Everyone has their own unique approach to savings along with different goals. Some people prefer short term savings while others want to save for long-term with retirement in mind.
Many people now prefer alternative finance options like peer to peer lending to get more out of their funds. If you want to save but don’t know where to start, then we are going to give you some pro tips to help you achieve your financial goals.
First things first, create a plan
Before taking any action, you need to plan it out. Know and understand what you are working with. First, calculate your total income. Then estimate all your outgoings, separate the essentials (like mortgage, food, credit card payments) from luxuries (memberships to gyms or trips of hairdressers etc.). This way, you can know where you can save and how much.
Go for SMART and realistic goals
When you create a plan, make sure to set SMART (Specific, Measurable, Achievable, Realistic, and Timely) goals. It helps to have ambitious goals but don’t set the bar too high if you over-commit it may lead to frustration and you can quickly get off track with your savings plan and goals.
It is essential to set some money aside every month to enjoy and to account for any unexpected expenses that may pop up. If you can afford to take a little risk and want to save for long-term goals, then you can diversify and look for alternatives which can help you get high-interest rates.
Do your research!
There are a lot of alternatives to a standard savings account. Peer to peer lending platforms provide alternative investments that can help you grow your money.
So, make sure to do your research when looking for alternatives to a standard savings account, especially when risks are involved.
If you are looking at investments or ISAs, then factor in the access type to funds that you will need along with the time period you would like to put money away. Be sure to understand all the rewards and risks when it comes to interest rates and potential returns.
No matter how you save whether through your bank’s savings account, investing in an Innovative Finance ISA or shares & bonds ISA, always check the terms before you commit.
Short-term thinking can get you going
If you are worried and don’t know where to start from, it’s the easiest way to start is to save some each day. Understand all your extra spending can help you identify what you can put into savings instead.
Such short-term saving keeps on adding up, and they keep you motivated. For this purpose, we will share three helpful tricks.
- Try to do a zero spend day: try to freeze your spending just for one day. It can help you see where you spend. Once you are aware of the thing you are spending on, you can decide if that is worth spending for or not.
- Make other small swaps: while most articles might tell you to cut down on those expensive lattes, we say keep what you enjoy and value. You can cut down on things that really don’t matter to you as much. Try exploring other grocery stores. Do your things have to be of a brand name? Try to turn the heat down a few degrees. Just make sure you put away the money from any swap that you decide to do. For instance, if you buy lunch twice a week for £10, eliminating one day can get you £40 closer to your financial goal every month.
- Cancel one thing: review your debit and credit card statement from last month. Look at how many automatic charges or subscriptions charges can you find. Then pick the one you don’t need the most and get rid of it. For instance, if you see charges on Netflix or Hulu, then you can cancel one and put the savings in a separate account.
Try some pro-moves for long-term savings
Once your short-term strategy is complete, it is time to think about the big picture. Adding an extra 50 or 100 a month is good, but it is not enough for a luxury vacation or to buy a house.
This means that you will either have to shorten your goal or make more money. You can boost your income by making some long-term changes.
Focus on the big three
a majority of our budgets are spent on three things: housing, food and transportation. If you lease a place, then re-evaluate your priorities and decide if getting a roommate is an option or maybe find a cheaper place. Try to share a ride or take public transportation. Anything that can help you cut down on your spending can be helpful for your spending overall.
Invest, Invest and Invest!
Investing is another excellent way of reaching your financial goal. While it may seem like a difficult option, but now it has been made easier thanks to the peer to peer platforms online.
You can learn what they are how they work and invest the amount that is not breaking your bank. You don’t have to invest big; the beauty of these platforms is that you can invest small amounts as well.
Furthermore, IFISA is another great investment opportunity which allows you to earn interest in a tax-free wrapper. So instead of just following a traditional savings source look into alternative options and save smartly.
Stay strong and don’t steer away
There will be days or months when sticking to a budget will be hard, but don’t throw all your previous hard work out the window. Remember your ultimate goal, and remind yourself that reaching your goal a month or two late is better than not reaching at all.
Don’t worry if your circumstances or goals change throughout the year and if your budget needs reviewing. Remember a budget is not a life plan, and it should not interfere with your happiness.
So, think out of the box because there are a lot of pocket-friendly thing that you can do to enjoy your time while also saving for your future.