Spending less than you earn sounds simple in principle. In reality, it can be a real battle. Taking the time to get into good financial habits is paramount to being financially secure, but once you’ve mastered it, there will be no stopping you!

There is a lot of differing advice out there, but these seven tips should get you moving in the right direction. Becoming financially secure doesn’t have to be a chore!

Set a budget

The best way to start saving money is to dig deep and figure out what you’re spending. Take a look at your outgoings – are all of your purchases crucial? In a lot of cases, the answer will be no. You will more than likely find that you can cut back on various things or find a way to save. As an example, spending £5 every day on your lunch amounts to £25 a week – by thinking ahead and preparing your lunches at home, you could make huge savings. It takes time, but after a bit of practice, your lunches will feel far superior to an average meal deal!

Setting yourself spending targets sounds easy, but it’s potentially the hardest point to master; online shopping, eating out and the small purchases are the hardest to curb. Rather than spending £2.50 on a coffee each day, buy sachet lattes, as an example. Most people are shocked when they see how much they really spend without noticing each month. Taking out cash with you or using a pre-pay card can be a great help, as it can help you to realise your true outgoings.

Open a savings account

Whether or not you have something to save for, it’s always worth having a savings account – whether you’re putting money away for a rainy day or you’re saving for something special. If money is not in your current account, you don’t necessarily miss it. The amount you choose to save is up to you – and whether you want to limit withdrawals or make the account easily accessible, there’s something out there for every type of saver. You can also look at savings accounts as a buffer – whenever you need a bit of money you can, within reason, turn to it. If something goes wrong with your car, if you struggle one month, or if you just really need to let loose and have a holiday – the money is there for you.

Think about income protection

Income protection policies are there so that if you are unable to work, you can maintain your current lifestyle – your mortgage, rent, debt and everyday spending won’t be affected. When you take out a policy, you’ll be asked to set a deferral period, which is a period of time after which you’ll start to receive payouts. This will continue until you return to work, the policy expires, or you retire. The price you pay depends on your health, the cover you select and how long you decide to be covered for.

Get a pension

It might seem like a long way off, but investing in a pension is so important. You’ve probably heard by now that most companies are automatically enrolling their staff into a pension – the bottom line is that the state pension may not be enough for you to live off, so the earlier you secure a private pension, the better.

You can get tax relief on your pension, too, meaning that some of your money that would have gone to the government goes into your pension instead. You can access the money in your private pension from around age 55, and your employer will contribute too.

Get rid of bad debt

Debt can be a real strain on your life. If it’s got to the point where you feel like you’re drowning, it’s worth looking into the options that are available to you to help you pay your debt back. The main two being a Debt Management Plan (DMP) or an individual voluntary arrangement (IVA). Both involve an external financial company paying back your creditors on your behalf, with you paying back a set fee each month. It allows you to pay back a smaller amount each month. You’ll still pay it all back, just at a slower rate.

The difference between the two is that an IVA requires you to have a certain amount of debt spread over two or more creditors. When you apply for a DMP, if your disposable income is high, you may be rejected as it may be easier for you to pay back the debt yourself. One of the main benefits of an IVA is that all fees and interest payments are frozen – after you’ve paid your monthly instalments for a set number of months, any remaining debt is written off.

Find ways to increase income

It’s easy to dismiss getting a second job when you are working hard at a first one – but the best thing about a second job is being able to keep yourself busy doing something else, and a lot of the time it can be really enjoyable. Ask around at pubs and restaurants near you to see if you can pick up some extra work. Do you have another skill? Cleaning, writing, odd jobs, hairdressing… your hobby can turn into a side job very easily if you market yourself well enough.

Live within your means

It sounds obvious, but if you can’t afford it – don’t buy it. If you don’t really need it, if it’s not necessary, forget about it. If you’re still thinking about something in 6 months, make a plan to save for it. Do not impulse buy if you can help it!

It’s important that, no matter how many people you see online enjoying themselves, you remember that if you can’t afford to do those things, you probably shouldn’t. It feels much more worth it to save up for something rather than spending the next year paying it off. Fear of missing out (FOMO) is felt by so many people and it can be costly!

Remember – the sooner you start, the sooner it will make a difference.

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