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Do’s and Don’ts of Saving Money

Saving money is one of the hardest things to do. Unless you’re a lottery winner, in which case this isn’t really the information you need. For the 99% of us who have not won the lotto, there are a few things you need to consider when you are planning to save up.

Don’t….adjust your plan/budget

If you have a specific goal in mind. Maybe a new car, or a holiday, or a computer, then it’s vital that you plan what you can save. And then stick to it like cheap aftershave. DO NOT adjust your plan once you have actioned it.

Adjusting means more adjusting. Once you start to make compromises with your budget then you’re heading down a slippery slope. You need to stick with the plan at all times. Set yourself a monthly goal and adhere to it. It will be painful. It will be difficult. But after a short time, you’ll become accustomed to the amount of money you can spend each payday.

Do…pay yourself first

Speaking of payday, you should not fall into the trap of paying all your bills and then seeing what is left for you to save. Pick an amount. For example, £100.00. Now treat this amount as a bill that needs to be paid, like your gas or mortgage. Pay this into a savings account like you would any other bill. And do it immediately, like any other bill.

Don’t…start saving until all your debt is paid off

It sounds counter-intuitive but it’s much better to pay off any outstanding money you owe with the money you would normally be saving with. Trying to do both will stretch your finances and you might find the little you’ve saved needs to go towards paying off some debt anyhow.

Consolidate your debts if possible. This makes the interest payments lower and allows you to pay it off a little faster. Once you’ve paid it off, continue to put that money aside. After all, you’ve learned to live without it, so continue this way of thinking and stick it into an ISA.

Do…take a look back now and then

After a month or two of saving, keep a record of your outgoings. You may be surprised to learn that you’re spending quite a lot on lunches at work. As an example, this is money you could be saving by taking a packed lunch instead. Boring? Sure. A necessary evil? Certainly.

Ensure you can ‘trim the fat’ wherever you can. These things may be painful at first, but think about the long term goal; your new car, holiday or computer. Isn’t it worth it?

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