Discipline is a cornerstone of so many aspects of our lives – and our finances are no exception.
Yet among all the advice you see online, hear from friends, and learn from your parents, it can still be difficult to remain regimented with your wealth.
What’s more, while costs remain high – the Office for National Statistics (ONS) reports inflation reached 8.7% in April 2023 – budgeting and saving could be more challenging than usual, and may even cause you to feel concerned about your long-term financial viability.
Fortunately, there are several core steps that may put you in good stead to progress with your financial plan over the years.
Here are five simple yet powerful saving and budgeting tips you can employ in a time of rising costs.
1. Challenge your deeply engrained financial habits
Everyone has both helpful and detrimental financial habits that are formed over a number of years. We often inherit our financial habits from our parents and other close relatives, but can also form our own methods of money management over the course of our lives.
If you wish to improve your saving and budgeting strategies, the first step is to challenge your deeply engrained financial habits.
Do this by tracking your financial behaviours for a month or two, and notice where you seem to fall short in your budgeting targets. You might overspend on luxuries, or simply be disorganised when it comes to keeping track of your direct debits.
Whatever the issue, challenging your often-overlooked financial habits could help you to modify them for a better financial future.
2. Attach exciting goals to your savings targets
One way you could see more success in your savings is by attaching exciting goals to your various “pots” of money.
Indeed, today’s banking apps often allow you to create pots and label them with that money’s designated purpose. For instance, you could have a “new car” pot that reminds you, each time you save, that the funds you’re putting aside will one day pay for a new vehicle.
Even if you don’t have an app that lets you assign pots to certain targets, you can do this yourself by writing down the financial goals you treasure the most.
These could include:
Paying off your mortgage
Helping your children or grandchildren with certain milestones, such as further education
Taking a once-in-a-lifetime trip abroad
Retiring comfortably at the age you want.
Assigning meaning to your savings in this way might encourage you to stay on target when putting funds to one side each month.
3. Strive for financial progress, not perfection
Sometimes, no matter how hard you try to stay on budget, unexpected costs might scupper your perfect financial plan.
The truth is, striving for progress, rather than perfection, may help you alter your money management mindset.
“Toxic perfectionism” could cause you to obsess over the minutiae of your budget, meaning you lose focus on the bigger picture, and constantly feel like a “failure” when you don’t meet these impossible expectations.
Instead, try to focus on progressing towards your goals, not instantly completing them. This way, you may be able to celebrate the small wins for what they are, and feel more positive about your financial situation overall.
4. Balance cash savings with long-term investments
The delicate balance between cash savings and investments can be difficult to strike, particularly if you are nervous about exposing your wealth to investment risk.
First, cash savings are hugely useful for a number of things, including:
An emergency fund to cover maintenance costs and other unexpected bills
Holidays and short trips
Paying for extra child, grandchild, or pet care when needed
A buffer in case markets are uncertain when you come to retire and start drawing from your pension or investments
Any other one-off costs that don’t fall within your monthly budget.
Your investment portfolio, while equally important, may need to serve a different purpose.
When establishing your investment portfolio, it is essential to look at your desired time frame, your appetite for risk, and the growth you wish to see before you cash in your shares.
Usually, investments should be made over a minimum of five years – and some studies have indicated that the longer you remain invested, the more likely you are to see positive growth.
Understanding the different benefits of cash savings and investments can help you nurture a balanced set of financial assets that help you meet your goals in both the short and long terms.
5. Listen to trusted sources
Finally, one of the most effective steps you can take towards improving your budgeting and saving is to listen to trusted sources.
Today’s media is loud, and with social media propelling false narratives in some cases, it can be challenging to know whose advice is worth taking.
That’s when working with a financial planner comes in. Rather than scrolling through endless web pages looking for advice that may not even apply to your unique circumstances, you can have one port of call for any financial concerns you may have.
While the cost of living may rise and fall over the years, your goals are likely to remain fixed in your mind. Knowing there’s a professional by your side to help you achieve them, no matter what’s going on in the world, could bring you immense peace of mind.
Get in touch
Do you need trustworthy advice on managing your wealth for a better financial future? Email firstname.lastname@example.org or call us on 0208 882 2979 for more information.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.