Whether you’re an impulse buyer or have a vice that’s draining your funds, there are ways to tackle mindless spending. Personal finance expert Emma Lunn gives her advice.
One in three people didn’t save any money at all over the past 12 months. That means not saving cash for emergencies, not putting anything away for the future and, for many, not having any spare money at the end of the month.
But why aren’t we saving? The answer for many of us is simply that we don’t have enough money to save. Or at least we think we don’t. We can be very irrational when it comes to spending, but it’s not impossible to switch your mindset from ‘spender’ to ‘saver’. Here’s how it’s done…
1. Try the envelope budgeting method
Your bank balance alone doesn’t give you a clear picture of your finances, as it doesn’t show when payments and direct debits are due. This is where the envelope method of budgeting can help. You take your monthly income; divide it into different categories such rent/mortgage, groceries, going out and entertainment, and aim to stick to your limit for each category. Smartphone apps such as You Need a Budget provide digital envelopes and do the maths for you.
2. Switch it up
If you’ve been on the same energy deal for a while, you could save money by switching. A switching site such as Energy Helpline can help you find the best deal – fixed tariffs payable by monthly direct debit are usually cheapest.
If you’re happy with your mobile handset and are out of contract, you may be able to save cash by switching to a SIM-only tariff. Some SIM-only deals are less than £10 a month.
3. Take a long hard look at your vices
Giving up smoking all together, cutting down on your drinking and being smart with your coffee buying can all save you a significant amount of money. At £10-a-pack, a 20-a-day smoker will be spending £3,650 a year on cigarettes while takeaway coffee fans can easily spend £5 a day.
There’s no need to cut out coffee completely. You can save an average of 25p per drink in many coffee shops if you take your own reusable cup – that adds up to an annual saving of £182.50 if you buy two coffees a day.
4. Slim down your food spend
Fitness experts and Insta-influencers often talk about ‘food prep’, and while it’ a great way to help you stay in shape, it can also save you money too.
Write a food plan each week, work out what you need to buy and research the cheapest place to buy it. Cooking recipes like curries and sauces in bulk, and freezing it in portion sizes is a good way of minimising waste. Check out Cooking on a Bootstrap for budget recipes.
No time for cooking in the week? Try Nez – a free app that offers daily discounts on your favourite local food spots.
5. Split the bill with an app
Always left to pay the tip at the end of a meal? Flypay is a smartphone app that makes it easier to split restaurant bills between friends and family. It’s available at hundreds of restaurants across the UK and enables you to just pay for what you ordered or, if you don’t drink, work out your share of the bill minus the booze. You can settle the bill on the app without calling the waiter over, so it’s quicker too.
6. Don’t be duped by ‘false economies’
False economies – an attempt to save money that actually results in greater expense – dupes seven in 10 consumers, according to research by TopCashback. Bulk buying can be a false economy because it increases waste, while buying reduced-price items might be a false economy because of poor quality. Next time you pick up several pots of yoghurt because it’s ‘on offer’ – think about whether you’ll manage to eat it all before the sell-by date.
7. Think before you tap/click
Be aware of the dangers of contactless and direct debt payments too: it’s much harder to pay attention to how much you’re spending when you’re tapping and moving on. A good tip is to turn off one-click shopping when you’re buying online, as this will enable you to pause and reflect by submitting your card details.
8. Make saving a priority
Many savers swear by the ‘pay yourself first’ rule when it comes to saving, as opposed to seeing how much you have left at the end of the month. Work out how much you can afford to save each month and set up a standing order to transfer this amount to your savings account the day after payday. Try to save the equivalent of six months of your salary for emergencies before you start saving for luxuries such as a new car or a holiday.
Interested in helping your children develop healthier money habits? Read our 7 easy lessons to teach your kids now.
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