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Building Better Savings Habits

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Written by: Rory

Published Oct 21st, 2020

There are many reasons why you may want to save money, from building up a deposit for your first home, to saving for your retirement. Although these may seem like ambitious goals, they can be achieved through small, positive savings habits. Overtime, with discipline and deliberate action, you can transform these good money habits into long-term financial security. Below, we’ve listed a number of habits that can help you improve your financial position

Record your purchases

To begin improving your money habits, you need to get an understanding of where your money is going.

The first step is simply recording all of your regular purchases for a week. This list will give you an accurate picture of where your money is going. This can be initially daunting, but it is one of the most important financial habits to have.

Once this information is gathered you can organise your spending into separate categories such as, utilities, groceries, mortgage and so on. Remember, financial planning requires complete honesty with yourself.

But, if you are struggling to record every single financial output, we have compiled a review of several apps which can help with the documenting of your personal finances here.


Financial planning is all about working out what is most important to you; it is the short-term sacrifice, for long-term pay-off.

Therefore, in analysing your regular purchases, evaluate what purchases you value more than others. For example, if you aren’t really a coffee aficionado, could you substitute an expensive artisan drink for a home-made version? Or, instead of getting a five-minute Uber ride home, could you walk and enjoy some exercise?

These substitutions, although small, will free up money in the long run. This ‘extra’ money can then be used to afford items in a different category, such as utilities.

Auto transfer into savings

Once you have a detailed account of where your money goes, you can then begin to plan your future purchases and do away with any unnecessary repeat expenditures. This style of budgeting is one of the most popular methods of saving money.

However, it not enough to just create a budget, you have to firmly stick to it.

In the beginning, we encourage you to review your planned budget every day. This will remind yourself of how much money you are allowed to spend per category, per day. Once this begins to become second nature, you can then move to a weekly review, then monthly, and so on.

After you have your regular outgoings under control, we suggest setting up a savings plan to maximise the potential of your incomings. This is not as complicated as it sounds. With the aid of your bank, you can set up automatic transfers, or a ‘standing order’, from your current banking account, to your savings account.

This means that when you get paid, a set amount will automatically transfer into your savings account. This is an easy, no-hassle method of saving which really works.

There are two ways to decide on the amount of money being regularly transferred. Either, from the analysis of your budget, work out how much money you can potentially save each week and set up a regular transfer of that total. Or, decide on a total amount you wish to build up to, and work backwards from there (this is explained in greater detail below).

Set saving goals

Establishing clear saving goals is one of the best motivators for saving money. These goals are entirely unique to you and your financial outlook.

However, if you are new to budgeting, we suggest aiming for a smaller, realistically achievable target to maintain motivation. One example of a short-term goal is a holiday. To begin, calculate the holiday’s cost. From this, you can plan how many weeks of saving a certain amount, per week, will be required to achieve that total, and work from there.

For example, if the trip is going to cost £1000 in six months’ time, simply set up a transfer of £27.70 per week. That way, as the weeks pass, you will slowly build up your £1000.

By succeeding in this smaller objective, you may just find the motivation you need to achieve some longer-term goals.

Get the best savings account possible for your goal

Many long-term financial goals cannot be achieved in just six months’ time. But that does not mean they are impossible. Rather, you just have to maximise the probability of them occurring. The best method of doing this is getting your money to work for you.

For example, if you want to save money to afford a deposit on your first house, do not put your growing nest egg into a regular saving account. Instead, chat to your bank and explore the option of setting-up a ‘Lifetime ISA.’

This Individual Savings Account (ISA), supported by the government, can offer you a 25% bonus of top of your existing savings. This means that if you have £100,000 in the account, when you withdraw your savings, you can actually withdraw up to £125,000 – perfect for helping you get on the property ladder!

Check the cost of subscription services

The key to budgeting is objectively evaluating all of our purchases. This means you can’t forget all of those minor costs in life; including monthly memberships and repeat-fee subscription services.

You have to consider everything you pay for, and whether it can be reduced.

For example, a monthly payment to Netflix of £8.99 is not a mammoth outlay. But, over a year, that means that Netflix will cost you nearly £110. If you still feel that is necessary, continue to purchase the service. If not, consider where else that money could be more useful in life.

Save on your utilities

This is one of the, relatively, easier methods of saving money. Get into the habit of reducing your use of utilities by doing small things around your home such as switching off lights in empty rooms, not running water when brushing your teeth and introducing a Smart Thermostat.

There are several things you can do each day to make sure you are maximising the financial benefits of utility usage; we’ve listed them here

Use vouchers for necessities

There are some items that we have to buy, no matter the cost - items such as toothpaste and toilet paper. Inevitably, every few weeks, they will be bought. Therefore, work to reduce the costs of these items.

By regularly looking through your local newspaper, or browsing across online couponing websites, you can find discounts to the items which are absolute necessities for your home. These reductions can make a huge difference to your overall grocery bill.

Two of the most popular websites we would recommend for this are, latestfreestuff.co.uk, and, ashleighmoneysaver.co.uk.

Negotiate bills

When considering all of your costs and expenditures, don’t forget to review your regular bills.

After inspecting these bills, you may realise that your internet, TV, or mobile phone bills may fluctuate every now and then. Many times, these irregularities are down to small changes or fees which are tacked onto your regular payments.

However, if you are unhappy with these charges, do not be afraid to speak to your service provider about them. Make sure you are actually using everything that you are paying for. For example, if you are paying for a premium sports package, but it is in summertime when the majority of sports aren’t taking place, re-negotiate your bill to save yourself some money.

Compare prices before a major purchase

This is an obvious, but essential, behaviour involved in improving your financial health.

When considering an expensive purchase, it is very important that you double-check the value of the item in rival stores or online competitors. This is called comparison shopping and can be an extremely useful method of helping you keep to a budget.

As a general rule of thumb, the bigger and more expensive the purchase, the more important it is to spend time comparing the price of the desired item with alternative options (in competitive shops, or online).

Not only will this save you money, but it will allow you to make a better-informed decision when it comes to purchasing the item.

The 30 day wait

Another simple, but extremely valuable tool to save money is the 30 day wait.

When considering whether or not to buy an item, on a notepad; write down the name of the item, how much it costs, and put it away.

Then, after 30 days, come back to the note and if you still feel like it is necessary, buy it. If you can no longer justify the need to buy it, don’t – use the money elsewhere.

Don’t get sucked in

Budgeting and financial planning requires discipline. That means staying away from marketing tools such as “50% off!”. This technique is designed to make you, the customer, feel as if you are getting a product for half-off. But, in reality, if you buy the product, you are still spending more money than if you did not buy it.

In simple terms, if a jumper is in a “50% off” sale, it may cost £10 instead of £20. Therefore, if you spend £10 to buy the jumper on sale, you are saving yourself £10 (its non-sale price was £20, so you earn the difference), right?

In fact, you are only saving £10, or getting the 50% off, if you spend £10. That means you are spending money to save money.

To actually reduce your outgoing money, do not spend £10 just to save £10. This money can be used more productively in your savings.

Dedicate time to your savings

After you have employed all of these tips and techniques, set aside a regular amount of time each month to chart your financial progress. Once you have a grip on your finances, this review can be as little as 30 mins per month. But it is important for several reasons:

  • To set new goals
  • To chart your progress against a long-term goal
  • To maintain your interest in maximising the potential of your personal savings plan
  • To help identify and fix problems quickly