If you haven’t heard by now, saving is pretty imperative to building financial resilience and independence. But finding the motivation to save can be tricky because managing money on a daily basis is challenging enough. As with most things in life, a good motivational starting point is a positive one: instead of thinking “I need to save because I don’t have enough money”, try “I need to save because I want to go on holiday this year”. When you have something to work towards which will enrich your life, saving becomes much easier.
But apart from treating yourself from time to time, saving can also help you manage your cashflow and feel money-confident. We share 5 reasons to start saving, and a few tips along the way too, so you can feel financially independent and in control of your finances.
1. Save to reduce your credit dependency
One of the most common reasons people save is so they don’t need to borrow money when a large or surprise payment crops up. Reducing your credit dependency isn’t always straightforward, but if you can save just a little bit of cash each month, you might find that further down the line you don’t need to borrow money to meet a payment. You then won’t need to pay interest on the credit and so you save in two ways. Every time you use money you’ve saved instead of money you’ve borrowed you take a little step further towards credit independency.
If you don’t have a huge disposable income available at the moment, start by just saving little amounts where you can. Perhaps it’s the cash leftover at the end of the day, or the money you’ve saved by using a discount code. Even £20 a month for half a year could help you replace the tyres on your car or fix your oven.
2. Save to feel less anxious about money
Money is an emotional subject for most people, and usually it bears negative feelings rather than positive ones. If you find you are consistently anxious about money, even if you don’t really have a reason to be, then starting a small savings jar can help to ease some of your financial stress. Having an accessible amount of cash to help you in emergency or unexpected situations can ease a lot of the anxiety that comes with managing money.
Try saving to improve your financial wellbeing as well as your mental health. If you feel less anxious about money, you might find you make better financial decisions and generally spend more time managing your financial affairs, instead of rushing to get them over with. The extra time you spend on budgeting and researching service providers might just save you some cash too.
If you are a visual person, why not save money into a clear jar or container so you can see your savings increase over time? Then every time you start to feel stressed about money or upcoming payments, you can look at a tangible representation of the money you’ve saved so far which might help you with those payments.
3. Save to increase your financial resilience
Financial resilience is responsible for ensuring you can meet your normal expenditure, as well as unexpected payments, without borrowing money or getting into debt. It’s important to look at your financial resilience on a short-term and long-term scale: do you struggle from week to week? Are you confident that a random large purchase in the next 12 months would be affordable?
Having even a small amount in savings can help protect you against future financial shortfalls meaning you can maintain your usual cashflow without falling into debt to cover the unexpected payments. Building your financial resilience can be done in many ways but saving a little bit of cash every now and then is a good way to start.
4. Save towards a life event
There are several times throughout a person’s life that you need a big pile of cash:
- To buy a car
- To purchase a house
- To pay for a wedding
There are credit options available to assist with these large payments because it’s unusual to have thousands of pounds lying around. However, if you can save even a fraction of the amount you need for a life event like the above, you won’t have to borrow as much which saves you money in interest repayments and might get you better deals. Plus, some life events can be very emotionally difficult so having the money readily available is a big stress-reliever.
Obviously, it’s going to take a long time to save up the funds you’d need for a house deposit or to buy a new vehicle. But usually, you have a few years notice. The earlier you can start saving the better – even if it’s an occasional £100 or regular fivers or tenners in a piggy bank. For something like a life event, you will have to consciously save, but setting yourself an achievable yearly target based on your current income and expenditure can make the ordeal much more manageable. Plus, the benefit of needing to save a few grand means that rare, emergency payments of £100 or £200 could be accommodated from this fund if you really needed it.
5. Treat yourself without feeling guilty
When you live on a budget, even small treats can make you feel guilty. You might start to worry that the money should have been spent on something more useful or just saved for a rainy day. If you struggle to find the motivation to save for potential cashflow problems, why not start off by choosing something you really want, but can’t afford out of your usual monthly budget? It might be a new pair of trainers or even a weekend away. By starting your savings journey with a tangible reward at the end of it, you’ll better understand the benefits of having savings. From here, you might find it easier to save on a more general basis as it can become addictive to see your savings grow. As long as you are sensible and you don’t spend money on luxuries for yourself when there are more important purchases needed, it’s fine to save for occasional treats if it helps you save for other things too.
Saving money is no easy feat which is why there are so many online saving help tools. Money management shouldn’t be an isolated task; while you might not feel comfortable sharing your financials with friends or family, you can always speak to independent advisors or even your bank if you need some advice when it comes to budgeting and saving. Although a very private matter, money shouldn’t be something you are ashamed of. Whether you are ready to start saving now, or you need to jiggle your budget around a bit first, think how different your finances might look in 12 months’ time if you start your saving habits today?
