Do you spend the latter part of every month holding your breath for the next payday?
If your bank account is empty by the time that cash comes through then you’re living paycheck to paycheck – and financial experts all pretty much agree that this is a dangerous way to manage your finances.
You may have a small pot of emergency savings stashed away, but let’s face it… other than that, by the time payday rolls around you feel pretty skint.
Why does it matter?
This can leave you vulnerable in a number of ways. A larger emergency expense, such as an appliance breaking down or a problem with your vehicle, could leave you reeling.
You may be tempted to take out a loan or more credit card debt than you can handle. And imagine what would happen if you lost your job… add these factors together and it becomes clear that you need a safety net.
How can I make it happen?
Yes, there really are options available. They may require a little hard work, but once you get started you’ll find that it soon comes naturally.
Act as though you earn less
What would happen if you had to make do on just £50 less each month? Even if it was tight, you’d find a way to make it work.
Whether that means cutting down on luxuries, learning to nutritious meals cook meals from simpler ingredients or adding a walk to your commute to cut down on petrol/commuting costs.
So set yourself that goal, and set the other £50 aside. As time goes on, challenge yourself to find more places to cut costs and continue saving. Soon enough, you’ll have enough set aside to deal with at least a small financial setback.
If you get a pay rise then try to maintain your current standard of living and pocket the difference. You might want to set yourself a ratio – say 70/30 – where 70% of any rise or bonus goes into savings while the rest can be used as additional spending money.
Put your savings in an account that’s hard to reach
Now that we live in an age of online banking, it’s easy to log on and see our rainy day savings balance right there next to our current account.
Sure this makes it easy to get a financial overview, but it also makes it all to tempting to transfer some of those savings across when you’re feeling the pinch.
Long-term, this is extremely counterproductive… so take away the temptation by putting your savings out of sight with another bank, or in a hard-to-access account.
Treat your savings like just another bill
Just like you would find a way to manage if you were earning a fraction less, you’d also find a way if one of your essential bills went up by £20.
Quick Compare Banking Services
|Service||Good For||Savings Interest||FCFS Protected||More|
|Starling||Budgeting, Saving||0.25% – 0.5%||✅||More|
|Atom Bank||Saving, Mortgages||0.8% – 1.9%||✅||More|
|Tandem||Saving||1.6% – 2%||✅||More|
|Chip||Saving||0% – 5%||No||More|