It’s hard to save. Here are five tips from Knowsley Mutual Credit Union to get you started on that safety net.
1. Plan ahead
There’s a quick and easy way to bring your spending under control and it’s called the 50/30/20 rule.
It’s really simple. No budget forms to fill out.
Importantly, 50/30/20 doesn’t stop you enjoying life. The critical challenge is not to spend more than 50% of your money on life’s absolute essentials. That can be hard if you’re on a low income. But if you achieve this, it’s easier to reach your money goals.
After spending half your money on your ‘needs’, you’ve got 30p in every £1 to spend on whatever you want. Money is there to enjoy. But you need to set a limit if you want to save more and borrow less.
The remaining 20% is for financial commitments. Try and pay off debt and start saving.
2. Don't splurge
Nationwide’s Payday Saveday survey revealed that one in five people were spending over half their spare monthly wages within 2 days of getting paid.
It can be the same on benefits. Cupboards need restocking. Electricity, gas and phones will need a top up. There might be a fiver owed here and there to friends. Consequently, the money can vanish quite quickly.
Despite this, making your money stretch beyond a few days means you’re more likely to meet your money goals.
3. Use cash
Sometimes how you pay is as important as what you spend.
Research has shown that people on ‘cash only diet’ save £100s compared with those that spend on cards. People tend to cut loose and spend more when they’re paying with a credit or debit card Scientists have found that spending cash feels more painful than using plastic.
4. Spring clean
Check your bank statements. Cancel automatic subscriptions and memberships that you no longer need.
Consider switching suppliers.
5. Pause purchases
Impulse buys when sitting in front of the telly or scrolling on the mobile. Boredom buys, call it emotional spending. Force yourself to have a cooling off period. If you’ve been online shopping, leave your purchase in the basket for 24 hours. Then, a day later, ask yourself if you really need that purchase.
If you’re not allocating 20% of your income to paying down debt and saving, why not allocate the cash saved from impulse purchases there instead?
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