Work out a budget to see how much money you need each month to pay the rent and buy what you need – including food and utilities like electricity, gas and water. It also good to think about saving some extra money for emergencies.
For a short-term savings goal (up to 5 years), look at a savings account, term deposit or a cash ISA. For a medium term goal (5-10 years) use a savings product, or consider investments depending on your risk appetite. For a long-term goal look at shares/bonds/funds that provide protection from inflation over the long term.
Once you’ve got started saving money, give your savings chance to grow faster by spending some time to find the right home for them. The best home depends on how much time you have to reach your goal, and how much risk you’re willing to take.
To get started saving money, open an instant access savings account, which might be easiest to do with your own bank. Set up a regular payment to transfer the amount you want to save into your savings account each month, and give it a name that inspires you to save – like ‘Prague holiday’.
Working out how much money to save each month depends on the amount of your goal, how much spare money you have at the end of each month, and how soon you want to reach your goal. It’s a balance between what you can afford and how long you want to save for.
Research shows that people who set a savings goal save faster and up to £550 a year more than people who don’t.
If you are saving money for something and name your goal, research shows you’ll reach it faster. If you’re new to saving, try starting with a small goal. Even if you’re just saving for a rainy day, you’re more likely to succeed if you have a goal amount in mind.
People who set a money savings goal save faster than those who don’t. If you really want to get that deposit for a home, or save enough for a dream holiday, name your goal, work out how much you can save each month, and get started.
The first thing you should always check is whether you actually need to borrow. Borrowing is expensive and a big financial commitment, so don’t borrow if you don’t really need to. Remember that, because of interest, the longer you borrow for, the more you’ll pay back.
Once you’ve met your target amount for saving for an emergency fund, you might want to continue with the regular savings amount to fund other savings goals – as you will be used to this level of outgoings by now.