Saving money is one of the most common New Year’s resolutions in the UK, and whilst it is an admirable ambition, diving in without a solid plan can often see this goal fall by the wayside along with so many other New Year’s resolutions.
Start By Clearing Debts
The reason this is so important is because the interest you are paying from any debts you have accrued will often outperform any interest you may gain from savings you put aside. Therefore, clearing your debts first will allow you to grow your savings successfully. Consolidating your debts can help establish an affordable monthly sum to help clear these.
Start an Emergency Fund
This is money which should be kept in an easy access account to cover the costs of any emergency repairs or loss of income. Experts generally agree that you need an amount that is equal to three to six months of salary in order to have a decent emergency fund.
Set Short, Medium and Long Term Goals
Once you have established your emergency fund and cleared off any debts, you are ready to start saving. Experts agree that the key to successful saving is to set out with clearly defined goals. Decide on your short, medium and long term goals, and establish the amount you need in order to achieve each of these before setting up three separate savings pots to meet these targets.
Pay Yourself First
Make saving a priority and ensure that the money is moved straight to your savings vehicle as soon as your salary hits your account. A direct debit that moves small amounts across in regular intervals will often be barely noticeable. Alternatively you can set up an account with a platform such as Plum, which provides you with free access to artificial intelligence and complex algorithms to calculate how much you can afford to save at any given time.
A platform like Plum will also give you access to investment opportunities to help you achieve your long term goals.