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That’s it. I’m doing it. The money word is coming out to play. I want things to be useful around here and in this new “Time to grow up” series, I’m going to be talking about everything from mortgages to pensions. I’m fed up with the secrets, and the over complicated jargon and the outdated information rocking around. We shouldn’t all have to waste hours on the internet, so I’ll try to keep things as simple as possible, but also personal to my own journey and learnings. First up: let’s talk about savings.
It’s fair to say that I’ve had a turbulent relationship with money. Moving out at 17 meant that I used up all my bonds and ISAs from childhood, and living in London while studying resulted in a healthy amount of overdraft. While I’ve always been adamant that I would have lots of money in the future, my younger mindset of spending everything that came my way, wasn’t quite matching up with my vision of multiple homes and a walk-in wardrobe. Contradictions happen a lot when it comes to money. Mainly because since the dawn of millennials, we’ve been told we won’t ever be able to buy a house or earn enough without living with our parents and not having a life for at least 5 years.
In the last 18 months since going freelance, I’ve really set to work in cancelling out that debt and starting to save. In that time I’ve put aside over £15,000. Yep, 2017 Emma wouldn’t have believed me either. Of course some of this is due to a rise in earnings, but old Emma would have spent this on shoes. Wanna know how I did it? Here’s how you can learn to save money too.
Change your money mindset.
The most important change I made in beginning to save money was with my mindset. No, I’m not going all woo woo on you; it’s just something that I firmly believe helped me get started on saving and believing I could do it. If you’re the kind of person who says things such as “oh yeah, I’ll never buy a house”, or “I’ll never save enough money for that”, I hear you and this is one for you.
I used to believe that my money was made for spending in the moment, and while I still believe that’s true to some extent, I also think there’s room for investing in your future. A lot of my own issues with money comes from what I heard growing up and also what I’ve read in the media re: savings. In all honesty, I’ve probably always thought that if I didn’t spend the money, it would get taken away. We don’t have to adhere to those outcomes.
Fast forward to now and I’ve scrapped talking negatively about having £££ signs showing in my bank account and interestingly, I’m now slightly more careful about where I put my buck – primarily into experiences over Topshop and ASOS hauls. Don’t get me wrong, I still enjoy myself, but I also question whether I really need something over the thrill of investing it into my future. It’s nice to have things, but it’s also nicer to have bigger and better things.
Be at one with your accounts.
Here’s a hard one for some folks, especially if you’re faced with debt. Honestly, I’ve been there. Checking in on your accounts and knowing where your money is going each month is absolutely vital if you want to start saving. I check my bank account EVERY SINGLE DAY to ensure that I’m on top of my spending and that nothing odd is happening. It’s also really lovely once you’re out of the debt to see +++ signs on a daily basis. It reminds you how far you’ve come.
I haven’t gone so far as to create a spreadsheet, but if you like order, this might be something that will help you to know exactly what money is coming in and out of your account. Banking accounts like Monzo are also great for this, and will keep you in check with how much you’re spending on your weekly coffee or drunken fast food.
NOTE: If you are in debt, start working towards clearing it. You can still save a little at the same time (seeing plus signs in another account will help to boost your morale), but do remember that debt is likely costing you more in interest, which could all be going towards other things. It took me until this year to get out of my overdraft and credit card debt post-uni and that’s nothing to be ashamed of. I firmly believe that I was in debt because somewhere in my self-conscience I thought that was what my life was meant to look like. Reality check: it doesn’t have to be that way.
Set up a realistic monthly savings amount.
Once you’ve come to terms with your financial situation, set yourself an achievable monthly target to save. There’s nothing worse than putting money aside to have to dip into it immediately, so be realistic and work to a number that you know you can let build up without noticing it’s left your account. Whether that’s £10 a month or £1000 a month, getting into the practise of putting money towards your future will help you to become accustomed to it when times are better. A financial cushion is always a good shout, even if you’re not sure what you’re saving for at the time. Keep on reading for a couple of the routes I decided to take to for putting a set sum aside each month.
