Saving money is always important, whether things are going well or not.
Sooner or later an unexpected bill will land or a financial crisis can leave you scrambling to find a new job. That’s why it’s so important to have a rainy day fund (also referred to as sinking funds) and a healthy emergency fund if the worst should happen.
We always hear and know we should save money, but many people still like to spend their cash as quickly as it comes during the good times, only to be left in a panic during the bad times.
There is a better way: putting aside a small amount each month and making that money work for you through either interest or investment income. If you’re new to this or you’re trying to save a lot of money, it can be difficult to sustain over long periods of time as boredom and frustration can set in.
Follow the below tips to ensure you stick to your investment or savings goals long term.
To make any meaningful changes to the way you treat money and to achieve your savings goals, you'll need to be consistent in applying your techniques and improve the basic strategy.
Although making small tweaks to your approach as you learn what works and what doesn’t is a great approach, it’s no good having a plan for a month and then completely changing it the next.
This can be applied to almost any field, from finance to gaming. For example, when you play strategic card games such as online blackjack, you will need to continually implement your strategy, regardless of what others are doing around you.
Even at work you need to consistently be productive and deliver results, whilst striving to improve your performance and continually self-develop.
In the same way, if you run your own business you need to avoid continually deviating from your business plan to increase your chances of it being successful. You can’t spend too much time getting distracted by competitors who may serve a different segment of the market to you.
No matter what area of your life you wish to improve, consistency is the key. It’s exactly the same when it comes to savings or investments - you need to be consistent with either saving money or investing money to see results.
Anyone who's tried to stick to a strict budget over the long term will know there are times when being disciplined can be a real struggle. For short periods, not spending money is relatively easy as the novelty hasn't worn off. However, after several months it can become a little tiring.
This is particularly true if your money-saving activities reduce the amount of time or frequency that you can socialise.
That's why it's important to build "fun money" into your budget. Just like you have categories for savings, groceries, and transport, "fun money" is a pot of cash that can be spent on whatever you want that month.
It’s your very own personal spending money that doesn’t need to go on bills or regular household stuff. You can spend it how you wish. By allowing “fun money” it will reduce the temptation to dip into your savings or investments and ensure you are able to treat yourself each month.
To make your fun money go further, you could change the activities you do with friends. Instead of going to a restaurant, you can host a dinner party. Instead of going to the cinema, you can hold a movie night at home. There are plenty of alternatives that you can use to balance your money-saving and socialising.
Set and track your goals
The people who are most successful at saving money do it by setting a goal. If you set out to “just save money”, you have no way of tracking your progress to know whether your efforts are worthwhile.
This can quickly lead to demotivation since you’re aimlessly trying to not spend with nothing to really show for it.
Instead, you should set a goal. If you have no savings, it might be to reach £1,000 in three months. Or you may wish to save up enough to cover three or six months of personal expenses. That way, if you get made redundant, you have enough cash to keep a roof over your head while you search for a new job.
Alternatively, you may be looking to buy a house and need a certain amount for a deposit. In which case, the deposit amount needs to be your target, with a little bit on top to cover all the extra fees you can incur while going through the process of buying a house.
Once you’ve set your goal, you can attach a deadline and then work out how much you need to put aside each month to reach it. That way you know whether you’ve been successful, overachieved, or missed your target each month.
To help you stay motivated, you can also track your progress. Visually seeing your savings target and progress whether on a wall chart, spreadsheet or a money management app will really help to motivate you. This way you can also give yourself a pat on the back when you’re doing well!
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