Saving money does not have to be about complicated pensions, savings accounts or investments – for many savers some simple easy steps to spend less can make a difference.
Cutting back is all about self-discipline and learning how to say no sometimes when you are tempted to buy those little luxuries because why shouldn’t you deserve a little treat now and again.
The truth is you should not suffer guilt for spending a little on yourself, after all you work hard and why shouldn’t you.
The problem is all that cash that is frittered away.
So how can you make some small changes that will have a big effect on your savings?
First, stop putting off the fateful day when you decide to start cutting back and do it right now.
Every small amount you can save now is more than you will have if you do not start putting money away for another five years – and a little every month can add up to a lot over a few years.
Stop buying coffee and lunch. Take a flask and some food to work and see how much that saves every week.
Save a little a lot
Putting a little away for longer will mean the impact of losing a small amount of spending money won’t be so harsh each month, while your savings pot will grow larger because of the magic of compound interest applied every month.
Everyone needs rainy day money for when the car breaks down or something needs doing to the house.
Have cash you can access and savings in accounts earning some interest – and try to make sure the account pays more than inflation wipes out.
Have a plan
It’s easier to save towards a goal rather than an open-ended target. Work out how much money you think you will need in retirement and try to guess how many years the money will have to last.
It’s not easy, but try and figure out how much money you will have to set aside to last until at least your mid-80s.
Work on savings not borrowing
Debt eats up money you could save. If you can’t afford that shiny new toy or luxury item, then don’t buy it.
Borrowing is spending tomorrow’s income today and paying someone interest for the privilege.
Try and reduce your borrowing by saving, then offering a reduced lump sum to clear the debt.