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It’s been a while since I’ve done a work / school / uni or money related type of post over here – so I thought I’d wind it all back today with a little refresh of my tips for “saving money”, especially now that I’ve been working full-time for three years (bleurgh)!
Let’s be honest – saving money and also wanting to live your best-young-life isn’t always easy. You want to save to buy and property and invest your money because, well, that’s what smart people say you should do. At the same time, you want to be doing up baecation in Bali just like all these insta celebs. It’s definitely possible to save and enjoy, but it’s all about living within your means. Which brings us onto tip #1…
When I first started getting full-time pay a few years back, the first thing I laid out for myself was: how much do I need to spend per month? At the time, I decided on splitting my monthly income into ~thirds and putting one third towards living, one third towards monthly spending and one third towards savings. I’d try and stick to this as stringently as I could but would at times dip into my savings if I had a non business-as-usual expense such as a holiday I wanted to book. I still sort of do things in a similar way except my split of income and what goes where has changed slightly as over these past three years my pay has increased but I still live in the same place and live in pretty much the same way bar a fancier hotel here and there. It’s important to be realistic – for e.g. I see people on Twitter sometimes vowing to spend just £300 or so a month on general life expenses. Now, if you live in London, this just isn’t that realistic. TfL alone I can chop up to £10 in a day if you don’t tap in and out correctly. And if you’re living out, you could end up going shopping one day for dishwasher tablets and spices for your meals and that zaps £10 out of your account just like that. Let’s not even mention car insurance, phone bills, gym payment etc – it stacks up very quickly. I would divide it in this way and in this order: (1) how much do you need to live (i.e rent a bills)? (2) what can you spend a month on “life” and general travel without absolutely restricting yourself but also not living too lavishly above your means and (3) what’s left for savings? Is it much at all? Which takes me onto point 2…
If you divide up money for rent, gym, insurance, day-to-day living, food etc and the end balance is £0 – then it’s time to prioritise. Are you perhaps due a pay rise in a few months or years which means that for now, you’d rather continue to live as you do and start saving later down the line? Do you prioritise living out and renting and therefore you’d rather have that balance say £0 for the time being as long as it means you get to be independent? Is your #1 priority to save up money to buy your own property within the next 3 years? I think once you can prioritise, you can better decide on where you want your expenses to go. For example, some people decide they’d rather live at home for a few years than rent, so that they can save up as much as possible to buy their own property ASAP. Some people decide to ditch the rent and spend that money on travelling the world. Some people would rather forgo that gym membership and expensive phone contract if it means they can save up for a new Chanel. It can even be as little as picking Better Gym over Third Space Gym and saving yourself over £100 monthly in the process. Basically – what’s important to you? That’s the question.
There are little things you can very easily cut down and out in your life that could lead to way more savings. The truth is, other than a few random big payments here and there, most of what drowns our accounts is money paid out to big corporations – two big culprits being TfL (i.e. public transport) and Deliveroo (i.e. food delivery services). Here are a few things you can do to make a big difference fast:
When I first started work, I’d tell myself “I want to save £x amount by the end of the year”. I met my goal, then last year, I made a big investment and I reset my goal. Recently, I told myself “I want to save £x amount before I start paying down my student loan voluntarily” (I just hit it this month, eek, time to slowly stop letting SFE take all my money via interest). When you have a goal – maybe it’s to get a mortgage, pay for an expensive holiday or even buy a designer bag (but, definitely, mortgages/investments over designer bags!), there’s more motivation behind your saving each month, you’re more likely to actually save.
I always say that whilst saving important – you should always feel free to treat yourself. A few years ago I heard of guy that spent his whole first year of full time work living at home, going on no holiday breaks, no nights out, never eating out, never shopping, barely seeing his friends and basically falling into exile because he wanted to spend every last drop on paying off his student loan. Perhaps, that is commendable – what I can say is that I simply can never do that. I’m in my 20s, I work hard, I don’t want to suffer ya’ll. I’ll treat myself with a weekend break, a nice hotel, or evening at a night restaurant if the opportunity presents itself, because these things make memories for when we’re older with real things to worry about like children and a family! It’s the same way reason why after a night out I’ll always get an uber – I don’t want to suffer ya’ll. An uber is usually safer at 4am and also, at 4am after the club, I’m probably hellllaaa tired – I’m not rolling onto the night tube! Saving money is important – but living is important too.
Another thing to remember is that once your bank account does start to stack up, the question is – what next? Most wealthy people hold their cash in diversified places – put money into a mortgage, hold some in an ISA, invest in some stocks and/or bonds, keep some money in cash in their bank account etc. Now I’m no master investor but this is definitely something to keep in mind – do more with your money. One of my New Year’s Resolutions was actually to start investing my money (and not just in bitcoin ha – yes I still have some money in cryptocurrencies from just before the hype last year) – I hope to be able to come back to you with a nice juicy post on what you can do in this sense at the end of the year!
Andddd with that – have a great week people!