When I started saving for the first time in my life (*cough* – at the age of 30), it felt like an impossible task. It always used to astound me how people could buy things with cash because they had savings.
How did they make them? Surely all their money was going out on bills and, well, life wasn’t it? I just couldn’t get my head around it. Every time I saved, something would happen and the money would be straight back out again.
If I’m not careful, this still happens and I’m now 4 years in.
Saving From Nothing Is Hard
It can feel like you have a mountain in front of you – especially if there is a figure in your mind that you want to reach. This alone can be so de-motivating that you just want to give up and blow your cash.
So I thought I’d write a post about the strategies I have used over the past 4 years to save money more easily and overcome my inability to do so. It hasn’t always been plain sailing.
In fact, there was a whole year when I was paying two mortgages, two sets of bills, and two council tax payments. I had a flat in London and moved to Milton Keynes to be with my fiancé. We bought a house together and shared all the bills, but my flat didn’t sell while his did.
This put us both in a really tough position.
During this period, all the money I had managed to save disappeared because my salary wasn’t stretching far enough. Any extra money I made seemed to be going into a black hole, never to be seen again! Thankfully I had Tom to support me through everything else while I concentrated on paying the bills.
Once my old flat finally sold and the equity was released, I could replenish the savings I had plundered and carry on.
I’m still paying off a large final debt, so this outgoing is taking up 30% of my salary each month, then the rest is going on savings, investments and living my life. It isn’t easy, but somehow, a bit of money is being saved!
So What Strategies Do I Use?
I have to protect my money from myself at all times. This sounds strange, but it’s so true. If I am not conscious about it and don’t budget properly, I end up dipping into my savings because I have overspent. I have needed to put things in place to try and encourage myself NOT to spend my savings.
I also have a budget in place, but this often needs tweaking as things change. Budgets are not supposed to be stiff and rigid. They’re fluid and change as you do, so it helps to have some strategies to cope with ever changing demands on our money.
The first thing I try to be is realistic. I quite often look at life with a “can-do, rose-tinted” outlook and this can get in the way of setting realistic goals.
I find that I hold on to my savings more easily when I set a realistic budget (not based on what I might earn in extra income for a start – extra income is a bonus, not a given), and try to plan for every possible outgoing.
My budget has been tweaked over and over.
Initially I’d forget about paying for car insurance and services once a year, so this would always be a shock. I’d also forget to factor in saving for Christmas and birthdays and this put strain on my already stretched wages.
If your first budget doesn’t work, don’t give up! You just have to make sure you factor in these once yearly activities and treat them as extra monthly outgoings. These are also known as sinking funds.
I have several that I save into different accounts:
- Gifts (birthdays etc)
- Education (books, courses I want to go on)
- Car Insurance
- Doctor subscriptions
- Paying extra towards my debt
Every sinking fund will have a small amount going to it (even if it is just a few pounds). When I get extra income, it is distributed between the funds with the bigger chunks going to the larger portions I’m trying to save.
This can feel quite complicated, so if you don’t like the idea of separate accounts, just have one savings account to put it all into in a lump sum every month. Do what works for you.
Slow And Steady
Unless you have a huge disposable income, saving money will take time and a lot of patience. Starting from zero is always going to be hard, but everyone has to start somewhere. Even if you’re only saving £1 a week, it is still a saving.
This is exactly how I started. I could only afford small amounts at first, then as I paid off more debt, I was able to build up on my savings.
Start low, and go slow is the mantra here.
There is absolutely no point in saving 50% of your income in the first month, only to then drag it all back out again the next month because you forgot to factor in something. Save small amounts more regularly. Get comfortable with this, then notch it up a bit at a time.
The trick is to save money that you don’t miss, because small amounts are more easily parted with than big chunks.
This has been an ongoing struggle for me. I have been so used to spending every little bit of my money, that having some set aside is a weird concept.
Investing money is easier, because once it’s in, it’s more difficult to get out again. Plus, I know that if I take the money out before it’s ready, it’s like chopping down a tree to eat the apple. The apple tastes good, but then the tree cannot make more apples to eat!!
I have to treat my savings in the same way. Once the money is in, ideally, it needs to stay in.
Obviously life happens, and it’s not always easy, but this is what you need to hold onto.
