Having money saved up for emergencies or a large purchase you’re hoping to make can give you a lot of financial security and freedom. Living paycheck to paycheck certainly isn’t ideal, since if an emergency arose or you suddenly became unemployed, you wouldn’t have any money saved up to cover expenses in the short term.
If you don’t have a lot of savings, then you’re probably wondering how you can start building up a nice nest egg. Keep reading to discover how to easily increase your savings.
Open an ISA
If you don’t have a dedicated savings account, then you could be making it a lot harder for yourself to save money. In particular, an ISA (individual savings account) is a great choice for those looking to open a savings account.
There are many different types of ISAs to choose from. For example, a Cash ISA allows you to deposit up to £20,000 tax-free each year, and a Stocks and Shares ISA is an investment account where you can also save up to £20,000 annually. To save money for your children’s future, you can open a Junior ISA and save £9,000 a year. Learn more about Junior ISAs on the Wealthify website.
You won’t be able to start saving money until you get a clear idea of how much money is entering and leaving your account each month. Often, with all of your expenses throughout the month, it’s hard to keep track of what you’re spending and where, so actually writing this information down can be really helpful. Every month, make a note of your income and spending and place your purchases into categories. Then, you’ll be able to see exactly what you’re spending your money on, which can help you cut down on unnecessary purchases and therefore save money.
Create a budget
Creating a budget is an essential part of saving money. Once you’ve tracked your spending and divided your purchases into categories, you can decide on appropriate monthly limits for each category. This will help you set aside more money for your savings.
If you don’t know where to start with creating a budget, you could try the 50/30/20 approach. With this budget, 50% of your money goes towards needs (rent, bills, food, etc.), 30% goes towards wants (frivolous purchases, restaurants, takeaways, etc.) and 20% goes into your savings. If these amounts aren’t possible with your current financial situation, you can always change the ratios to suit your needs.
Set aside money each month
Above all, you should make sure that you’re always setting aside a certain amount of money each month. This will ensure that you save money steadily and sustainably over time, helping you build a nice cushion of savings. Setting aside this money right after you get paid is a great way to stop you from spending it.
Saving money can be hard, but with the helpful tips listed in this article, you can easily increase your savings in no time.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. London Loves Business bears no responsibility for any gains or losses.