We all know saving’s important. But it can be easy to put it off. Having savings gives you freedom and security, and means you’re ready to deal with any surprises. But according to the BBC, half of twenty-somethings have no savings and nearly four in 10 don’t have more than £1,000 stashed away. By Monzo.
If you’ve got no savings and you’re worried you’ve left it too late to even start, you could try paying yourself first.
It’s a popular strategy that helps you make saving a priority.
What is paying yourself first?
Paying yourself first means paying a portion of your salary into your savings account as soon as you get paid, before you spend money on anything else.
It’s about giving your future self a portion of your current self’s income.
How do I pay myself first?
If you want to start paying yourself first, move a portion of your income into a savings account on payday.
To see how much you can afford to save, you’ll need to make a budget. Work out how much you have to spend on essentials like bills, and how much you usually spend on other expenses like groceries or going out. You should also make sure you’re repaying any high-interest debts you have first.
Next, work out how much of your income is left and commit to put that amount straight into savings, every time you get paid.
This is a good first step, but if you want to save more, you could try reviewing your expenses and working out if there’s anywhere you can cut back. Lowering your expenses will leave you with more money to save!
If you use Monzo, you can set aside your savings automatically every month. Just head to the Account tab in your app to create a Pot, and schedule a regular payment into it. That way you don’t even get to touch it, and it goes straight towards your savings goals.
Once you have at least £500 in savings, you could start earning interest by opening a Savings Pot through Monzo. You can earn up to 1.55% (AER, variable, 12 months Fixed Term) to help your savings grow.
You can even lock your Pots until a certain date, to make it harder for you to dip into your savings.
Ready to start?
You could open a Savings Pot with Monzo and move some of your money over this payday, to start the month off right and hit your savings goals sooner!