Whether you’re in need of a holiday, you’re planning a wedding, you want to treat yourself to a new car, or you’d just like to start an emergency fund, you’ll no doubt be wondering how you’re going to save money. Especially if you’re a parent looking to put away some money for your child’s future.
Things are tight for a lot of people — especially at the moment, with the cost of living crisis — so if you’re worried that reaching your saving goal is just a pipe dream, you are not alone.
Thankfully, though, by making a few adjustments, it is possible to put some of your salary aside to start building a fund for your children’s university expenses or pay for a once-in-a-lifetime holiday.
But how much should you be saving?
Experts recommend saving 20 per cent of your salary, with 50 per cent of it going towards your living expenses and the other 30 per cent being spent on leisure. This is called the 50/30/20 approach. But while it is a good rule of thumb, how much you can afford to save will depend on your own personal circumstances and whether you are saving for something in particular.
Even if you don’t have a specific savings goal in mind, it is a good idea to start saving money, so you have something to fall back on in case things change. In this article, we’ll give you nine top tips to help you save your salary.
How can I save more of my salary?
Some of the best money-saving tips include creating a budget, tracking your spending, setting up an automatic transfer for your savings and paying off any debts you owe first.
You can also try changing your service providers to get a better deal, spending less, re-evaluating your social life, increasing your income and saving any salary increases or bonuses.
Parents on a budget may feel that they are already doing all they can to save, but we have some tips you may not have thought of. Continue reading to find out how to put these tips into action.
Nine top tips to help you save your salary
Here’s our list of nine top budgeting tips to help you save more money from your salary:
1. Create a budget
If you want to start saving money, the first thing to do is to look at your monthly salary to see what you’ve got coming in and what you’ve got going out. Some of the expenses you need to include are mortgage or rent payments, utility bills, groceries, transport costs and entertainment. You can then work out how much you can afford to save each month and work that into a budget.
It is important to be realistic about these figures. Otherwise, it is unlikely that you will be able to stick to your savings plan. And, if you are self-employed, remember to base your budget on your take-home salary, as you will need to account for things like Income Tax and National Insurance when you file your Self Assessment tax return.
If you find you can’t save because you don’t have any money left over, you may be able to reduce some of your outgoings and free up some cash. See tips five, six and seven for more on this.
You could even teach some budgeting techniques to your older children, (like measuring income against outgoings) to encourage them to spend their pocket money carefully and set them up with healthy financial habits.
2. Track your spending
The best way to ensure that your budget is accurate is to track your spending over a month. To do this, gather all your bank statements and receipts and compare the expenses you’ve listed in your budget with your actual expenses.
If, after doing this, you find you’ve underestimated your expenditure, you can split your expenses into two categories: “Essentials” and “Luxuries”. You may be able to make some cuts in the “Essentials” column (see tip five), but it will usually be the outgoings listed in the “Luxuries” column that you can make significant reductions.
3. Set up an automatic transfer for savings
To ensure you stick to your savings plan, consider setting up an automatic bank transfer into a savings account. It is a good idea to schedule this immediately after you get paid, so you are less likely to miss the money when it leaves your account.
There’s a huge range of savings accounts to choose from, all with different interest rates for you to benefit from. You may even find you can make a good profit on your savings by investing your money — however, you should be aware of the risks associated with investments.
Another point to bear in mind when considering where to save your money is how accessible your cash is. An account or fund that requires you to leave your money for a set period of time or charges you for withdrawals will deter you from dipping into your savings whenever you feel like it.
It’s also a good idea to have when saving money, as it’ll help keep you motivated. Maybe you want to save up for a few years to buy your child’s first car or build an extension on your house. Name your goal to keep it front of mind.
4. Pay off debts first
Many finance experts recommend paying off outstanding debt before you start saving. This is because, often, you are charged more interest on your debts than you earn on your savings. So it makes more sense to repay anything you owe before you begin saving.
It is also worth mentioning here, that you should always ensure you make your debt repayments on time to avoid penalty fees, which can affect your saving potential. If you regularly forget to make payments, you might find it helpful to download a budgeting app to remind you when your payments are due. Alternatively, you can set up a direct debit to automate the payments.
5. Change service providers
In today’s fast-paced world, it can be hard to find the time to shop around for a better broadband, mobile phone, electricity or car insurance deal, but doing so can really pay off.
If you’ve been with the same service provider for a long time, it might be worth contacting them and suggesting you might leave. In most cases, they will offer to reward you for being a loyal customer with a better rate. Doing some research beforehand can give you some leverage — and mean you can haggle harder — so have a quick look on a search comparison website to see what other providers are offering.
If a policy is approaching its renewal date, it is often better to terminate the contract and find another provider who can offer you a better deal. Businesses are always touting for new customers, so you may find these advertised as “Introductory” or “New customer” deals.
