This is post 7 of 7 of the budget series. This week I’m talking about how to budget to save for events or the “saving to spend” fund.
We all have those events don’t we? The ones where we need a big chunk of cash?
I needed a very large stash of cash for when I went travelling 2 years ago. I didn’t manage to save what I wanted to, but I still had an awesome time. The downside is that I had to use credit for some of the trip, and I’m still paying it off now! So I’m including this to make sure IT DOESN’T happen to you.
What about weddings? Some people spend modest amounts, but others can spend a small fortune! It depends on your priorities, but the money has to come from somewhere! I have a post on wedding tips here to keep the cost down as much as possible.
So what else could you save for? If you have no immediate goals, you could always start a fund off for travelling whenever you like, or maybe a fund for your children to go to university (or even to start having children!)?
Just remember a few fundamental rules:
- If your event is 1 year away, the money can be left in a savings account with the highest interest rate you can find (even then it won’t be huge!) The Money Saving Expert has a good resource for this.
- If your event is 5-10 years away, consider saving into a bond
- If your event is 10+ years away, definitely consider investing in stocks and shares (see my blog on index trackers)
The aim is to reserve around 5-10% of your income for your big goals. Realistic targets help you to manage your cash flow more easily. I am no where near this monthly target yet, but with more of my debt being paid off bit by bit, this will get better with time.
What if I don’t have the money for this, or don’t have anything to save for?
This is a hard one to answer, because only you know what your priorities are. If you really have no plans for holidays, flying out to see your family who live in a faraway country, a wedding, having babies or sending them off to university in the future, then I guess skipping out of this budget item would be best for you. Really though, who wouldn’t want a holiday fund?? I suggest sitting down and writing a bucket list – things you want to do, be or have before you die. This might give you the motivation to start saving.
But Nikki, I literally cannot save. I don’t have any money!
If you struggle putting together the money, enlist the help of savings apps like plum or chip. I’ve tried both. Plum runs off of facebook messenger, so there isn’t an extra app to download, and chip is a downloadable app for your mobile. They both “read” you bank account to track your spending habits, and then withdraw small amounts of money every few days. I managed to save £600 from March to October this way. At approximately £75 per month, there is no way I would have been able to do this on my own, but the apps calculate it for you and do it automatically.
Automatic: this is the KEY word. When humans get involved emotionally, this is when we sabotage ourselves and take the money out again.
Auto-bot apps are how I put together my holiday fund, and I don’t miss the money when it goes out at all. Its easily transferred back again when I need it, and I really couldn’t be without it now! It feels like free money when I open up the account and see the balances. Plus, its so easy to set up, and safe too (the e-wallets are backed by Barclays Bank). Why not try it out for yourself and start putting together your savings for a future goal? If you join plum, you can earn free money by signing up 3 friends too! You can also earn money by using their peer-to-peer lending option for saving your money (starting at 3% interest per annum. Just be aware that this is an investment, and could go down as well as up in value).
Chip doesn’t give you money for signing up, but for every friend you refer, they give you 1% interest on your money, up to a total of 5%.
Whatever your goals are, and however you wish to do it, having an event planning fund is really important. The less pressure you can put on future earnings the better.
So that’s it for the budget series
We have covered the money-pie-method from start to finish.
If budgeting is not your thing, call it something else. Call it your “life plan”, “money diary” or anything else you can think of that makes you feel better about money and b-u-d-g-e-t-i-n-g in general.
As adults, we simply cannot afford to be immature with our money – ESPECIALLY if you have children, or other dependents, and also in view of our salaries not keeping pace with inflation. Living life is getting much tighter, so the more we can do to lighten the load the better. Allocating money to different slices of the pie is a method you can use to give your money direction and be the leader of your well-earned pounds. Without leadership and love, your money will just wander off to someone else (like having a puppy without a lead!).
How do you budget?
There are tonnes and tonnes of offerings on the internet to help you budget your money. Some are paid for, some are not.
Your budget needs to be a balance between what you spend on (is it the best way of doing something, or do you actually need it) and how much you can save. You can’t have everything all at the same time!
But at the same time, We need to banish credit cards and get rid of the stress related to money. If we can put people on the moon, and fly into space, then this is most certainly do-able too.
Have fun with your money, don’t be scared of it anymore. You have plenty of information now to set yourself an awesome plan to stick to that shouldn’t feel like being restricted. Be purposeful with how you spend and save your money, and I promise it will improve.
P.S. Don’t forget to sign up to my free and private facebook group! We’re a friendly bunch – come over and introduce yourself!
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