Ok, I’m going to begin this series on a level; I’m still not what would exactly be described as an efficient, successful, saver. In fact up until recently, I owned my boyfriend money on a rolling basis because he’d have to bail me out of my overdraft at the end of each month: not ideal, I think we can all agree.
It took him putting his foot down and telling me he was no longer going to act as my financial manager for me to realise that perhaps this really wasn’t a sustainable way to live.
The issue is, once you’ve had the great epiphany, that moment of wondrous clarity, what then? How do you go from being the girl who can’t rub two pennies together at the end of the month to being the girl who actually has surplus funds (albeit small ones)?
Let me tell you something for free. It’s the simplest and the hardest change I’ve ever had to make.
It’s no secret that the situation we find ourselves in now, post-2007 meltdown is one of the hardest economic eras since the mid-1980s. The good news is that consumer goods are still relatively cheap, everyday technology is developing at a breathtaking pace, and international travel is still an affordable possibility for many. However, the old stabilities such as a steady job, a strong pension, and a home of your own are becoming almost unobtainable for the average twenty-something earner. Just to illustrate this: In 1995 the average house in the UK was between 3.2 to 4.4 times a buyers income, in 2013 it had soared to over 12 times.
With prices like these becoming a solo homeowner has become an almost impossible fantasy. In fact, by 2025 more than half of those under 40 will be living in properties owned by private landlords.
What all this really means, is that the idea of what it means to save has also changed. The world is different now, people want different things, have come from different backgrounds, and there is more than one prescribed way of living. If the old stabilities are no longer available to us then we find a new way of living, and affording the life we choose. Therefore, the idea of saving has now become the way in which we can achieve our own sense of freedom and stability; our own independence.
For me, the following three steps were what changed my attitude towards my finances, because they changed my habits.
1. Set a Budget
I don’t want to patronise you folks, but I can’t stress enough how much this matters. By setting a budget you are actually sitting down and consciously looking at how much you earn, where you spend it, and how much of it goes where.
Personally, because I tend to throw my cash around like fairy dust the first week after payday, I log each and every spend. This is quite a prescriptive way of operating but it’s done wonders for me. I can see exactly where the majority of my cash goes and I know at any given moment exactly how much I have left in my bank account.
What this triggers is a thought process that I never used to have. It makes me stop, look at what I have left, and decide if I really need to buy this thing in front of me and what I will need to go without in the future if I do decide to buy it.
2. Choose the way you want to save
Not all of us work the same, spend the same, or are paid the same. Some of us know exactly what our salary will be and when we will get paid, some of us live on a more fluid contractual basis. You know which you are, and you know which way to save will work best for you.
But really, in the end it comes down to two basic choices: save big or save small.
Once you’ve got a budget in place and you’ve learned to stick to it, you understand your money more. Give yourself a few months to get used to this. Once you know more about your real spending needs you will be able to make a judgement about what portion of your salary you can ‘do without’. It doesn’t have to be enormous, and it doesn’t always have to be the same amount, but earmark that money and pop it away somewhere the day you get paid. Then it’s out of your head, and every single penny left in that account is yours to spend and enjoy, right down to zero if you want! And I’ll be honest here… it’s always down to zero for me.
Maybe saving in a lump sum isn’t the way for you; it doesn’t mean you still can’t save. Do it a different way, put away small amounts instead whenever you get the chance. The old adage look after the pennies and the pounds will look after themselves is a good one. Buy a coffee on Monday, get 28p change, and put that 28p into an unbreakable piggy bank or in a digital saving account thanks to Oval Money free App. Do this every time you buy something and it will all add up.
3. Put it out of reach
Honestly; it’s all very well to say you won’t touch that fifty quid you set aside this month, but when the chips are down and you’ve eaten pasta and sweetcorn for three nights running you are absolutely going to dip into that money for a nice bottle of red and some fresh vegetables.
Put the money you choose to save away at the end of each saving period, whether you set this period as weekly, monthly, six weekly, it doesn’t matter. Find a place to put that cash that you can’t get to on a whim (ideally NOT your boyfriend’s bank account).
It doesn’t matter how you save, why you save, or how much you save; saving is saving, and at the end of the month, or week, or year, you will find yourself with cash that you didn’t even realise you had. This will give you choices you didn’t even realise you could make.