafty pieces of jewellery in your spare time? Consider selling some of them on Etsy. Are you a sports or music nut, but don’t want to pay a small fortune for tickets? See if any night shifts are going in a stadium. Do you have a natural flair for writing? Set yourself up on a platform for freelance copywriters. There are all kinds of ways to supplement your income these days, and with the amount of online platforms devoted to it, it’s much easier to fit these side-gigs around your general responsibilities.
Keep on Investing
Putting a fair chunk of your income into savings is imperative, no matter what your situation. Having said that, make sure your money carries on growing or at least keeps up its worth with the tide of inflation. You will need to have some kind of investment strategy. The more you save, the more you need to ensure that a decent proportion goes to good use. This can mean putting it into bonds, stocks, precious metals, and other lucrative avenues. Yes, investment can carry a lot of risk. You need to have a keen understanding of the factors tied up in it to have any kind of success. However, by investing your money in assets that have the potential to grow, you’ll be able to generate more income. Then, you will have much more to put away in savings.
Savings Summarised
If you’re one of the 16.8million people in the UK with less than £100 in savings, or you’re financially stable but you still struggle to save up enough to meet your plans, I hope this post has helped you out. Regardless of your age, your income and your non-negotiable expenses, you should be saving in the most efficient way possible. Getting into the right mindset isn’t always easy, but making it a priority will pay off massively and will help you out of the rut of those who struggle to save more than £100.
