17 April 2018

How to put 10% of your income in your savings account

According to  (This link will open in a new window)a survey by ING International,  (This link will open in a new window)27 per cent of people in the UK have no savings they can quickly access in case of an emergency.

12 per cent also had debt from a personal loan, 27 per cent had credit card debt, 13 per cent had an overdraft, 7 per cent owed money to friends and family, and 8 per cent had student loan debt.

The good news is that even if you've never done it before, putting money aside to pay off a debt or build a nest egg can be relatively simple, by following a series of baby steps a few times a month.

Follow these three simple steps and you could be putting aside 10% of your monthly income in no time at all.

1. Plan to save

To get started, you first need to get in the mindset of saving. If you have any debt, it's best to prioritise putting aside money to pay it off as soon as you can. The interest rates on your debts will typically be higher than the interest you'd get by saving, so you'll be saving money that way.

Once that's done, you can focus on saving. A good target to aim for is putting aside 10% of your income.

10% of your income may seem like a lot of money, but if you can find a way to cut back and live on 90% of what you earn, you'll have more available for your future needs.

If you're new to saving, it helps to focus on the positive aspects of saving money rather than the pain caused by not being able to buy everything you want right away.

Instead of thinking about what you can't have or what you need to cut out of your life, think about the things your savings might enable you to buy — a better car, a holiday away, or tickets to a big game.

2. Have a rough monthly budget

The worst way to approach saving is to think of it as drudgery. For many of us, the idea of having to track every single expense and being slave to a spreadsheet is the quickest way to get put off.

So, don't create a budget. Instead, take a look at your last 2-3 months of expenses and figure out how much money you realistically need to live comfortably — the daily coffee habit included. Make sure that the number is well below your monthly income.

Once you've got that number in mind, you know what your average living expenses are for the month.

The next time you're paid, just keep that money in your current account to live on and transfer the rest to a savings account in one lump sum. For the rest of the month, spend as you normally would without worrying about budgets or spreadsheets.

At the end of the month, take a look at your bank account again. If you came up short during the month, you might need to cut back on your expenses. But if you end the month with spare cash in the bank, you can put that extra cash into savings as well.

3. Find areas to cut back on

Each month, take a look through your bank statements and try to find areas where you're overspending. The point here is not to downgrade your lifestyle, but to look for things that you may be paying for that you don't use anymore or that you can do without.

Perhaps you could go to the pub after work four days of the week instead of all five? The daily coffee at the train station is fine, but could you perhaps do without a sandwich? And what about those app subscriptions that you bought once and never used again?

Saving money is not always easy but it can be simple. Rather than looking at the money you save as a sacrifice, start thinking of it as a payment towards bigger goals. You'll be putting money away for your future in no time at all.

Learn more about how our savings accounts could help you get started

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