After a period of bad luck or poor choices it can be easy to find yourself in a tough spot financially. It is suggested that 1 in 3 people do not have enough savings to cope with a sudden financial upset. This is a growing concern as you never know quite when you are going to have unexpected costs – maybe a car breaking down, or a much needed home appliance stopping working. Whilst living hand to mouth it can be difficult to save but it is really important that everyone puts away whatever they can afford. I am teaching the children this as with their pocket money they have to save a percentage of it. It is suggested that we should all aim to have three months living costs as savings. This sounds like a huge amount but if you suddenly lose your job or face ill health and do not get paid you will need this security net. Three months will obviously be different for all families but it will give you peace of mind when you have this saved. To start the process write down all your expenses for the month, include mortgage / rent, food, mobile phone contracts, loans, all direct debits.
Once you have a clear idea of your spending you can then introduce some money saving ideas. Most of us are able to save but we chose not to which is short sighted if ever there is an emergency.
Tips for saving
- Have a separate account for savings – usually they have better interest too, look at ISA’s
- Treat your savings like a bill, pay it to yourself when you get paid via direct debit. That way you don’t forget.
- Make your savings realistic so that you still have some spending money each month that way you don’t feel hard done by.
- Once you have your three months savings, keep going and use it for holidays or similar.
- Meal planning is my biggest way to save as I don’t over shop then.
- Buy presents throughout the year and keep them in a cupboard. Although Erin has found said cupboard in the past and helped herself to things!!
Having the security of savings will make you feel more positive and better about things that happen. No-one likes it when cars breakdown, or like us you know that the washing machine is on its last cycle. I would much rather spend my money on nice things but I know that I need these appliances in my life. So when they break I can replace them without much thought. If you don’t have the savings you may need to resort to a loan – if that is the case shop about especially if you need a loan with bad credit.
Then once that is cleared start working on your savings. How long could you live off your savings?