When you’re still in your 20s or even your teenage years, you might not spend a lot of time thinking about why you need to save money. Without a lot of regular commitments to think about, it’s easy to see your monthly payday as a way to get by and spend cash on the things you enjoy, rather than looking at it as a way to save for the future.
However, when you do start to think about the years ahead, you’ll realise that you’re going to need to take a more structured approach to spending if you want to be able to pay for things like a house deposit, or a car. With that in mind, here are just some of the ways you can start to save money when you’re still young.
Be Cautious with Loans
Many people take out loans when they’re still young for everything from a new car, to their education. However, if you’re thinking of taking out a loan, it’s important to remember that the money you borrow may have a long-term impact on your future. Not only does a loan help you to start building your credit rating, but it also gives you an interest cost that you need to think about every month.
Comparing your loan options carefully in advance will help you to avoid over-spending every month on an excessive interest rate. Make sure you’re getting the best deal!
Create a Budget
Creating a budget is one of the best things you can do when you’re still young. Start by collecting all the information you can find about your incoming and outgoing expenses, then track your spending to see where you can afford to cut back, and how much you can reasonably save. Remember, creating a budget doesn’t mean you have to give up on everything you enjoy in life. However, it does mean that you pay more attention to where your cash is going.
When you track your spending, you’re more likely to save in the long-term. Just be careful to give yourself some wiggle room in your budget in case something goes wrong.
Start Saving ASAP
The earlier you can start saving your money, the better off you’ll be in the long-term. Even if you’re just putting a few pounds a week away towards a long-term goal, you’ll start to create a habit for saving that will help you throughout the rest of your life. To make sure that you’re not tempted to spend the money you save, it may be worth placing some of your cash into a separate bank account.
Some experts recommend saving about a third of your income if you can manage it. If you’re still living at home and you don’t have a lot of bills to pay for, saving more may be easier than you think.
Have an Emergency Fund
A good way to make sure that you don’t need to tap into your savings when something doesn’t go according to plan is to create an emergency fund. Your emergency fund is there to help you out when you need to pay for something you didn’t plan for – like a flat tire or a new suit for work. With your emergency fund to protect your savings, you’ll reach your goals much faster. Just like with your savings fund, you don’t necessarily need to put a huge amount of your income away each month. Start small and let your fund build over time.
If you end up never touching your emergency fund for several months, you can consider moving some of it over into your savings account.
Avoid Spending More than You Need To
Finally, while you’re still young, it’s essential to start building a habit of savvy spending. In other words, this means looking for ways to make sure that you never over-spend on anything. You could consider always checking for discounts and coupon codes before you shop online or downloading an application that will let you know when savings are available on the site you’re shopping with.
Another way to avoid spending more than necessary is to ask yourself whether you really need everything that you buy. If you’re not sure whether the item you’re going to spend on is really worth the cash, take a day to think about your options. It’s generally a good idea to give yourself 24 hours of consideration time with any purchase that’s more than £30.