With the state of the world right now, many of us are finding that our money isn’t going as far as it usually does. This means that saving for a rainy day / holiday / big milestone is either A LOT harder or pretty non-existent and we’re here to say that you’re not alone. As young people, we’ve all been told to stop spending money on takeaway coffee or a Netflix subscription but it’s obvious that won’t actually shift the dial and suddenly mean we’ll wake up to a house deposit sized saving-pot!
It’s also true that in the run up to Christmas, many people forget about saving altogether as they opt for spending money on the festive season and gifting. People are feeling the pressure to spend, spend, spend. So, how can you actually be smart with your money right now?
We’ve teamed up with our sponsors Zopa Bank, one of the UK’s leading digital banks, to share some helpful tips for how to navigate saving in these challenging times! It’s important we let you know that some of the links in this post are sponsored. #ad
Here’s a checklist of a few ways that you can be smarter about your money, so that you can genuinely get closer to your savings goals in this current climate:
1. Pay yourself first
What on earth do you mean by ‘pay yourself first’ I hear you say? Well actually this is one of the most helpful habits to get yourself into in difficult financial times.
So every payday when you get paid, as well as sorting out all of your bills and making sure everything is paid on time, you should also consider putting money into your savings account that very same day. Just see it as another bill you have to pay but this one is for ‘Future You’.
A lot of people wait until the end of the month to see what’s left over before they put anything into their savings account but often, you just end up spending the money you would have put into savings on little things that quickly add up. Paying yourself first is a form of self care, for your savings pot that is!
2. Automate your savings
Whilst we’re at it, why not make ‘paying yourself first’ even easier by setting up monthly direct debits to your savings accounts. This way you don’t even have to do the maths and all the hard work will be done for you. Find an amount that you can afford (even if this amount is really small because of the financial challenges we’re all facing) and automate that transaction!
3. Store your savings where you’ll earn interest
Are you storing your savings in the best place? Are you earning any interest on your savings? With inflation rising rapidly, the value of each pound is going down. This means that any money sat in a bank account that doesn’t earn interest is depreciating in value much faster than it would in a bank account that’s earning interest.
Zopa Smart Saver allows you to save in different pots for different goals from as little as £1, whilst earning interest. You can also choose to boost the interest rate of any of your pots in exchange for different notice periods. So, say you have a holiday booked in a year’s time and you’re saving up some spending money, you could select a notice period of 95 days and you’ll gain a higher rate of interest on that specific pot. Just remember to give notice 95 days out from your holiday and the money is ready to go with interest on top!
4. Emergency Fund
When you are saving in difficult financial climates, it’s important that you consider how quickly you’ll need to have access to money for an emergency. Many people choose to have an ‘Emergency Fund’ as well as a savings pot so that they don’t have to dip into savings when they’re in a tough spell. A general rule of thumb is to have around 3-6 months of expenses in an Emergency Fund for you to lean on. Choose an Easy Access savings account for your Emergency Fund so that you can get your hands on it quickly if needed.
5. Consider consolidating your debts
One of the biggest barriers that sometimes stands in the way of us and our savings goals is paying off existing debts. However, consolidating all your different debts into one loan could mean you pay less interest overall. Instead of borrowing from different places, all charging different interest rates, you can put them all on one interest rate. Some people do find that it saves them interest in the long run and it’s one of the few genuine areas to make savings in this current climate.
If you’ve got any existing debts – could be on a credit card or a loan – you can use Zopa’s Debt Consolidation Calculator in their app to see if you could save money on interest, or pay off your debts quicker, by consolidating them with a Zopa loan. Their personal loan representative APR is 15.4%.
6. Plan ahead for big spend months
Have you got a month with loads of birthdays or perhaps you’ve got a holiday, a wedding and a baby shower all in the space of 6 weeks? Times are tricky right now and it’s important to plan ahead for months when you know your expenditure is going to be higher than usual.
With Zopa Smart Saver account you can create separate savings pots for different months that help you plan ahead for those more expensive times of the year.
Future you will certainly thank you for ANY amount of saving you are able to do right now, so have a go at following some of the above steps and remember, don’t forget to pay yourself first!
Blog post shared as part of a paid collaboration with Zopa Bank.