According to a recent survey by First direct, more than half of UK adults regret not saving more last year. It seems very easy to agree that saving should be a priority, but much harder to actually start doing it!
The reality for most of us is that the only way we’ll save money is if we make a regular commitment to do so and put the money somewhere out of easy reach as soon as the relevant income is available. An example would be setting up a standing order to a 30-day notice savings account from your current account a couple of days after you’ve been paid.
If you want to start saving, here’s how to be SMART about it:
- Set a Specific goal to save for
- Measure how close you are to your goal by checking your balance regularly
- Make sure that you can afford to put aside the necessary money for the required length of time so that your goal is Attainable
- Save for something that is important to you so that your goal is Relevant
- Save regularly so that you have a known Time for achieving your goal
Another key to getting a saving habit is to recognise the difference that saving even a small amount regularly can make.
Saving £2 per day would accumulate to £3650 over a period of five years, even if no interest was paid upon the money.
There are many examples of little things that you could give up to enable you to save this amount: take-away coffee, newspaper, magazine, lottery tickets, bottles of soft drink, sweets – the list goes on and you don’t have to choose the same things each day!
Very few people can afford to do everything they’d like to; we have to choose what is most important to us. Often we don’t properly account for the odd £s we spend here and there, so don’t realise that we are actually committing significant annual amounts to things that we’d say we’d cheerfully do without if it meant we could afford something else – for example a holiday.
Here’s your one-week challenge: Every time you go to spend £2 or less on something non-essential, don’t. Instead, put the cash into a separate pot and see how much you have by the end of the week!
Get the kids involved and then let them help choose a treat with some of the money. Use what you’ve learnt to set some SMART goals for the family moving forward.
Liz Dunscombe, from the money education charity Credit Action, is mum to a pair of rather tall, adult (well in age anyway!) boys. Her passion is helping people to manage their money well, and watching the transformation that a well-constructed budget can bring to a family.