It’s a fact – people who set savings goals save faster than those who don’t. What’s more, figures from NS&I show that people who have a have a financial focus save up to £550 a year more than people who don’t.
If you have been meaning to save more, but just can’t seem to find the cash, here are five ways to set a financial goal and ensure that you achieve it.
1 PLAN, PLAN, PLAN
Just like you wouldn’t go on a road trip without planning your journey, you need be focused when it comes to savings.
If you have more than one goal, determine which ones are most important and make those your first priority.
Be realistic about how much time and money it will take to accomplish each goal – an estimate that is too low will only frustrate you, while one that is too high may put you off. Keep in mind that setbacks can, and will, happen. If something throws you off of your target, don’t give up – just readjust your plan.
2 GIVE YOURSELF A DEADLINE
Once you have an idea of how much you want to save, keep yourself motivated by setting a timeline for your goal.
Some timelines are obvious – for instance, paying for your wedding next summer or a preparing for a new baby in just nine months time. But other goals, such as an emergency fund or your retirement can be a bit more difficult to visualise. Here it could help keep you on track if you set a benchmark amount that you want to hit by a certain date – say £20,000 for a house deposit by the time you are 30.
3 PAY YOURSELF AUTOMATICALLY
A lot of people say they can’t save because they don’t have any cash left at the end of the month, so always pay some money into your savings accounts and investment products by standing order each month when you pay your bills.
It means the money is out of your account before you’re aware of it and you have to live on what’s left over. After a while you hardly notice the difference as you’re so used to living on a lower amount.
4 ADOPT A JAM JAR MENTALITY
If you’re like most people, you work toward several financial goals at the same time, yet you keep all your money clumped into a single savings account – but this approach can have some drawbacks. When your money is lumped into a single account, it’s tough to know how much more you need to reach a particular goal.
You can open additional savings accounts to avoid this problem. As each account has a name and specific purpose, you will have an added incentive to pay into it.
I have been doing this for years and, in my opinion, it works a treat. I have five savings accounts (not including my pension and investments) and siphon off some cash into each one on payday. Every month, money automatically goes to accounts earmarked for events such as “Christmas”, “Canada Trip” and “Emergencies”.
Crucially, I keep this savings accounts with Barclays Bank, rather than with Santander, where we have our current account, which means I’m not tempted to dip into it when I spot something I think I “need”. What’s more, thanks to a glitch meaning I can’t access the Barclays app on my newest iPhone, I must log in on an old handset to get my mitts on my money and is very effective as safeguarding my savings.
5 GET “SMART” ABOUT SAVING
Most adults in the UK check their smartphones 33 times a day, with more than two hours spent mindlessly scrolling and tapping.
But other than simply wasting time on social media, why not use the device in your hand to improve your finances? Download an app such as Chip.
Here you enable read-only access to see the transactions data in your online banking and its algorithm calculates how much you can afford to save by analysing your spending behaviour. Every few days, it automatically transfers money into a new instant access savings account that you are required to open when you sign up. This account is in your name and hosted at Barclays.
And there is no need to worry about your data – the app is on the Information Commission register and your login details are protected using 256-bit encryption. Phew.
How much you earn varies – when you first sign up, you start with 0% on your savings. You can boost your rate to 5% by inviting friends – you get an extra 1% for each person, valid for a year. This is calculated weekly and paid into your account quarterly.