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It’s no lie that as a nation we love to treat ourselves, whether we are grabbing a fancy flavoured coffee for a midweek pick-me-up, or ordering a takeaway after a long day at work.
Yet, it can all add up and recent research shows that Brits could save over £2,000 a year, by simply thinking about how significant the little things they buy are to them.
Pensions advice specialist, Portafina asked the nation how it spends its disposable income each month, and can reveal how much, on average, those little buys are costing and how much Brits could potentially save, each year, if they really needed to.
The top of many people’s lists for the new year is to save more and one of the most effective ways to do this is to spend less. For most Brits, that’s easier said than done.
A great starting point is to have a clear idea of how much you are spending on those little things.
Based on the research, the top ten things that Brits consider as treats, cost on average, £2,221.56 per year. There’s a reason why many spend on the little things, of course; working hard, and treating yourself is an enjoyable and necessary part of life. Yet, even cutting just a month’s worth of spending could save an average of £185.13 a year, or perhaps a lot more.
Jamie Smith-Thompson, managing director at Portafina says, 'The little things we buy can add up quite quickly and often without us realising. We’re all different when it comes to the little luxuries we want and need in life. But getting to grips with understanding how much you are spending on those things, and where you can spend less, will allow you to save more in the long run.
To help you get started, here are three simple tips on how to get your finances in order, enabling you to efficiently save money in no time.
Most of us only manage our money when we are strapped for cash or in a crisis, but making a habit of budgeting regularly reduces the likelihood of a monetary crisis in the first place. By keeping a log of monthly expenditures, you will gain a better understanding of your incomings and outgoings, allowing for more effective budgeting and saving.
Managing your money online can make things so much easier too. You don’t have to wait to see monthly statements, you can see when money is coming out of your accounts, you can transfer money between your accounts at times of need, and enjoy watching your savings accounts grow.
If you earn £10 an hour, every £10 you spend is one more hour that you have to work before you can retire. That’s a big incentive to save! Many people try and save at the end of the month, hoping there is enough left after bills and spending.
The problem is there usually isn’t money left – when we consider it available, it will be spent! To overcome this, pay yourself first. You can put the money into an easy-access account so you can still use some of it if necessary, until you adjust to having less to spend. To really make the most of savings you will want to get the highest interest rate possible and not lose the growth to tax, so look at high interest accounts and ISAs.
Some expenses in life are unexpected, but there are others that we know are coming. Christmas happens at the same time every year, as do birthdays, anniversaries and even renewal dates for car tax and insurance. Yet, even with a full 12 months’ notice on these, it’s easy to leave it until the last minute to plan for these events and then panic about the expenditure.
To break the cycle, spread the cost over the year. Decide how much everything may cost you across the year, and divide that number by twelve to see how much you need to set aside each month. This way you will always have the money ready. It’s far better to set aside £50 a month for everything, then have to raid the savings for several hundreds of pounds when times are tight!