Lots of Irish families find that while they may be reasonably good when comes to budgeting money, saving can present a dilemma; there is often not enough put aside for short term needs. But do you know how much money you spend annually on the small stuff. And it’s not for lack of trying. You’ve reduced take-home meals, cut back on take-away teas and coffees and even do the odd spot of upcycling to do the bit for the environment…and cut back on spending. You are even using a budgeting spreadsheet to track your spending to ensure you have financial ‘visibility’. But you need to be extra vigilant that those pennies do get added to become savings worth bragging (to yourself) about.
- Start with small steps
If you set yourself a savings target, in 3 months, you could save €1,000 by putting aside just €11 per day. That is a simple target and the system works. Goal setting and especially, goals that are underpinned with small steps can lead to big savings success over time. But without this guiding goal, savings can become much more difficult.
The goal is to taste savings success early in the process. Soon, once the small steps approach is established, it’s time to move onto bigger and more important saving goals.
- Automate your savings process
Most employers can facilitate the automatic deduction of your income to be saved into a nominated savings account. This is a major key to successful savings. The reason is that where money becomes available, it can (and will be spent) so you really need to ensure that you have the cash put aside before the temptation of spending takes hold.
By setting up an automatic deduction from your wages, you are really paying yourself. The system will work, in no time; you’ll find that savings begin to mount which will have a major motivating impact on you to stay the course.
- Break the (contactless) connection
In today’s world of hyper connection, if you want to continue to reach your savings goal, you really do need to break the connection between your accumulating savings and you. This means putting it in a place that has no connection to a contactless debit card. This can all too often be the open door where good savings habits get drained.
So, ensure you set up an account that you cannot access readily, especially on a whim when you might just happen to roll your eyes across the latest ‘must have’ in a pop-up ad on your social media account or while out visiting the local shops. In this case, contactless-ness, not contactless really is better.
- Allow for hiccups
Setting a money goal is just like setting any goal; there will be ups and downs. So, it’s important to build that into your plans. Maybe a family member lost a job which resulted in cutting back on the amount saved each month. Or perhaps there was a financial emergency like an unexpected a car repair bill that was within the insurance excess limits. These are the types of hiccups you need to allow for. What is important is when your savings plans get interrupted you have a way of recovering and getting back on track.
A trick to managing the hiccups is to treat them as a mini-rainy day event. Try to allow for one per year and build it into your plans. If you suffer none, all the better but in some years, you could have more than one but over time, it should even out. The important thing is you have it incorporated as part of your plan as it will be easier to recover from. .
- Keep your savings and finances visible.
To reach any savings goal, e it short-term or long-term, it is vital you keep your personal finances visible. So, here is a trick to ensuring you do just that.
Review your income. Ask yourself if you claim back on and tax relief you may be entitled to. Get receipts each time you spend – after a month, review how you spend. Check your current account statement, credit card statements and debit card statement for all spending activity. This will provide wealth of detail that you can use to question how much you are really spending. It might sound like a lot of work but if you have never done this before, the satisfaction of getting to know your finances can be liberating and if you are really determined to save, it is only the key to your savings success.