Want to know how to save more? Understand why starting to save can be a hard habit to get into.
➜ Why saving can be difficult
➜ Steps to make saving easier
➜ How to increase the amount you save
Making a sacrifice today for a future that feels far away is one of the biggest financial challenges we face. It can be hard enough to make ends meet, let alone find extra cash to put away for the future.
It’s not just our budgets that can hold us back. Research has found that many of us would trade a larger reward in the future for a smaller reward today. We tend to focus more on the present, which explains why we might find it easier to spend than save.
But saving for the future is important.
The good news is there are some small actions you can take to make saving easier, potentially even second nature. They can help you build up your savings balance in the short-term and progress towards your financial goals for the future.
Here are some steps to get started.
A separate savings account can give you greater control. The money is separate from your spending money so it makes it more difficult to spend your savings – accidentally or deliberately. It also means you’ll know exactly how much money you have saved at any given time.
When you get paid, you might like to put the money you want to save straight into your savings account. Again, this might prevent you from being tempted to spend it. It’s even better if you’re able to automate the transfer into savings. This takes away the hassle of having to transfer the money each month and will stop you forgetting.
If saving a portion of your pay each day will help you feel a sense of progress, you can do that through the Wagestream app. You need to work out how much of your earnings you could realistically set aside each day, so you are sure to meet your bills and essentials too.
A lot of banking apps offer the ability to ‘round up’ your spending and transfer the money into another account. Your bank rounds up each purchase you make and adds that extra amount to your savings balance. The amounts can be small but if you’re struggling to save it can be a way to start without noticing.
Finding the right account for your savings can help your money grow faster. Interest rates are pretty low globally at the moment, so look for an account that offers a high interest rate but still has the other conditions you’re looking for from a savings account.
Keep in mind that saving regularly means you can make the most of compound interest. With compound interest, you earn interest on the money you deposit into savings plus the interest that money has already earned. Use a savings calculator to see what difference saving regularly makes.
Financial goals can be aspirations about what kind of financial position you would like to be in in the future or what large purchases you would like to make within a certain time frame.
Simply sitting down and thinking about these goals can help you to save for them. That’s because it can help connect the act of saving in the short-term with a future benefit. Take the time to decide what it is you're saving for and when you want to save the money by.