Treat your savings as sacred – they do not get touched unless absolutely necessary, ESPECIALLY your emergency fund (buying shoes doesn’t count as an emergency – I checked!!)
Plum* is a genius bit of geeky-tech I use to help me save money. It runs off of facebook messenger (but you don’t need a facebook account) and you interact with the robot on there. Once you have connected your chosen bank account to it, the little plum-bot will start saving money for you automatically every few days.
It “learns” how you spend money, and when it thinks you have a little spare, it takes it out and puts it into a fully accessible e-wallet (which is fully encrypted and one way only, meaning that if someone tried to hack you, all they could do is transfer the money back to you).
I love this method, because it requires no thinking or calculation on my part. I use it to save up for holidays.
The great thing is that you can also invest with plum. If you just save the cash then there is no interest added so it just sits there (so it would be a good place to store money that you will need access to regularly). You can start putting a proportion of it into investments like ethical or tech funds. This of course carries risk of the highs and the lows, so it’s really for long term strategies and it’s money that you don’t touch – certainly not a place to put the holiday fund.
So I think money should be stress-free, fun and interesting. Saving unfortunately is not because it can take so long to achieve what you need to! So this year I came across the 1p Challenge after one of my lovely Facebook community members shared it with us.
If you manage to save all the money in the boxes, you’ll have over £600 by the end of the year. Personally, I’m using this towards our wedding fund, but you could start stocking your emergency fund, or it could be money for Christmas/holidays.
You can either follow the days as written out (so saving a penny a day, but increase by one each time), or you can do it in reverse so the expensive month is out the way, or you could play bingo – which is what I do because it’s more interesting!
When I find money on the street, it goes in. When my fiancé raids his pockets at the end of the night, invariably there are some coins to add into the pot. Get your kids on this too!
Out of Sight, Out of Mind
One of the best things I can do to protect my savings from myself is to keep it out of sight, out of mind. Plum is good because it banks it into an e-wallet that you have to ask it to show you periodically.
I also have a savings account on a different platform for my wedding fund so I’m not tempted to dip into it.
Keeping your savings on different accounts is handy because it’s not on your usual banking app every day. The temptation is not there anymore! One of the ladies in my group has to drive 10 minutes to access her savings account. She doesn’t have a banking app for it, so she has to physically go to the bank to withdraw and deposit. That’s also an excellent strategy!
Unless you have iron-clad discipline, you will need to do something like this as well. Keep your money out of site, out of mind, and then when you do come to check the balance, you’ll (hopefully) be pleasantly surprised!
Saving £2 Coins or £5 Notes
It’s an oldie but a goodie. Whenever I have a £2 coin I throw it into my change pot. I have one of those pots you smash when it’s full.
Incidentally, if you want to see a video of a pot being smashed in slow-mo by one of my Facebook community members, head over to the group and you can see it – strangely mesmerising and satisfying!!! She had over £1000 in the pot when she smashed it!
You could do it with any type of coin if you want, but £2 coins and £1 coins are good because you get more into your savings pots that way. £5 notes are also good too – this is what my mum does and she stashes them in an envelope and banks it when it’s full.
Bring In More
Sometimes the problem really comes down to not bringing in enough money. After I have reviewed all my bills and made them as small as possible, plus set aside money for emergencies, in order to save for other things, currently I have to work extra shifts to bring in more money.
I know that I’m lucky enough to be able to do this, but even if you aren’t able to, there are plenty of other ways you can bring in more income to save for the things you want and need.
Be warned though, bringing in more money is NOT the first strategy I go to. I optimise my OUTGOINGS first. If you don’t do this, any extra money you bring in just leaks out and you’re back to square one. Why do you think lottery winners often end up broke after a few years?
The key is to take good care of the money you have in the first place, and then if you need more, you can bring it in.
So there you have it! Some money saving ideas for saving money from zero. I won’t pretend it’s easy, because it isn’t, ESPECIALLY if you are like me and haven’t started saving until only recently.
Saving money is a habit just like anything else. It takes time to develop, but hopefully some of the strategies I’ve outlined above will help you along the way.
What strategies do you use??
Until next time,
P.S. If you enjoyed this, why not try…..
Come and Join the Money-Medics!
Every week I'll send you something inspiring, useful and fun related to our favourite m-word.....MONEY! I look forward to "meeting" you. Love, Dr Nikki x