The notion of saving up a nice chunk of money for a house deposit or for retirement probably seems like a distant dream for many young people. With the cost of living rising much faster than salaries and property prices going through the roof, most of us are simply trying to concentrate on paying this month’s rent and bills. Yet, at the same time we know that this isn’t a valid long-term strategy, and we ought to be thinking ahead about our financial future. This might seem daunting, but luckily there are some relatively simple steps you can take that over time make a big difference. So, if you want to take control of your finances and improve your money management, here are a few top tips to get you started.
One of the most obvious ways to manage your money more successfully is simply to spend less of it. However, in many cases that’s easier said than done. It can be helpful to start by making a budget if you’ve never done so before. Keep track of everything you spend over a month, and then examine the results closely to see where you can make cutbacks. Some costs, such as rent, are unavoidable, but perhaps you can reduce your bills by being more diligent about using less water and electricity. There are plenty of apps out there that can help you with this, so be sure to use technology to your advantage.
Plan your meals in advance and be rigid about sticking to a shopping list at the supermarket to save money on your weekly shop. You could also consider making coffee at home or work rather than stopping at Starbucks every day. Similarly, making your own lunch at home rather than buying it can add up to big savings over time. Another helpful tip is to always wait before making a purchase. If you see something you like online, add it to your basket then come back to it the next day. You’ll be surprised how often you change your mind after sleeping on it. Meanwhile, consider buying essentials in bulk to benefit from cheaper prices.
Spending less is a great first step, but to truly take charge of your finances you want to channel that money you’ve saved in a sensible manner. A good place to start is by paying off any debt you have on credit cards, and then once you’re in a more stable situation start to organise your savings. Look out for accounts that offer you a high interest rate on your money, and set up a direct debit to automatically transfer cash every month from your current account into your savings account. It doesn’t have to be a lot – even small amounts will add up over time without you noticing.
It’s also never too early to start thinking about your pension. There is a lot of discussion at the moment about the impact of Covid on the pension industry, so whether you’re paying in through your employer or setting something up yourself it’s definitely an area worth taking the time to research. Retirement might seem very far off at the moment, but if you plan ahead and put things in motion now then your older self will thank you.
Learn about your options
One reason that people struggle with financial matters is a lack of knowledge. After all, most of us were never taught about taxes, pensions, or any of these other issues in school. Therefore, one of the biggest advantages you can give yourself is education. Take some time to read about the different options that are available to you so that you can make an informed decision. For example, if you’re saving up to buy your first house look into some of the various schemes the government offers to help out with this.
This mindset can even be applied to areas such as utilities. There’s a chance you’re paying more for gas and electricity than you need to, so find out if you can get a better deal by switching suppliers. These days, many companies will even handle the administrative hassle of doing so for you. Finally, when it comes to savings accounts, again there are a huge number of options out there with different rules about fees, when and how much you can pay in, when and how much you can withdraw, and if you have to pay tax on the interest. Therefore, it’s very beneficial to do your research and choose the one that best suits your individual circumstances.