Open a savings account or sign up to a savings app.
I’ve had a savings account my whole life and to this day I still have a grand total of £1.36 in it. I just find that they don’t work for me as it’s so easy to transfer the money right back into my current account when I want to buy some clothes or interior decor. I’ll always be a shopaholic at heart. Nevertheless, this is also a pro for those who live a little more month to month, and it’s worth trying out. Hopefully your willpower is a little better than mine.
For those in the same boat with the savings account, a recent discovery for me is a free savings app called Plum. This is an app that links directly to your bank (this might seem scary but is all legitimate and regulated) and uses a very clever algorithm to work out how much you could be saving. I recently worked with them on a campaign, but was so impressed with the way that the app worked and how quickly I saw cash build up, that I’ve been shouting about it ever since.
Once the app has “read” your accounts, it starts to automatically make deposits. You can set how aggressive you want it to be with this, but ultimately it’s quite clever with the amounts it takes. I find that with me it takes little and often, as if I’m spending on a coffee or groceries. It also rounds-up pennies, investigates whether you’re overpaying on bills, offers cashback and a healthy friend referral scheme. You can still withdraw the cash for free if you need it for anything and you can also set up different savings pots for different goals. Honestly, it’s a great way of separating your savings from your day to day accounts. You can sign up with my referral code here: https://friends.withplum.com/r/AsuSqV
Open up a Lifetime ISA.
You’ve probably at least heard of the Help to Buy ISA if you’ve been researching purchasing a house, but even before that scheme was scrapped last year, a Lifetime ISA was likely the best option for you in the long run. A Lifetime ISA (LISA) lets you save up to £4,000 every tax year towards a first home or your retirement, with the government adding a 25% annual bonus on top of what you save. That means you could get £1,000 for FREE every year.
After much research of the market, I decided to open a Moneybox Lifetime ISA which pays 1.25% interest on top of the 25% state bonus on top. It’s an app, so you need to download it, but the overall design is simple and easy to use. I like that you can easily check in on how things are going and drop in extra deposits if you have any unexpected cash come in.
To reach the full £4000 in a year, you need to pay in £333 a month (roughly £77 a week), but it’s not essential to meet this target. You do need to be aware that these savings are somewhat “stuck”. To withdraw them for anything other than your first home or your retirement will cost you more than you put in — 25% to be exact, although at the time of writing this extra charge has been scrapped due to COVID-19. This one is a no-brainer if you’re saving for a house. I repeat, FREE MONEY.
Check out these resources.
Want to investigate more? Here’s some of the resources that I used to help me on my money journey.
Sarah Akwisombe’s Money & Manifesting Course >> I took Sarah and Jen’s course around 2 years ago and it helped me to come to terms with a lot of my issues with money. Once you’ve signed up once, you get lifetime access, so get to revisit it every time the course runs. I came at this course with a lot of scepticism but I’ve found it’s completely changed my relationship with earning, saving and spending.
You’re Not Broke You’re Pre-Rich: How to streamline your finances, stay in control of your bank balance and have more £££* >> If you want to read about changing your mindset and how you still save while eating avocado on toast, try this book by Emilie Bellet. It’s informative and thoughtful.
Money: A User’s Guide by Laura Whateley* >> Want something practical about everything from credit score to saving money on bills? This book will help.
Google Spreadsheets >> Did you know that Google offers free templates for finance and budgeting? You do know. Find it here >> https://docs.google.com/spreadsheets/u/0/?ftv=1&tgif=c
Moneybox Lifetime ISA >> If you’re looking to save for a house, this LISA is marked as the best of the bunch on Money Savings Expert and I’ve found it to be easy to navigate and use.
Plum Savings App* >> This free savings app helps you to build your money without you really noticing. It uses an algorithm to ensure you can afford every move it makes. Sign up using my referral here >> https://friends.withplum.com/r/AsuSqV