The Fundamental Money Tips to Save Your First £10,000.
The fundamental money tips to save your first ten thousand pounds to gain yourself a little bit more financial security to invest buy home or save for a rainy day in the future it might sound like a scary figure to reach but will break down how you can reach it quickly and easily i recently bought a buy to let investment property and spent over 50 000 pounds both on the deposit and the refurbishment to bring it up to a really nice standard that means right now i’m back into saving mode to recoup all of these funds and then get ready to go for project two later this year or early next year and that made me think maybe that i should share some of my top saving tips to help you save more money every single year there’s a cost of living crisis bills are really really high bread and milk costs a fortune and you can’t fill up a car without taking out a small loan these days so it’s really important and has never been more important to save more money and invest into the stock market to grow your money.
make sure you’re future proofing yourself through these more difficult times the average uk household saves around 5400 pounds a year so in this video we’re going to target double the average using these tips and tricks that you really should know money is extremely relative 10 000 pounds to you might sound like a lot of money to others it might not sound like much at all everybody has different incomes we all learn different amounts and we’ll spend different amounts through our different lifestyles as well so pick a figure that is personal and tailored to you and it all comes down to mindset and ambition you have to change the way you think about saving money and then maintain that habit over a long period of time to start to gain some good amount of money in your savings account now there are four things that you really should know when it comes to saving your first ten thousand pounds the first rule is the roundup trick now this is something that i discovered when i was about 12 years old and i opened my very very first bank account with lloyds bank as a 13 year old and they had an awesome feature which was well ahead of all the fintechs at the time and it’s called save the change the whole idea of save the change is that when you spend 80 pence they will round up to the nearest pound.
Lifestyle Creep aur Smart Saving Choices.
then move that money so 20 pence into a savings account and when you’re spending day to day you don’t really notice that spend and across the month you don’t realize that actually you’ve been saving money all that time by the time i realized it i had saved about five thousand pounds purely from letting the money sit in this account and just kept on spending on my card every single day just as normal and then this saved the change feature completely did the rest and moved all that money into a savings account these days a lot of the big traditional banks have this exact same feature or you can use the fintechs like monzo and starling i know for sure that monzo had this future because they made a huge marketing campaign about it as one of their big flagship features there are also now investing platforms like moneybox that i tried out for a while last year where you connect to your normal bank account through open banking and they will then monitor your transactions round up all of that spend.
then through a direct debit once a month or once a week depending on your choosing they’ll move the same amount of money based on the roundups into an investment account the stockton shows isa or a sip as well so that’s a really cool feature if you want to invest your money rather than save it through moneybox and if you do think about investing the money then at least that can grow around 10 a year in a good year in the stock market so you can save hundreds if not thousands of pounds a year and then get an extra seven to ten percent purely through interest the second big money saving tip is lifestyle creep now this is a really really big point if not i think one of the most important and i always talk about it on this channel if you’ve ever heard of keeping up with the joneses this is the whole idea that we have to buy things that are too expensive for us to impress people that we don’t like or don’t know and it’s all about for example if your neighbor buys a brand new car you might buy a brand new car if you have friends who have something new shiny or fancy you have to buy something even bigger better shinier newer.
Avoiding Lifestyle Creep.
it’s this whole idea of just keeping up with people around us that we can impress everyone with how much money we have or in theory don’t have if it’s all on finance and the thing is this is quite a dangerous behavior because that means that people start to finance cars that are extremely unaffordable for their household income over time as you earn more money and advance in your career naturally what happens is that you’ll start to spend more and more money so if you remember back to when you were 16 years old earning three four pounds an hour or even less your outgoings then were really really small compared to now when you might have an expensive car massive mortgage maybe you send kids to private school you go out for dinner multiple times a week that lifestyle creep is getting bigger and bigger and you realize at the end of the month it doesn’t matter how much you earn and how many pay increases you get you still have no money left at the end of the month.
