The importance of saving regularly
If you save regularly, you’ll find that your savings quickly add up. The easiest way to watch your savings grow is to get into the habit of putting money away little and often.
How to make saving a habit
The best way to make saving a habit is to make it automatic, so you don’t even have to think about it. Set things up so you routinely add a little bit every week, two weeks or every month to your dedicated savings account. Whatever cadence you choose, setting up a direct debit means you won’t even have to think about it. And you won’t be tempted to skip a payment!
Before you know it, you’ll have a sizable chunk saved up ready to contribute to your goals. 🥅
Do it on payday
Sometimes it can feel like a marathon until your next payday 🏃. The monthly pay cycle is a rigid structure which makes it hard to save little and often. Instead of waiting until things become tight, move your savings over as soon as you get paid. Think about how much you want to transfer each payday. Then set up a direct debit so you won’t even notice the money leaving your account.
How much can you afford to save regularly?
Saving regularly relies on you setting an achievable amount to save every month.
If you’ve got money left over at the end of the week or month you’re already on to a winner. If you don’t have money left over it’s still doable to start saving regularly. It’s not easy to change how much money you have coming in, but you can definitely change the amount you have outgoing. For example, if you bought one less coffee a week at an average price of £2.44 you would save £126.88 per year. Tiny adjustments in your spending can go a long way.
It’s all about the interest
Every saver wants to earn as much interest as possible, so having a basic understanding of what goes into interest will benefit you. There’s a base rate of interest which the Bank of England sets. Then there’s compound interest which is when the interest you earned on your savings earns interest on itself. Each time the interest earned on your money is paid into your account that can earn interest too, which can make a huge difference to your saving goals in the long run.
What about regular investing?
Investing means committing money to an investment vehicle in the hope of making a financial gain. However, investing isn’t a reliable source of income, it’s risky, and there’s no guarantee you’ll get your money back.
Generally, investment solutions are for long term goals and only really suitable if you have the financial cushion of 3 – 6 months.
Now you know why it’s important to save regularly, take a look at our article on how to set a savings goal for tips on structuring your aims.