The key to start to save is to set up a budget. If you know where your money goes, it may be possible for you to find money to save. Setting up a budget also involves deciding on a goal to keep you motivated when you save.
Why set up a budget?
A budget will help you determine whether your day-to-day spending habits have any negative impact on your finances. Also, setting a goal will help you not to spend beyond your means. Setting up a budget involves
- tracking all your expenses
- deciding on time frames
- writing down your goals and figuring out what to do to meet them
Track your expenses
You can set up a budget in eBanking. Once you know your income, look at your expenses by tracking your spending for a month.
Group your bills like this:
- Basic non-discretionary expenses such as rent or mortgage payments, credit card payments, groceries and insurance policies broken down into fixed and variable expenses
- Discretionary expenses - things you spend money on, but may not really need such as buying DVDs, going out every night or eating out for lunch
Now it is time to analyse your outgoings and target your discretionary expenses. Perhaps you can take the bus once in a while instead of a taxi? Maybe you do not have to buy four newspapers every week?
Develop goals and decide on time frames
The more specific you are, the better - both in terms of deadlines, amounts and saving purposes. Remember to review your budget regularly to make sure that it reflects your goals.
Use our Budget calculator
Read more on the Money Advice Service
website.