Can't afford to save? Here's how to do it

Updated
woman examining piggy bank
woman examining piggy bank



The idea of saving for the future can seem like a pipe dream when it's always a struggle to make your money last until the end of the month as it is. However, saving offers you the chance to get on the front foot for a change - so you have money set aside for emergencies and one-off expenses, and you can stop feeling like you're constantly rushing from one financial crisis to another. It's therefore worth considering these five ticks to help you set aside some cash for the future.

1. Set a savings goal
Saving vaguely for a 'rainy day' will either mean you spend the nest egg just before you really need it - or you lose enthusiasm for saving. You need to set up a savings goal - for a specific amount at a particular date. This may be to pay for repairing the car, going on holiday or buying a house. Whatever your goal, work out what cash you need, and how much you need to save each week to hit your target.

2. Keep a spending diary
Yes it's dull, but it's essential. It will show you exactly what you are spending in every area of your finances - and it will reveal any areas where you are spending more than you think - and can afford to cut back. It'll also help you think twice before you fork out for things.

When you've completed a diary, make sure you go back over it each week, and add up spending in each category. Then ask yourself whether you expected to spend so much, whether it's a reasonable sum to be spending on each thing, and whether you could be spending less.

Try a budget planner


3. Make the easy savings first
Cutting back on the things you love is hard - so don't commit to something like giving up all takeaways or evenings out unless you absolutely have to. Start with the easy stuff instead. If you haven't shopped around for utilities and insurance, your mobile, phone, TV or broadband package, get yourself to a comparison site, and set aside a few hours for shopping around. You can spend less without noticing it, and free up hundreds of pounds a year to set aside for savings.

4. Trade down
You might think that food and drink are essential, so there's nothing you can save in this corner of your budget. However, there will still be cash you can cut from your grocery budget without sacrifices. Try trading down from brands to the supermarket's own brand - or from here to the essentials range. You could also try trading down to a budget supermarket, or making a regular trip to a store offering food past its 'best before' date at a high discount. You can easily shave anything up to 30% off the amount you spend on groceries without having to sacrifice your favourite food and drink.

5. Actually save the money
All these cost-cutting tricks will only work if you put the money you save aside in a savings account or an ISA. If you just leave the money in your current account or your wallet for too long, you will just find something else to spend it on.

At its most basic, you can collect the cash you have left in your wallet after a trip to the shops - or at the end of the week - and put it in a money box. On a more sophisticated level, you can calculate what you have saved each time you avoid an overspend, and make an effort to transfer this into savings (there are several apps that will make this process easy for you). Alternatively, you can set up your accounts so that every month any cash left over is automatically transferred into savings.

Budget 2016: Martin Lewis Explains New Lifetime Isa
Budget 2016: Martin Lewis Explains New Lifetime Isa


Advertisement