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There are many more reasons to save than the just-in-case ‘rainy day’ scenario. Cashfloat explore how and why you should save money regularly. There’s a reason for you to save, too.
In general, Britons don’t save. According to the Office for National Statistics research for March 2017, only 3.3% of Britons put money by; this is the lowest figure since the early 1960s.
Just by entering ‘save money’ into a search engine, you’ll find thousands of articles giving you tips on ways to cut down on your household and personal expenditure. However, there are much fewer articles explaining why you should save money. In this article, Cashfloat looks at the reasons why you should save money every month. It is important that our consumers use our service as a short term solution. We should not be your destination every time you need quick quid. In this article we’ll explore how saving money can affect your life and your future. Before long you’ll have a savings plan in place, and won’t require our cheap loans UK.
Did you know that people can save much more quickly if they have a reason to save? In research carried out by Ns & I (National Savings & Investment), it was found that people who set a goal had an incentive to stick to their saving plan and saved up to £550 more a year than those who had no fixed goal in mind.
Having a reason to save means you can realise your future plans and dreams. Whether your goal is short-term or long-term, you’re more likely to achieve it if you do something concrete rather than just dreaming or talking about it. So what could your goal be?
Short-term goals could be anything that you can realistically achieve in under five years. This could be something like having enough money to buy Christmas gifts for loved ones without going into debt to pay for it. Or this could be saving up for the holiday of your dreams. For example, have you always wanted to go on a round-the-world cruise? Saving regularly will help this dream come true. Maybe you wish to treat yourself by the purchase of a luxury item such as the latest mobile phone or home entertainment centre. Put money away, and this will happen.
You and your partner might be discussing the possibility of starting a family. You may wonder how you will cope on only one salary or how you’ll manage the extra expenses of the baby. Saving means you’ll be less stressed out about your finances and can give you one less thing to worry about in an-already stressful experience like bringing up a child.
For other people, their goal might be to save up the money to buy a new car. Just think of how much more money you’d have at your disposal if you didn’t have to make monthly payments for car finance deals. Similarly, many people want to save up enough cash to have a sizeable deposit for the purchase of property. Although mortgages are available for deposits of as low as 5%, you can get much more competitive deals with lower interest rates if you have more money put by and increase your share in the property.
You might be planning for a goal which is further in the future. You might start saving when your children are small so that they can have choices and opportunities when they leave school. Whether your savings are used to help them through the expense of doing a degree so they can start working life without debts or used to set them up in business, you want your kids to have the choices and freedoms which were perhaps denied to you.
Another common long-term goal that people have when they save is to be financially secure when they retire. You’ll have a pension but having money put by will also allow you to make the most of your retirement to do the things you’ve always wanted to do and to retain a higher standard of living even though you aren’t working.
None of us have a crystal ball to know what the future will bring and having an emergency fund is your best safety net when things in life don’t go according to plan. Although your fund should ideally be enough to cover 3-6 months of your living expenses, even smaller amounts can make a difference. The debt charity StepChange has calculated that if every household had £1,000 to fall back on, it would reduce the numbers falling into problem debt by millions.
This is because when we’re desperate for cash, we often resort to borrowing with the highest interest rates such as using credit cards or taking out a high acceptance payday loan. Putting money by can save you money.
Knowing that you have money put away for a rainy day can help you enormously psychologically since you won’t have sleepless nights worrying about worst case scenarios. Living a hand to mouth existence where every unplanned expense has the potential to be a disaster can be stressful and take its toll on your emotional and physical well-being as well as your relationships with those around you.
Having money saved up can give you greater control over your life and greater freedom about what you intend to do in the future. You are free to make your own choices instead of having them dictated to you by circumstances. Taking a sabbatical or re-training, switching careers or starting up your own business are all choices which are denied to you if your financial situation means you have to work and even worse when it’s a job which you dislike.
Once you’ve decided on your saving goal, you’re ready to make a start on making this a reality. Even if you only start with £20 a month, this sum will soon accumulate.
You should never keep your savings in your current account which you use for spending. Instead, you should set up a direct debit and arrange for the sum to be transferred to a separate savings account on the day that your salary is due. If you leave it to the end of the month, you’ll probably find that you end up spending it.
If you find it a struggle, adjust the amount you’re putting by. Above all, persevere and don’t give up even if you have to dip into your savings for an unplanned-for emergency. Instead, congratulate yourself on your foresight for saving and imagine how you would have coped if you hadn’t had this amount saved.
Saving money makes good financial sense, but it can also have beneficial effects on your psychological, emotional and physical well-being. Equally importantly, putting money by is the key to achieving any goals you have for the future. It gives you more options and the freedom to live life the way you want and on your terms without requiring no guarantor short term loans.