that is the exact definition of lifestyle creep data shows that about one in three people in the uk who are high earners earning over a hundred thousand pounds a year live paycheck to paycheck and it shows that they have awesome earning potential and earning power but they have no financial sense because they don’t have the savings or the investments or the additional income to protect them if that sole income then disappeared through redundancy job loss whatever it was they’re then at risk and that whole lifestyle comes crashing down very very quickly my point behind this is that if you get a pay rise or a new job or you increase your income make sure that you’re very aware of that and put that extra money into savings straight away every single month rather than spending that extra money because you’ll start to lose it and you’ll let lifestyle creep go in over time by all means treat yourself but don’t go to the extreme.
Prioritize Saving Before Spending.
make sure that you’re still saving more and more money the more you earn and it’s also great because rather than focusing on trying to increase your income this is really easy because you can look at your existing income and your existing spending and cut some of those costs down which leads me really nicely onto my third point which is number three tracking your expenses now you can do this through two ways use a spreadsheet and do it manually or you can use an app both from a manual or an automated open banking perspective this is really good because you can track all of the expenses in a single month and categorize them so you have a really good idea of when the money comes in what goes out and where what are those biggest categories that you’re spending your money on where you can start to cut down and save at the end of the month data is really powerful here a few years ago when i was working in london i was really guilty for two things number one was buying too many coffees in a day which was adding up to about six to ten pounds if you look at a coffee bean about three pounds and then also eating lunches out as well so my food bills for eating out and the coffees were very very high.
that means i could save 340 pounds a month just by cutting out those costs which is a really really big increase in savings just by being able to spot that in the data make a change and save more money at the end of the month i’ve been tracking my income and expenses for about two years now so i have a really good idea of month on month trends as well so being able to look at the biggest areas is one thing but then actually looking at month a month and starting to see that in the summer months when the weather gets warmer if you then start spending more money on drinks and pub gardens and eating food out you can start to see that increase over time and you can do something about it to stop yourself spending too much money but this one again is really simple you don’t have to focus on earning more money trying to get a new job getting a promotion whatever it is focus on what you have right now reduce those expenses and that three pound coffee every single day can add up to huge sums of money every single year you multiply that by the amount of things you waste your money on then you have a really good pot of savings every year.
Treat Saving Like a Monthly Bill.
Lastly is saving first now this is something that i learned from rich dad poor dad by robert kiyosaki now this talks about in your own corporation business or company where the money comes in you have all your expenses and then whatever’s left is taxed it’s kind of the same principle minus the tax benefit when your salary goes into your bank account move that money that you want to save into a savings or investment account straight away most normal people when they budget the finances let the salary come in they’ll pay bills mortgage rent all the things they need to pay then they’ll start spending what’s known as the disposable income and then whatever is left at the end of the month then goes into savings the danger with this is that you can overspend which means you have less money into savings whereas if you treat the savings like another bill and it goes out straight away whatever you’re left with is your defined budget for the rest of that month because then you’re not tempted to go into the savings account to take money back out to then pay for a meal out it will help you say nope we’ve ever spent this month.
We have no more money until the next payday that way you’re paying all your bills and all the necessary costs you’re saving a lot of money and then also you don’t feel as guilty by going all the way down to zero because you’ve done everything else you need to do first before spending your disposable income the reality is you could look at loads of get-rich-quick schemes you could try and get the next big promotion but just look at your finances right now cut down some of those costs track it so you know what you’re looking at every single month and make sure that you’re not falling victim to lifestyle creep and that way you are guaranteed to start saving more money this year and through these difficult times and when you’ve started saving more money you’ll need to learn how to invest into the stock market really easily into a stockton shares isa to start growing it from anywhere from seven to ten percent in a really really good year i highly recommend checking out this video here which are the top mistakes that beginner investors make when they’re putting their money into index funds and the stock market so check this out here see what those mistakes are and learn how to grow your savings.