If you own a property, you could also consider remortgaging to lower your interest rate, although you should think about this carefully, as there are risks involved.
6. Spend less
It sounds obvious, but spending less is the key to saving more, which means it’s worth keeping at the forefront of your mind. It may not always be easy to do, but there are some realistic adjustments you can make without feeling the squeeze too much. Here are some ways to cut your spending:
Avoid impulse spending — Before making a big purchase, go away and think about it first. Often, you will find that once you’ve slept on it, you don’t want it anymore.
Don’t food shop when you’re hungry — If you do your grocery shopping when you’re hungry, it is likely that you will buy more food. You can also reduce your grocery bill by planning meals in advance, so you only buy the ingredients you need.
Buy in bulk — OK, you may be spending more at the time you make the purchase, but buying in bulk tends to be cheaper, which means you will be spending less in the long run.
Make online shopping less convenient — Spending money online is easy. All it takes is a couple of clicks. But to make online shopping less convenient, you can remove any credit card or bank account details you’ve saved to your browser.
Reduce your energy consumption — You can reduce your monthly bills by turning appliances off at the socket when they are not being used, switching to energy-saving lightbulbs, taking shorter showers and putting on a jumper instead of turning the heating up.
Cancel unused subscriptions — This is something you may have done while drawing up your budget, but if not, it is worth going through your bank statements and cancelling unused gym memberships, TV subscription services and other subscriptions you no longer want.
Make alternative transport arrangements — You can reduce your transport costs by sharing lifts, cycling instead of driving, buying monthly or weekly travel passes or even downgrading your vehicle. If you always take your car on the school run, and it’s a short journey, see if your kids would enjoy walking or cycling instead.
7. Re-evaluate your social life
You don’t have to give up your social life entirely, but you can save money by adjusting the ways in which you have fun.
Here are some suggestions:
Rather than going to a fancy restaurant, create a fine-dining experience at home by inviting some friends over and cooking for them in a formal setting. You can even dress up to make it more of an experience.
Instead of expensive days out at theme parks, take your family on adventure days in the countryside, or plan a family sports day.
Cinema outings are notoriously expensive, so arrange a movie night in with popcorn and pick’n’mix instead.
Choose free activities like hiking, cycling and camping over shopping trips, tourist attractions and city breaks.
Take advantage of deals like Earlybird restaurant specials, happy hour and two-for-one discount codes in pubs, restaurants and bars.
It is recommended that you shouldn’t spend more than 15 per cent of your income on pleasure activities, so limit yourself to just one or two outings per month.
8. Increase your income
If you can earn more while spending less, you will be well on your way to achieving that savings goal.
So if you have some spare time outside of your usual work hours, consider getting a part-time job or starting a side hustle. This will be easier to do if you have a particular skill — such as DIY or baking — however, anyone can bring in a few extra pounds by dog-walking or renting out a spare room.
9. Save your salary increases or bonuses
If you are fortunate enough to get a raise or bonus, it is natural to simply adjust your lifestyle accordingly, so that, in the end, your luxury expenses become essentials. But, the sensible thing to do is to put any extra money into a separate account as soon as you receive it. That way, it won’t be swallowed up in your regular income, and you will be more likely to want to spend it on something special.
Remember that just because you are earning more, it doesn’t mean you have to spend it straight away.
Experts recommend saving 20 per cent of your salary, with 50 per cent of it going towards your living expenses and the other 30 per cent being spent on leisure. This is called the 50/30/20 approach.
Nine top tips to help you save your salary are as follows:
Create a budget — Look at what you’ve got coming in and what you’ve got going out and work out how much you can afford to save each month. If you find you can’t save because you don’t have any money left over, you may be able to reduce some of your outgoings and free up some cash.
Track your spending — Gather all your bank statements and receipts and compare the expenses you’ve listed in your budget with your actual expenses to see whether your budget is realistic.
Set up an automatic transfer for savings — Ensure you stick to your savings plan by setting up an automatic payment to transfer money into a savings account.
Pay off debts first — Pay off outstanding debts before you start saving and make payments on time, to avoid penalty fees.
Change service providers — Shop around for better broadband, mobile phone, electricity or car insurance deals rather than renewing the policies with the same providers.
Spend less — Think carefully about big purchases, don’t food shop when you’re hungry, buy in bulk, remove credit or debit card details from your internet browser, reduce your energy consumption, cancel unused subscriptions and make cheaper transport arrangements.
Re-evaluate your social life — Entertain at home instead of going out, choose camping trips instead of city breaks, take advantage of restaurant deals and limit your outings.
Increase your income — Consider getting a part-time job or starting a side hustle.
Save your salary increases or bonuses — Put any extra money you earn into a separate account as soon as you receive it.
This blog is edited by a mid-30s mum with over 15 years of professional childcare experience. Now 9 years into motherhood and enthusiastic about finding great products and helpful solutions for busy families to make life more fun and easier too.
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