Like every other ambitious millennial, I’m currently in the throes of saving a monumental amount to put down a deposit on my first home. Pinch me, I’m literally not grown-up enough.
While of course owning a house isn’t the be all and end all, I’ve known that I wanted to own my own place ever since my University days when my parents would let out property to students and bring in some extra cash. I quickly became of the mindset that I didn’t want to rent and line somebody else’s pockets with money that I could be putting towards a place of my home. Thankfully my parents have been incredibly supportive ever since and don’t charge me traditional rent, simply a sum to hire out my office space in the house. I know I’m in a very fortunate position, but as somebody that has always struggled to save money, I wanted to share my top tips to making substantial savings, whatever age you are or whatever stage in life you are.
A note to begin with: when I landed my first ever full-time post-grad job at the age of 21, I spent money like running water. Almost all of my money went towards eating out, buying more clothes than would fit in my bedroom and on countless other things that I have nothing to show for today. If I could turn back time, I’d probably 50/30already be settled in a beautiful home by now! The earlier you begin saving, the better. For me? I hadn’t even begun to make any sort of big saving before I moved to Hong Kong on a whim aged 24.
Implement the 50/30/20 rule
They say you should implement a 50/30/20 rule when it comes to your personal finances. I’d never really got to grips with this before coming home from Hong Kong, but it’s something that I stick to quite religiously now.
This finance structure is a guideline that is proven to be quite successful. After taxes, 50% of your total income should go on essentials. These are things like rent, bills, direct debits, debts. Next, 30% is to be dedicated to ‘wants’, a little bit of luxury for you. Then, 20% is to be saved.
Personally? I use the 50/30/20 division a little differently.
After tax, 50% is saved, 30% goes on non-negotiable essentials like my phone bill, business expenses, beauty bits like tampons, cotton pads and shampoo/conditioner, and the gym, and then 20% is for my own use. It’s working well for me thus far!
Help to Buy ISA
My next tip is to set up a Help to Buy ISA. Mine is with NatWest and I opened my account about a month after returning home from Hong Kong. The account is a Government-backed scheme where the Government will give you some extra cash based on how much you manage to save. You can put in £1,400 to the account when you open it, and then £200 each month after that. I put in the maximum opening amount and set-up a standing order to automatically transfer £200 monthly, so that I can maximise the figure. You then use the sum to put towards your house.
Create a Direct Debit to yourself
This is the easiest way that I personally find to add to the savings jar.
Every month, a fixed sum from my income is automatically transferred into a savings account. I review this once in a while as, as a freelancer, my income isn’t exactly stable, but for the most part, you’ll find that roughly 50% of my money goes straight into my savings. This is a fairly huge sum but I’ve made peace with the fact that I have to make one or two sacrifices each month in order to receive something great at the end of it. This goes out on the 1st of every month to make it nice and easy to track, although you can easily schedule yours to coincide with payday and after a few months, you won’t even notice it going. You’ll just notice your savings account balance looking nice and healthy.
Another way of approaching this is to pay ‘rent’ to yourself, if you live at home. I did this in Hong Kong as, again, I was lucky enough not to pay any rent. Calculate what it might cost you to rent or even use a mortgage calculator to get a grasp of what your monthly repayments could look like. Getting yourself in the habit of seeing £600, £700 or even £800 leaving your account monthly will not only help you save a HUGE sum in a year, it’ll lessen the impact when you do eventually purchase a property and start mortgage repayments.
Open a Monzo account (or start a spreadsheet!)
I find it incredibly boring to track my outgoings on a spreadsheet and found that I never kept up with the ones that I set up. So it’s something of a blessing that 2018 gives us countless apps with which to play around on! From Monzo to Yolt, Daily Pay to Bucket, I’ve downloaded and tried them all. What I’m finding incredibly helpful is using Monzo to track my spending, spend smarter and review my outgoings on the go. I rarely use cash, so this is absolutely perfect for me. The app lets you create ‘Pots’ of money that you can freely use or freeze as you please. It also tallies up your spending into useful categories to hold you accountable (for visiting Pret 7 times a week) and, of course, allows you to review how you spend your disposable income. I’ve been using mine to track my weekly budget: I simply transfer the set budget into my account and am wholly strict with it. Anything that isn’t spent, I then transfer to my savings account and start again the next week.
Overall, Monzo is a great way to track your outgoings and review them regularly to see where you could be making sensible cuts, figure out your non-negotiables and face up to the numbers of what you’re spending your hard-earned cash on.
Get a piggy bank!
Okay okay, we’re going back to basics here, but pick up a piggy bank! Make it a cute one and pop it on your desk/dressing table/hallway/bedside table. At the end of the day, empty your pockets into the piggy bank instead of back into your purse, and once it’s full, revel in taking it to your local Coinstar machine to see how much you saved. I took mine over to change up a few weeks ago and had managed to save an incredible £56.17!! I found that my small change would simply have been used on buying chocolate bars or a Costa here and there, so I’m endlessly grateful to have that in cash instead of in food 😉 You could then put the money in your savings account or treat yourself for being so damn great at saving.
Shop the edit:
Start a bullet journal collection/habit tracker
Oh c’mon, you knew this was going to crop up…! If like me, you find great satisfaction in checking a box off or logging something in paper form, then setting up a habit tracker in your bullet journal to log your savings will be great. Pinterest is full to the brim with ideas and it’s a great motivator to know you’ll be able to fill in a few boxes, should you save ‘quickly enough’. I also have a ‘To Buy’ collection which forces me to take a closer look at the material objects I covet and limits me to purchasing a maximum of 4 things per month. Below are some of my favourite money-saving spreads: