How to stop being a spender and start being a saver
Savings? What savings? One in four adults has no savings. Zero. Zilch. Nada.
Worse still, one in 10 people spend more than they earn.
The figures are from a study by Skipton building society but, to be honest, studies that conclude Brits aren’t saving enough, and splurge their cash on things they don’t need, are 10 a penny.
The big question is: Why don’t people save? And here’s where it gets complicated. Although your income is obviously a factor – you can’t save what you don’t have – the way you think about money plays a big part too. It’s a big psychological shift from spender to saver but it’s not impossible.
Of course, you’ll need a home for your savings. How about the easyMoney innovative finance (IF) ISA? You can invest up to £20,000 a year and the returns are tax-free. The annualised target return is 7.28% and all lending is secured by UK property, giving you extra peace of mind. You can ask to withdraw your money at any time.
Here’s how to get in the savings habit:
Track your spending
Everyone’s tracking everything these days, from your heart rate and fitness levels, to calories and sleep. Now it’s time to start tracking your spending too. It might be dull but it’s necessary. You won’t figure out how to save money unless you know where you’re spending it.
There are several apps that can help you track your spending. You can input all your transactions into Spending Tracker, for example, or if you use a credit or debit card for most transactions, let a service such as Money Dashboard categorise your transactions for you.
Anyone who’s ever tracked their calories will know it makes you eat less – well, tracking your spending makes you spend less – all the more money to add to your easyMoney IF ISA.
Do you need it?
“You can’t always get what you want” as the Rolling Stones classic goes, “You get what you need”. The song might not have been about money, but bear with me. Do you really need that thing you’re about to buy? Really need it? Buying a shiny new gadget (or whatever) might give you instant satisfaction but wouldn’t you be better off with delayed gratification later on?
My number one money tip is stop spending your money on things you want but don’t need. Rather than indulging your online shopping habit, think about the rewards on offer if you save your money instead. A few clicks and the money will be in your easyMoney innovative finance (IF) ISA.
Pay yourself first
Many savers, myself included, swear by the “pay yourself first” rule when it comes to saving. Sit down and work out your budget – how much can you afford to save each month?
Whatever the figure you arrive at, don’t just leave your money in your current account with a vague intention of transferring it to your savings account at some point. This won’t work unless you have cast iron willpower.
Standing orders are your friend: set one up to transfer the cash to your easyMoney IF ISA the day after payday. There. Done. The money’s gone. A fully automated process removes you from the decision making on an ongoing basis: what’s not to like?
What’s your long-term goal?
So, what do you really want? Not right now, but in the long-term. Me? I don’t want to be stuck in a job I hate. And I don’t want to be stuck in a bad relationship because I can’t afford to leave. And I want to travel more.
Having a pot of money in an ISA gives you freedom and choices. What do you really want – the latest iPhone upgrade or pair of trainers, or freedom and choices? If it’s the latter (and I suspect it is), get saving. Your future self will thank you for it.
You can open an easyMoney IF ISA at [easymoney.com](http://easymoney.com) or by calling 020 3858 7269. You can either start from scratch or transfer from other stocks and shares of cash ISAs. The minimum investment is £100. Remember, as with all investing, your capital is at risk. All investors receive an easyMoney plus card offering discounts at more than 100 of the UK’s biggest retailers.