Saving is a sensitive finance topic many people prefer to avoid. Although putting by savings is a priority for most UK workers, the actual amount that makes it to the savings pot can be disappointing. For many British workers, that means paying bills each month, and then watching their savings goals fall apart.
When money isn’t available to cover regular outgoings and whatever extra expenses pop up during the month, savings are often the first thing to suffer. Though finance is available from several short-term lenders – even for bad credit applicants, savers often tap their reserves when money’s tight.
Financial challenges are to be expected, so the best ways to protect your financial health are to start saving at a young age and make consistent contributions throughout your lifetime. It may sound like a tall order, but young UK earners need new ways to set aside funds for the future, without feeling the pinch today. These tips can help you save more money in your 20s.
At its core, effective personal financial management balances income and outgoings. The relatively simple equation only works when there is enough incoming cash flow to consistently cover outgoing obligations. When one side tips the balance, the equation falls apart, and your financial health may be in jeopardy.
Cost-cutting measures can help bring about better financial balance, but earning more cash is another sure way to get your finances back on track. Consider these money-making moves for a temporary or long-term income boost.
- Side Job – The “side hustle” economy is in full swing, with many workers supplementing their “day jobs” with side work. Each person’s talents, skills, and circumstances are unique, so it’s important to match your side job with your existing lifestyle. Are you interested in evening and weekend work? Do you have an entrepreneurial streak, working a side scheme from home? Is a short-term earnings bump enough to get you back on course, or are you out for a long-term solution? Answering these questions and involving family members in the process can help you settle on a side hustle that fits your personal profile.
- Pay Raise – You can’t afford to sit back, wondering when your next rise is coming through. Sometimes asking is the only way to start the gears turning, so don’t hesitate stating your case for a raise – particularly if you’ve recently taken-on new duties or received training that makes you more valuable to your employer.
- Gigs – You don’t always have to make a big commitment in order to earn a few extra pounds. From survey sites to creative opportunities for writers, photographers and designers, the web provides casual earning opportunities from which you may pick and choose. And local retailers, food service providers, theaters, and sports facilities regularly need help with special events and seasonal activities.
If your earnings are strong, but you still have a hard time saving money, careless spending habits may be your worst enemy. When you’re serious about saving, budgeting is the best way to account for your income and establish spending limits.
An effective budgeting strategy tracks your household spending for 1-3 months, and then reviews the results, with savings in mind. There are several budgeting apps available to simplify the process, but recording your spending in a ledger works just as well. Once you have a record, showing where your money goes, it’s up to you to make cuts and send the money to savings. One popular budgeting theory promotes a 50-30-20 rule, devoting 50 per cent of earnings to necessities, 30 per cent to discretionary buys, and the remaining 20 per cent to savings.
Even the most dedicated savers falter, setting by cash. Why not take away the worry by setting-up automated savings? Advanced apps can help you complete the task, and they include other helpful features. In addition to designating automating savings withdrawal and diverting funds to a savings account, young earners can also use apps to analyse their finances and work out how much to save each month.
When financial pressure builds, the last thing you need is added interest and finance charges. To keep balances as low as possible, commit to cash only spending for day-to-day needs. If you don’t have money in your pocket, change your spending plans, rather than reaching for your credit card. Not only will you perhaps prevent unwise spending, but you’ll also freeze growing finance balances, helping you clear debt and make savings.
It’s never too late to start saving, but young earners can use time to make the most of their reserves. Putting by savings in your 20’s gives the money time to grow, earning interest that compounds. Over time, interest starts earning interest and your savings pot grows at a faster rate. If you’re ready to start down the road to prosperity, use these tips to save more in your 20s.