From being able to buy a house to taking your family on holiday, there are so many reasons to become a better saver.
If you have clear goals, strong willpower, and a good plan in place, saving money should be easy. For those with debt or low income, it can be trickier, and you’ll need self-control to make it happen. But here are 5 ways you can become a better saver today to reap rewards in the future.
1. Follow the 50/30/20 rule
Some people swear by the 50/30/20 rule for mapping out their budget. It’s a budget technique that splits your income – 50% on ‘needs’, 30% on ‘wants’, and 20% on savings.
Things that you can’t live without, like mortgage or rent, bills and food all fall under ‘needs’. New clothes, hobbies and eating out fall under ‘wants’. Then the remaining 20% should be put into savings, or used to pay off any debts you have.
If you find that your lifestyle isn’t fitting into the 50/30/20 model, it could be time to re-think where you live, the car you drive, or the number of nights out you have.
2. Pay yourself first
After creating a realistic budget, set up a savings transfer from your current account each month. This is the ‘pay yourself first’ method. Whether it’s an online saver or a cash ISA, automating your payments will mean there’s no temptation to overspend.
Schedule deposits to your savings account on the same day that your wages come in. By paying yourself first, it becomes a priority, just like your bill payments.
3. Keep an eye on your cashflow
With contactless card payments, it’s all too easy to enjoy days or nights out without knowing exactly how much you’ve spent. But money management apps like PocketGuard and Money Dashboard can help you stay on top of things. These apps even show all of your multiple bank accounts in one place, so you don’t have to log into different banking apps each time.
If you prefer to use cash, try basic jam-jar budgeting in physical jars or envelopes, so you know exactly how much money you have to spend for bills, social life or savings.
4. Live a greener lifestyle
Going green can have a positive effect on your health, as well as your finances. Consider a Smart meter to keep an eye on your energy use and see how much you could save. Reduce water usage by taking shorter showers and less baths. Switch off lights and appliances when you’re not at home. You could even think about swapping your car for a bike.
There are so many environmentally-friendly ways to save cash, and making an active change will give you a sense of purpose. Save the environment whilst saving pennies – these are two huge reasons to keep motivated.
5. Don’t be a loyal customer
Loyal customers often miss out on the best deals, especially with car insurance or gas and electricity. This is because insurance firms and energy companies generally bring out their best offers for new customers. Never let your contract auto-renew, because you’ll typically end up paying more. In many cases, it’s possible to save hundreds of pounds each year just by switching provider.
With energy companies, it’s also worth moving away from ‘The Big Six’. These are the main energy firms (British Gas, EDF, E.ON, Npower, Scottish Power, and SSE) that supply to over 90% of the market. There are so many great alternatives out there, most of which are better for the environment, provide better customer support, and will put cash back into your pocket.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.