You can start saving at any time throughout the year, though most people tend to pick the New Year or maybe Easter, because of the associations with new beginnings. But often, starting your saving journey because of a national holiday leads to poor results: if you’re trying to save money just for the sake of it, you’ll lack the motivation you need to get the right outcome.
Instead of focusing on a start date to work towards better financial health, you may want to consider saving towards a more tangible goal. Saving is a journey, and it helps if you have a target. It could be anything from a well-deserved holiday to a rainy day fund in case things don’t go to plan – if you’re not sure what your savings goal should be, take a look at some of our suggestions below.
Financial security is one of the biggest motivators to get saving for a lot of people. Having the funds put away for small financial mishaps like a new tyre or big income shocks like redundancy can help ease the stress and anxiety that many feel when it comes to managing money. The amount of money you need to save will likely depend on your circumstances, as the idea of saving for financial security comes more from relieving financial pressures than having a financial plan in place. However, as a general rule of thumb, you could look over the last year of unexpected expenses and take an average amount from that data. This is a good starting place and most unexpected expenses come in under £300 which is an achievable target, even if you’re saving on a low income. From there, you can continue to save, and your motivations may change: instead of saving towards feeling financially secure in the day to day, you might decide to aim for a rainy day fund in case of unemployment or other income shocks.
A rainy day fund is more of a colloquial phrase than a formal term, but most people consider a rainy day fund as the money you save in case of a worst case scenario: such as sudden unemployment. It’s a case that a lot of people don’t often consider, but if your job security isn’t great or if you’re self-employed, for example, you may find your income varies and some weeks you might not have any work at all. While this may be manageable, if you lost your job or regular work altogether, having no safety net can be a huge stress. Instead of focusing on finding a new job, you may find yourself worrying excessively about your finances. Having a rainy day fund, which is usually recommended as 3 months’ salary, allows you the peace of mind that you would be financially secure for a good few months even if you lost your job. If 3 months’ salary feels entirely unattainable right now, start by aiming towards 3 months’ rent or mortgage repayments and build towards your priority bills from there.
Emergency expenses might seem like a boring reason to save but saving for predicaments helps you save twice. Instead of taking out credit to cover these inconvenient costs, you can use the money you’ve saved for that purpose. This also saves you paying interest on the cash you’ve borrowed. In some cases, it may be unavoidable to take out same day loans especially if you need the money quickly, but even with online applications and the Faster Payments Service, transferring cash from your savings account to your current account is still probably quicker! Once you have an emergency fund sorted, seeing the money you’ve saved add up can improve your financial wellbeing and motivate you to save for luxury or leisure purposes as well.
If you find it difficult to motivate yourself to save for things that may or may not happen, it might be worth thinking about saving for your financial wellbeing instead. Your financial wellbeing affects your mental and physical health, so it’s just as important you take care of it. It involves your attitude to money, your ability to manage your finances and your overall feeling that you are in control of your finances. While everyone’s circumstances are different, your financial wellbeing remains an important part of your health and while working to improve your financial wellbeing isn’t a one-step job, saving money and having financial security is a part of it. If you’d like to reduce money-related stress and fixations, consider using this as a motivator to get saving.
For many people, future-proofing their finances is more than enough motivation to start saving properly. But for others, especially young people who still feel invincible and have a lot of life still to experience, saving can feel like a pointless task. Why save money for the future when you can spend it now and enjoy yourself? But ironically, saving money can help you enjoy life more because your finances will be better balanced as expensive trips and tickets can come out of a ready-made fund, instead of your normal paycheck. Once you start saving for things this way, you’ll find it easier to save for more important or practical purposes. And if you do suddenly experience a major cashflow shortfall, you’ll have the funds ready – even if they weren’t intended for that purpose.
Maybe you’ve found a reason you can resonate with above, or maybe they’ve inspired you in a different way to save. Either way, there’s no better time to start than now (or at least, on your next payday!). Whether you have £50 a month to spare or £250; everything you put into savings will help you manage your money better, either in the short term or long term, for emergencies or holidays.
As you become more financially savvy, you may find other areas of your finances improve too. You might put more effort into budgeting or reduce your invisible expenditure. Either way, as your financial security and wellbeing improve, so will your mental health, which will positively affect other areas of your life as well – there are so many benefits of having savings. Saving is a journey with multiple destinations!
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