It can be easy to think that saving money is a luxury reserved for those with high income. But that couldn't be further from the truth! It's been years since I've written about budgeting and saving money, but it's something that is so important. Particularly in a time when we don't get educated about money matters when in school, we are left to figure it all out ourselves and often don't know the best way to approach it. Whether you're saving for travel, for a new car, a house or even just a rainy day, it's so important to realise that we can ALL save money if we put our minds to it, no matter how much we are earning. It's all about being smart, educating ourselves and planning ahead.
Now I'm in Hamburg and settled in my new job, I've started saving for a rainy day. I don't know exactly what I am saving for, but I've never been one to fritter away money without a plan and a back-up plan. Since traveling, I've been both the richest and poorest I've ever been and I know how crappy it is to run out of money. Since then I've never let myself do anything or make any decision without a cushion of money. I've never been a rich girl and I've never had anything paid for, I'm a hard worker who is smart with her money. One of the greatest skills you can learn in life is how to manage your finances and budgeting for your income. Now I want to teach you the skills I have learned so you can take control of your finances.
Assess your incomings/outgoings
The key word here is honesty, you have to be brutally honest with yourself if this is going to be helpful. Take a close look at your finances, how much money you get paid monthly, how much goes to bills/rent/food, how much goes into your savings and how much you fritter away. Whether it's the latest top from Asos or another Primark haul, buying your morning coffee or eating out at Pret every day - all of these are luxuries and if you honestly want to save, you have to cut them out or at least cut back. A small daily sacrifice can save you a lot of money at the end of the month. By being honest with yourself about your incomings and outgoings, creating a spreadsheet and working out how much money you are wasting each month, you can clearly see how you could be saving a lot of money.
Set a savings goal and deadline
I love organisation and if you ask me, making a plan is the best way to see real results. Setting a savings goal is a great way to really track your progress and to make it achievable instead of vague and out of reach. When I went travelling for the first time, I already had a chunk of money saved but I knew I wanted to travel freely for as long as possible without working, so I set a goal of £10,000 and a deadline of one year to save until my flight. Making a plan kept me focused and setting money goals meant I knew how much I had left to save. Now I have set new money saving goals both for travels and for a rainy day, by using my new N26 bank account, I can do this all on the app and it tells me exactly what percentage I have saved and how much I have left to reach my goal. It's great to have it visualised and to have it so easy to move your money around. By setting a date deadline, it really keeps you focused and means it is not a never-ending task. Another good tip, start a savings jar and put all your loose change and notes in it. We lose so much money in loose change lying around and never end up using it. Empty pockets, clear out the sofa, find all the loose change and keep adding to it, you'll be amazed what you can save with one jar.
Cut back on frivolous spending
This covers a whole range of things, from cutting back on buying that pumpkin-spice mocha choca latte and pastry every day, you could be helping your waistline and your bank balance. Take saving money seriously, realise that buying lunch every day for a month could cost you between £200-300, while those coffees could add another £100-150. Then there are all those shopping trips and new nail polishes and all the things you don't really need but you want. Always ask yourself if you NEED it, or if you just WANT it. Then add up what that money could be used for - I always worked it out compared to how long I could travel in Thailand for, and a week in Thailand easily won over buying lunch.
This also applies to things like gym memberships and phone contracts - look at what you are spending and if it is really worth it or if you could cut back. Perhaps change up your expensive gym membership and start running outside for free, or cancel your expensive monthly phone contract and get a cheap SIM-only deal like I did before I went travelling. I went from spending £40 a month to £11 on my phone, and managed to convince my gym to let me have an unofficial short-term membership for a cheap flat rate instead of paying joining fees etc for just a few months. Be smart and cut back anywhere you can.
Invest and save your money wisely
Do your research, don't just go with the bank you've been with for years, or the one your mum was with. Get informed and find out about interest rates, about ISAs and savings accounts with benefits. Trust me, we have a duty to be financially informed and to make sure we are wise about investing our money and saving it in the right places to make the most of our savings. If you have a chunk of money saved, why not put it in an ISA, you can't touch it so you won't accidentally spend it, and it has a higher interest rate than a current account. You could also look at investing a chunk of money over a longer period of time with potential for a larger payout in five or ten years. It seems crazy to plan this far ahead, but by making smaller investments now, you could really help support yourself later on. Need help? Why not make an appointment at your bank to talk over options.
Pick up extra work
Looking at your earnings and worrying you won't make your goal? Why not pick up some extra work? Perhaps you could work some extra shifts at your current job, or start bartending one night a week, babysit or even freelance in the evenings. There are so many options and ways for you to earn more money directly for your savings. Before I went travelling for the first time, I was working five jobs and still managed to have a social life, so don't tell me it isn't possible to do it and not burn out. You just have to be smart and organised. If your main job is low paid, perhaps consider whether you are in a position to ask for more money or even apply for a different, and better paid role.
Blag your way to saving money
Depending on your job, or friendship circle, there could be some great opportunities you are missing out on. Saving money makes you get creative, because I don't see why you should still have a life while you save. You just have to find new, cheaper ways to socialise and have fun. For instance, as a writer, I used an opportunity to manage a festivals website as a way of getting free tickets to events while I gained writing experience. I also started to invite friends round for dinner and drinks at my home, hosting dinner parties and the like as a way of saving money and enjoying the people around me. I made the most of free activities in my hometown and made the most of my last few months at home, while still saving money.
Sell, sell, sell
Look around you, do you have a wardrobe that is bursting at the seams, or a bookshelf weighed down by your novel collection? See the value in everything and question whether you need it anymore, you could make some serious cashlady! If you are planning to buy a house or go traveling, it could be a perfect time to have a huge clear out and sell your old stuff. Not only will it go to a good home, but you could make some good money on items that would otherwise just sit there. Before I went traveling, I had a huge clear out and sold half my wardrobe, lots of books, DVDs and CDs, plus all my old kids toys, I sold them online using sites like eBay and at car boot sales. I made a small fortune, a lot more than most of the items were worth and it also gave me so much more space. Now there are so many ways to sell items easily, including Depop and Facebook groups.
Not earning a lot?
If your income is low, that doesn't mean you can't save. Don't let it put you off looking after your future. Try setting a goal to put aside 10% of your monthly income once you have taken bills/rent and expenses out of the mix, or save £100, or even £50 a month. It doesn't matter how big or small the number, just put something aside. Once you get into the routine and start to see a bit of money build up, you'll see how good it feels to know you are doing something for YOU. Top tip: as soon as you get paid, immediately move your savings into a separate account so that you can't spend it. It doesn't matter how big or small your goal is, perhaps you want to buy a laptop for your studies, or buy a designer handbag. Whatever your goal, work hard for it, it will make reaching the goal so much more satisfying.
Are you saving for something? What is your goal? How are you cutting back and saving for your future?