Saving money is a positive and empowering habit to develop – and doing so now could help you live more comfortably in the future. If you're not already regularly putting something aside, and if you’re able to do so, the best time to start is today.
Whether you want to start saving, or to discover new ways to add a little more to your savings pot, we've shared some money-saving tips and tricks to help you take control of your finances. You’ll also find links to our articles, which are available on our money tips hub, to explore each tip in more detail.
Why saving money now could help improve your financial wellbeing
Financial wellbeing is how you feel about your relationship with money and the control you have over your financial future. As set out in our financial wellbeing index, we’ve split financial wellbeing into two types of building blocks to help you adopt a positive money mindset:
- Money building blocks – paying for what makes you happy now, and in the future
- Mindset building blocks – paying attention to the things that matter to you
By identifying and keeping in mind what makes you happy, you’ll be on the path to achieving better long-term financial wellbeing.
Saving money now could give you greater peace of mind in the future. By doing so, you’re actively working towards your financial goals, for example buying a house or saving for your retirement. Saving now could also help you to be more prepared for unexpected life events such as losing your job, going through a divorce or experiencing a medical emergency. For other tips on how to take control of your finances, you can read our financial wellbeing index.
If this all seems daunting, remember that you can always start small. If you can, putting aside some money every month could help you build up a reasonable sum over time. If you’re looking for some hints and tips, learn more about the benefits of saving £50 a month. And while it’s perfectly normal to compare your wealth to that of others, doing so can affect your financial wellbeing and overall life satisfaction. Instead, try to focus on how far you’ve come rather than comparing your wealth and financial status to others.
7 ideas to help you save money
1. Make a budget
The first step to saving money is knowing how to budget effectively. There are different ways you can do this. For example, there’s the traditional method, where you track your income and outgoings and set savings goals. Then there’s the 50-30-20 budget, where you divide your spending into needs, wants and goals, and dedicate a percentage of your income to each.
Fortunately, saving money doesn’t have to mean giving up your favourite hobbies. Finding a balance between saving and spending is key. For example, you can often find discounts for spa days and beauty treatments online, and you can book travel in advance for the best deals. If you enjoy eating out, some restaurants have lunch sets or pre-theatre menus that offer value for money.
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2. Track your finances
Next, it’s important to track your spending. Consider making a list of all your expenses and ranking them in order of priority to identify where you can make savings. You could also explore other ways to cut costs – switching your energy supplier or mobile provider might be a possibility.
To help you keep track of your finances there are many budgeting apps that can help you track your everyday spending, such as Money Dashboard. If you have online banking, going through your recent bank statements will help you see where your money is going.
You’ll probably need to track your outgoings for a few months to get an accurate picture of your spending habits, but it’ll help you better understand your financial situation. Tracking your finances is a good step to working towards becoming financially independent. Read how you could be more financially independent for some hints and tips.
While you track your finances, you’ll probably see that you need to adapt to changing circumstances. For example, the cost of living has probably made it difficult to track your finances and you might have had to make a few changes to respond to the rise in prices. To help you stay on top of your finances during times of uncertainty, learn about 9 ideas to help you on our money tips hub.
3. Adopt a positive money mindset
When it comes to saving, having the right attitude is key. This starts with building positive financial habits, such as spending less than you earn and not letting your emotions influence your financial decisions. Doing regular ‘life admin’ can also help you to cut costs and save money. Whether that’s planning your meals in advance, so you don’t overspend at the supermarket, researching ways to get cashback on online purchases, or comparing prices to make sure you’re getting the best deals.
We share some other life admin tips which could save you money in our infographic.
4. Create your savings goal
Hoping to put aside £100 every month, or looking to save up for a house deposit? Whatever your savings goals are, you should always begin with the end in mind. This means deciding on a fixed amount and target date first, and then creating a step-by-step plan to get there. Being specific is key as it can be hard to measure progress for generic goals like ‘I want to save more’ or ‘I need to spend less,’ which can be too vague to stick to. Keeping your goals achievable is also key.
Read our hints and tips on how to save up to £10,000 in a year and simple steps to hit your saving goals.
5. Build up an emergency fund
An emergency fund is a pot of money that you’ve set aside for unexpected costs. When building it up, you’ll need to work out how much you want to save and where to save it – it’s important that you’re able to access your money easily in case of an emergency. As a rule of thumb, you should try to have at least three months’ worth of living expenses to fall back on.1 You could consider setting up a monthly standing order into an easy-access savings account to help you reach your target.
To get started, read more to learn how to build up your emergency fund.
6. Future-proof your finances
When saving money, it’s crucial to future-proof your finances, especially if you’re raising a family. After all, every financial decision you make today could directly impact your loved ones in the future. This might mean building up a bigger emergency fund or making sure you have protection insurance in place to help ease any unexpected financial burdens. While raising kids can be expensive, it’s still important to save towards your retirement – even if you’re just putting away a small sum each month.
If you’d like to find out more, we share other ideas on how you could future-proof your family finances.
7. Carry out budget reviews
Now that your saving is well underway, be sure to carry out regular budget reviews to make sure you’re on track to reach your financial goals, especially if your personal circumstances and income change. A good start might be to do a mid-year budget review. Ask yourself – am I halfway towards achieving my savings goal? Should I adjust my target amount or spending habits? What else can I do to get back on track? Remember to also celebrate the progress you’ve made, no matter how small.
Discover how to review your progress against your budget.