First time savers

I’ve been saving money for a few months now and I’ve learnt a few useful things.
Saving big? Live with your parents. I know, everyone knows it’s easier to save if you’re living with your parents. It’s not just easier, it’s a freaking gold mine! Don’t be an idiot about it, you’re not loosing your freedom, you’re investing in your future. Your parents aren’t going to charge as much as your landlord (if you pay board at all) and you’ll probably get a lot of things done for you, washing, ironing, cleaning. Be respectful and do as your parents ask. They understand it’s not easy saving money, especially for a house. They know things are different now and that’s why they’ve opened their doors, they want to help. If your mum asks you to clean the cooker (the first time ever the cookers being cleaned and she wants you to do it!?) just do it! If your go out drinking and don’t roll in till 3am don’t bring your mates round, don’t make yourself a sandwich (because we all know you’ll make a mess and won’t clean up. I bet you’ll even leave the mayonnaise out of the fridge you baboon!) just quietly tip toe to bed. You’ll save so much by moving home!
Direct debits. Setting up direct debits does the hard work for you, the hard work being transferring all that money from your current account into a savings account when you could just spend it on shoes. Set yourself up a direct debit for each time you get paid, that way when the money comes in you’re savings are going out straight away and you don’t even see them to miss them.
Don’t put all your eggs in one basket. I have three bank accounts, my current account which I get paid into and I have a bank card for (all my direct debits come from this account), a savings account and an ISA. I put 75% of the money I’m saving into my ISA, so I won’t be tempted to change my mind and withdraw it back, and 25% into my savings account. The theory is that I have money set aside for emergencies, just last week I had a flat tyre, it’s also there for when my car insurance, tax and MOT are all due. Having that account means I don’t worry that I won’t have enough money. It’s my safety net. You might think ‘why not just get an over draft’ well I spent 3 years stuck in my over draft (which was thankfully a student account so I didn’t pay any interest) and I learnt the dangers of ‘free money’ through experience, an overdraft is more like a trap than a safety net.
Work out exactly how much money you spend in two time frames, weekly and monthly. So weekly I pay board into my dads account and every other week I pay off my credit card. Monthly I have a gym membership and phone bill. If your have a gym membership etc decide if it’s worth it. Do you use it enough? Would you miss it or would you relish that extra bit of money? Once you know what your bills are and what you spend you can figure out how much to save. I did this by calculating my average income for 4 weeks and subtracting the cost of my spends per month.
Don’t just save what you’ve set aside. If you have a lot of money in your savings account, transfer some of it to your ISA and same with your current account. You’ll only spend it on rubbish anyway.
A few don’ts… Don’t eat out every day. If you buy your lunch at work, start taking your own. You’ll soon notice the change in your pocket getting heavier, then one day you might want to treat yourself. Don’t struggle, be realistic not over ambitious about what you can afford to put away. Just because you have X amount remaining when you deduct your weekly/monthly expenses doesn’t mean you have to put it all away. Now would be the best time to quit smoking. You know you should and it’s not going to get cheaper or healthier. Don’t be going out drinking every night/week. Give yourself a last hurrah! Go out on a bang, and then only go out when you can really afford to. This included friends birthdays and bank holidays. Your friends should understand that you’re saving money, you cant possibly afford to go out for every birthday especially with the amount of friends you have! You’d be bankrupt!
If you’re saving for a house here’s another good tip… Forget what your parents told you about how credit cards are the devils work ‘you don’t need one’…’ You’ll never pay it back’ … When you’re buying a house the banks will do what is called a ‘credit check’ on your financial history. Credit cards accrue a good credit rating if you use it responsibly. When you start saving it might be worth getting yourself the most standard credit card your bank will offer and building your own credit rating. Use it little and often but only for things you would normally buy and can afford, for example your weekly food shop or petrol, and pay it back in full every month. I’ve been using a credit card for the last year to pay for my petrol, I keep my eye on the online banking and have a direct debit set up incase I forget (hasn’t happened yet) to pay it back.

Once you get past the first few weeks it will all get easier. If you’re still finding it hard remind yourself why you’re doing it. What you’re saving for, your own house? Starting a business? A holiday? A wedding? You’ll get there!

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