I think we all know that we should be saving more. People my age are constantly tarnished with that ‘millenial, rubbish with money, can’t save, doesn’t work hard enough, always complaining’ brush, but it’s so much more than that: we spent our school years being told that hard work is all it takes, and that a degree equals money which equals a house, mortgage, family, dog and all the rest. Of course, whilst once that may well have been the case, the reality for the majority of us is quite different.
For a long time, I didn’t bother saving at all – or at least I didn’t do it consistently or without spending most of it on ’emergencies’ (end-of-the-month nights out), anyway. The prospect of me owning a house in Brighton is pretty slim, so the motivation wasn’t there. It took something pretty big to jolt me out of this mindset, when we were forced to leave our rented flat and, with no cushion to fund another move, had to go back to Helen’s family home instead. After that, I vowed to save a realistic amount of money every single month, so there would always be a little pot there if ever we needed it.
I’ve become pretty good at saving over the past year, and budgeting has always come fairly easily to me, even at university. I’ve never been one of those ‘live like a king for a week after payday‘ people, mainly because the thought of running out at the end of the month sends me into a complete panic. Thanks, anxiety – you’re good for something at least! I want to share what I’ve learnt in the hope that somebody – even just one person – might benefit from it. So here is how I personally budget, and whilst it works for me, feel free to tweak it to suit you, and let me know if you have any of your own tips in the comments!
Quite simply, work out how much comes in every month (e.g. wages, student loan, allowance etc), and then list everything that has to go out, too. By ‘everything that has to go out’, I mean the likes of bills, food shop, council tax, subscriptions, rent… I could go on (why is the list so long?!). Next to each of these, note how much they cost, estimating (generously!) if you’re not quite sure. It helps to scan through previous bank statements to come up with realistic figures.
As soon as I get paid each month, I transfer the money for these essentials into a separate ‘bills account’, and I’ve set up all my direct debits to come from here throughout the month. That way, the money left in your current account is completely yours to spend (and save!), and there are no hidden surprises.
Once you’ve got the ‘essential’ payments out of the way, you can see clearly what you have left to play with – starting with saving. I can’t really tell you how much to save each month because there are so many factors involved, but to give you an indication, the number I settled on equates to roughly 17.5% of my take home pay, and that works pretty well for me. As soon as I am paid, I transfer this total straight into a separate savings account using my online banking, and then I don’t touch it – under any circumstances! This can be tough as the temptation is always there, so if you think you might struggle, consider giving it to a trusted relative to ‘look after’, opening a savings account with a different bank, or putting restrictions on the account so that you physically can’t withdraw the money.
I recommend being realistic with the amount you’re going to save, and it might take a month or two to get it right. If you’re saving for something with a time restriction (if you’re moving in 5 months, for example), this may come into play – but at least you’ll have the motivation to save a little more! Equally, remember that you can always add more to your savings if you have any leftovers at the end of each week, which brings me to…
This is the fun bit! I can’t believe I just described any part of budgeting as ‘fun’. Could I be any more tragic?
Anyway, it IS fun, because once you’ve worked out your core outgoings and transferred your savings, whatever is left is for you to spend however you like. This is where many people fall, as on payday this number looks HUGE, and it’s easy to blow it all in the first week and then spend the next 3 living off beans and crying because your friends are all having fun without you. Not ideal. It can also increase the temptation to dip into your savings, and as previously mentioned, this is strictly forbidden!
Here’s where my secret weapon comes in: my Revolut card. There are a few variations of this (Monzo, for example) that you might have heard of, but basically it’s a cash card that you can top up using an app on your phone. It’s a Mastercard, so it’s accepted everywhere, and you can also withdraw cash with it too. I don’t like carrying cash (mainly because I’ve lost about 7 of those new tenners because they’re so bloody slippery!), so instead I transfer my spend allowance to my Revolut card every week, and once it’s gone, I stop spending! Working out your spend allowance is simple: just divide the amount left after your savings have been transferred by the number of weeks left before you get paid again. I normally base this on the number of weekends as this is when I spend the bulk of my money.
The reason why I love Revolut so much is that, as soon as you’ve used it to pay for something, you get an instant notification and it is immediately taken out of your account – unlike regular bank cards where there is a lag, making it easy to lose track. It also creates statistics to help you keep an eye on where you’re spending the most, so you can cut back more easily. As a bonus, you can also use it abroad at no extra cost, so it’s a perfect alternative to carrying cash on holiday! I realise it sounds like Revolut are paying me for this, but I promise you they aren’t. I just bloody love it! You can get a free card until the 9th of March by clicking here, but it’s only £5 normally anyway, and well worth the investment.
Of course, some weeks are extra expensive – perhaps you want to book a gig ticket or you’re visiting friends? No problem; just take a little more that week and adjust the other weeks accordingly. Similarly, some weeks are cheap as chips (or you might choose to have a ‘no spend week’), in which case you could add a little more to your savings pot. You could even open another savings account especially for these leftovers, and use it for more short term goals – like that handbag you’ve been eyeing up, or a little weekend minibreak. Or, you know, just treat yourself – you’ve budgeted for it, so why the hell not?!
I hope you’ve found some of these tips helpful, and – as I mentioned earlier – I am always on the lookout for other ways to save, so let me know if you have anything to add! I was going to include a section on meal planning, but it ended up being long enough for a post of its own, so look out for that in the next couple of weeks. Happy saving, and happy SPENDING!