Saving money tends to be one of the first financial skills that we learn, typically in the form of pocket money as children. However, that doesn't mean we're automatically pros at it - in fact, for many of us, saving continues to be the trickiest part to get right with our finances.
Is saving worth it?
The quick answer? YES. Nowadays, people see saving and investing as two separate choices, when in reality, they compliment each other, allowing you to do the maximum amount with your money (no matter how much you start with).
Saving means putting a sum of money away for use in the future, while investing means trying to grow your money by buying assets which you believe will increase in value. Typically, saving money is better for your short-term money goals, whereas investing is better in the long-term.
For more information, check out this module of our Digital Money School.
For example, if you were to invest your emergency fund, you could double (or even triple!) the amount much faster than in a savings account. However, when you need the money for an emergency, it could be a bad moment to sell your investments, or it could take time to access the fund. The whole point of your emergency pot is to have the money readily available, so saving it makes much more sense than investing.
How should I start saving?
Money management is personal, and you should make sure that the methods you choose work for your specific financial situation. We've got some fantastic tools to help you get started down below, but first, have a think about the following questions...
How do I feel about saving?
When you think about saving money, what do you feel? Peace of mind at the thought of having a safety net to fall back on? Or maybe stress at the thought of meeting saving targets month after month...
Try and figure out which are the most important feelings for your saving plans, and use them to answer our next question.
Why do you think you feel this way?
As with anything financial, your feelings are linked to your money mindset. By exploring how these feelings might have come about, you're beginning to take control of them.
A good place to start is by thinking about how saving was portrayed when you were a child. Were you given weekly pocket money? Can you remember saving up for a new toy or game? Are there any money habits from your childhood which you can see reflected in your life today?
How will you combat these challenges?
No one is perfect with their money, but with a healthy mindset, you can plan and prepare for any challenges you might encounter. These challenges can appear when you least expect them - for example, if you pride yourself on being a generous person, donating and lending money will make it difficult to save. How will you change your mindset to make this easier?
Write down three challenges you find with saving money. Then, plan for how you will either overcome these bad habits, or stop them from impacting your new budget.
Do not save what is left after spending, but spend what is left after saving.
Looking for more saving tips & tricks?
We spoke about the 5 things preventing you from building a strong budget (and how to overcome them!) in our latest Money Tip. Sign up below to have future issues delivered straight to your inbox, every two weeks!
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