If an emergency came up and you needed to spend over £1000, would you have enough money saved up to cover it?
According to research conducted by the Yorkshire Building Society, 26% of people only have enough saved to last them a month, 10% of people would last just 10 days on their savings and 15% of people have no savings at all.
Emergencies happen all the time and it is important for you to better prepare by having money saved aside in case something comes up.
One of the most common suggestions to get yourself saving more is to set up a budget. However, you might realise that you have barely any money left over to put aside. There is, however, another method you can employ. This is the idea of paying yourself first.
What does it mean to pay yourself first?
Paying yourself first is the idea of first putting a bit of money aside for yourself into your savings account before everything else. Even before things like bills, money for groceries and other nice things you were planning to buy. It is important to think of your savings and the money you set aside as your first bill.
The reason for paying yourself first is that you essentially train your brain to think of saving as high priority and what’s more, you will naturally adjust your lifestyle accordingly. Start with baby steps and gradually increase it to a comfortable level. By just paying yourself £100 every month, by the end of the year, you will have saved up £1200!
Review our monthly spending
It’s easy to assume we have enough in our accounts to cover all our outgoings but it also means we don’t really know how much we really have. As every pound that goes to building your potential pot, means more money for you and less stress for the future. Sounds good right?
Commit to reviewing your transactions after a month and look at the following:
- How much is remaining at the end of the month?
This is after all outgoings and living costs - Is there anywhere, that you could save a bit more?
E.g. one less cup of coffee a day. Somewhere a bit cheaper for lunch - Decide the amount you are going to put aside each month and commit to it.
Why not setup a scheduled payment each month to keep you on track?
Take your savings to the next level
Instead of just thinking of your savings as a pot that you throw money into, why not take things to the next level by making that money work for you. That way, the money that you put away makes money, allowing you to reach your savings goals much faster.
It’s worth looking at the market and seeing the types of savings and investment products out there.
Start building better money habits
Paying yourself first is a great way to build positive financial habits. Things may not change overnight but with small steps and perseverance, you will be able to save up for the future you have always wanted.
So start putting your own long term savings goals first because at the end of the day, you are your own biggest asset. To find out more about building better habits read our article “How to make ‘saving money’ a lifestyle habit” here.
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** Disclaimer: The information summarised here does not constitute as financial advice or other professional advice and is general in nature. It does not take into account your specific circumstances and should not be acted on without a full understanding of your current situation and future goals and objectives. If you are unsure about how to deal with your money, always consult a fully qualified financial advisor.
