• Work Hard
  • 30th Mar 2022
  • 1.9k Views
  • 0
  • 6 minutes

Here’s why we should keep saving money if we can

Our living costs are on the up, our energy bills eye-watering. But the experts say keeping a focus on our savings is key.

News of rocketing energy bills and the rising cost of living have been making headlines for a while.

There’s no doubt these price rises are having an impact on what we choose to spend our money on, from the petrol pump to the supermarket, and plenty of us are feeling the pinch. But in amongst the financial uncertainty, money experts are advising to keep on saving where we can. While it can feel tempting to put saving plans on ice and use our cash immediately, slowing your saving habits now could have long-lasting implications…

Save without thinking

Founder and CEO of Unbiased, Karen Barrett, advises on how to seamlessly top up your savings: “The easiest way to stick to your saving plans is to set up an automatic transfer from your current account to your saving account, ring fencing your monthly savings. You’ll be surprised how quickly it adds up, giving you greater peace of mind and a buffer against future bill hikes.”

Quick saving hacks can ringfence cash you’d have otherwise spent. Money influencer Gemma Bird @MoneyMumOfficialrecommended one such hack in her book Money Mum Official: Save Yourself Happy: “Look at your bank balance every day, and whatever the last figure is, transfer it over to your savings account. So, if there’s £208 in your current account, transfer £8 into your savings account. If the next day there’s £54 in the current account, put £4 into savings. It’s amazing how quickly you’ll find yourself saving £30 or £40 a week without missing it and over time that really adds up.”

Budgets aren’t boring!

Financial experts are united on this: to get a grasp of what you are spending and what you could be saving – you need to have a budget.

Annabelle Williams, personal finance specialist from from Nutmeg explains: “Although you already know what you earn and may have a good idea of what things cost, itemising each expenditure and looking at it laid out in front of you can change your perspective. Sometimes people have a kind of brain fog around what they’re actually spending, either overestimating or underestimating some costs. It’s especially tricky to gauge the cumulative cost of smaller spends like top-up trips to the supermarket or buying the odd lunch. The idea is that by seeing what you’re spending, you may be able to reduce expenditure in one area to free up more money for another, or even save.”

The idea of inputting all your outgoings and incomings into a spreadsheet might leave you rolling your eyes but try shifting your perspective on this: to get a clear view of where your money is going each month, you need to see the figures in black and white. Also, with some careful budgeting, it’s the route to holidays, home improvements and things you really want.

Karen tells us how to get the budget ball rolling: “First of all, find out where your money is going. Split your monthly spending into bills (rent or mortgage, utilities, council tax and TV licence, phone and internet), groceries, essential transport or commuting costs, subscriptions (gym, film or TV services) and non-essential spending (leisure, eating out, clothes). Also identify any one-off annual costs (for example, insurance premiums) and divide by 12 to get a monthly cost recorded.”

Annabelle adds, “While budgeting won’t make the cost of essentials go down it can make higher prices easier to manage. How you use a budget depends on how tight money is for you and what your financial aims are – do you want to work hard towards a financial goal or just have a plan to help you be mindful around money?”

Minimise little extras

Perhaps it’s an Uber habit you’ve got into or a Deliveroo reflex for a weekly takeaway. Both are examples of habits which can quickly drain your cash reserves but, as Karen tells us they are also a route to efficient saving: “Start with quick wins, cutting back on non-essential spending. This is where you can make surprising savings. However, it’s important not to cut out everything as you still need to have things to look forward to.”

Emergency funds

No one can predict when their roof might spring a leak, or the car suddenly needs a new and expensive part. In an ideal world, we’d all have something squirreled away for a rainy day. Annabelle at Nutmeg explains why it’s important to develop some financial resilience: “For those who can afford to, maintaining an emergency fund of three to six months’ living costs is a good idea and this money should be held in cash in an easy-access account for when you need it. This will help you develop financial resilience, which means having enough money put aside to withstand the unexpected, for example so that a broken boiler or having to pay for dental treatment doesn’t leave you completely broke or turning to debt.”

Family business

It’s a no-brainer that things like kids’ hobbies and holiday plans can be an expensive part of family life. Karen suggests making children part of the conversation and involving them in saving if your plans need to be re-assessed. “Discuss as a family what’s most important, considering alternatives to foreign travel and encouraging your children to get into good savings habits.”

Don’t stop saving

According to Centre for Economics and Business Research there’s a distinct gender gap in pension savings between men and women: to the tune of £183,936. At a time when many women’s pension savings have stagnated or taken a hit thanks to the pandemic and many more women losing work than men, it’s now vital to keep topping up your pension pot, despite the financial pressure many are feeling.

Annabelle advises, “Although it may feel safer to stop saving or investing right now, with pension contributions you can continue to receive tax relief, which may help counteract the rising cost of living. Also, if you pay into a pension and making regular contributions over a long period of time means there is the potential to benefit from compounded interest or investment returns.”

Take advice

Karen at Unbiased – which links consumers up with its database of thousands of independent financial advisers – recommends getting some advice about how, why and where to save. “A good adviser will ensure that your savings are in the right place, that you are maximising your personal savings allowance and that you’re getting the best interest rates. The savings a regulated adviser can bring you often far outweigh the cost of advice.”

Jo Dunbar

A journalist with over 15 years experience; ranging from online outlets to national newspapers via glossy magazines. Jo started her career on the Features team of a supplement at a national Sunday paper; from there she became a celebrity writer then celebrity editor and moved into women’s magazine with roles at…

Comments

Have your say

You might also like...

Let us introduce you to NetKno – new networking platform helping local businesses connect

Darlington fashion brand House of Zana wins trademark battle against Zara

Samuel Phillips Law on why we should all make a Will, even if we’re single

Get your advert here