If you’re ready to say goodbye to debt and spending and hello to savings, investing and long term wealth, we’re going to help you boost your savings with these 10 budget tips!
When it comes to wealth, living below or at least within your means and saving as much money as possible is one of the most tried and tested paths. When you reduce your expenses by using a budget, you can then control your savings and, ensure you reach your savings goals. These savings can then be used for investment purposes and ensure long term wealth.
#1) Create savings & investment goals
It is imperative to develop and write down a range of savings and investment goals. This will not only ensure that you know where you’re going and have a clear roadmap to getting there but it will serve as motivation to keep you sticking to your budget and saving as much as possible.
You should, ideally create both short, medium and long-term savings goals as this will maximize your chances of success and boost motivation as you will always be hitting one target or another. Once you reach your short-term goals, you may want to deconstruct your medium term goals into smaller short-term goals or simply create new goals.
You can work with a financial adviser, wealth manager or financial coach should you wish to maximize your potential and receive the best advice on where and how to invest based on your personal goals. Once you’ve made substantial investments as a beginner you can then consider making a few moves independently.
#2) Make savings a priority
In order to ensure you reach your savings goals, it is imperative to make savings a priority. This means that you should consider saving before you consider all other expenses. Basically you need to save first and spend later.
This may be difficult for some but may certainly become easier if you automate these savings. Set up a debit order from your transactional account to your savings account on the day that you get paid and avoid making use of these savings at all costs. Some people prefer to put their money in notice savings accounts so that they can’t easily access their savings and make impulsive purchases.
#3) Increasing your income
One of the best ways to boost your savings is to increase your income. Whether this in the form of returns from investments, an increase from your job or a side hustle, extra income means extra savings, and that’s exactly what you should strive for.
There are many ways to achieve this. This can be a short-term increase like selling unwanted items from around your home or a long term one such as a pay increase, for instance.
#4) Evaluate your finances
Evaluating your finances involves reviewing your income, outgoings and savings, your budget, your credit score and financial goals. Evaluating your expenses by taking account of all the aforementioned will put you in a position of power and help you decide which things need to go and what you need to start doing.
When it comes to your credit score, requesting a free copy of your credit report at least once a year is crucial to understand what lender see when they run a credit check on you. This is particularly important for those that are looking to purchase a home or invest in real estate.
#5) Create a budget
Creating a budget is a crucial in that it will help you manage your expenses and therefore ensure you don’t overspend. There are hundreds of resources available online to help you create your very own budget that is poised to ensure you stick to it in the long run.
You can create a budget using an excel spread sheet or one of hundreds of mobile apps that you can download on your mobile. These apps are even able to budget for you and keep track of your spending automatically when you connect them to your online banking.
#6) Make your budget work for you & update it regularly
Just because you create a budget does not mean that you will be able to stick to it. This is why you need to ensure that your budget is realistic and reflects not only your goals but also your spending habits.
You can better manage your spending by downloading and using a budgeting app that can help you determine when you’re overspending with minimal direct inputs into the app. This is because many of the modern budgeting apps can connect directly to your online banking and categorise your spending for you.
You should also update your budget on a regular basis to reflect increases in your income, new income streams and returns from investments as well as new habits and tendencies you may have developed.
If you’ve paid off debt or have taken on any new debts it’s also imperative to update this on your budget. If any of your savings targets have changed you should update these.
#7) Minimizing the purchase of luxury & unnecessary consumer goods
Consumer goods account for a major portion of spending for many, especially young professionals who have recently experienced an increase in their income.
To ensure that you boost your savings as much as possible it is wise to avoid purchasing expensive and unnecessary items. This money can be put to better use by adding it to your savings and reaching your financial goals.
#8) Review insurance, banking & other contracts, and downgrade if possible
If you review your expenses like we suggest to you in tip #3, you may note that debit order which include things such as insurance and banking fees may very well constitute some of your most costly monthly expenses.
Other items such as bowling, golf and gym membership fees are also costly. You should review each one of these in turn and determine whether they are necessary at all and for those that you want to keep, consider downgrading to more affordable options if this downgrade will not affect the services or coverage in a way that really affects you.
#9) Choose high interest savings account options
There are a large range of high interest savings accounts available in the UK. These include notice and no notice savings accounts also referred to as term deposits.
By searching for a high interest savings account you can ensure you receive the maximum return while preparing your money for investment purposes.
Leaving your savings in a transactional or minimal interest savings account is simply not practical for those looking to achieve their financial goals.
#10) Repay debts & avoid consumer credit
Debt will always cost more in the form of interest and fees than any earned interest on savings. This is why many financial experts advise that repaying debt with savings is a good move that will save you money.
If you do not want to repay your debt with savings, consider making extra payments towards your debts to get them paid off in as short a time as possible. Once you’re debts are repaid in full any excess cash must be put towards savings.