Learning how to save money doesn't have to mean making huge cuts to your budget—even the smallest money saving habits can make big gains in the long run
In order to build that nest egg for the future, you'll need to start saving to generate some cash. Here are six strategies for developing the habit.
Pay off your debt
The smart way to start saving is to clear your debts first. Think a moment—you could be paying up to 30 per cent interest on a store card debt.
Commit yourself to paying off a set amount each month. Then, when the debt has gone, put the money you would have paid in interest each month into a regular savings plan.
Make small daily savings. They soon mount up. Put spare change into a jar; take a packed lunch; cut down on those expensive cappuccinos—or those cigarettes.
At the end of the month, you'll have a small sum to put into a savings plan.
Put windfalls to work
Perhaps you worked overtime recently, received a tax refund, a bonus or a small inheritance? It's not part of your regular income—so you won't miss it if you save it.
Sign up at work
If your employer puts money into the company pension scheme, join it. Many people have stopped paying into company schemes, fearing that their money may not be secure.
However, in spring 2005, the Government set up an independently administered pensions protection fund to ensure that 90 per cent of an employee's pension is fully covered.
Alternatively, pay into your own pension through a stakeholder scheme. Charges are low and you can't touch the money until you are 50—so there's no temptation to spend it now.
And there is tax relief on every penny you pay in.
However you decide to save, the best way to make sure you do it is to set up a standing order, which puts payments straight into a pension, mortgage, stock market investment or savings account.
You'll miss the money less—it just becomes another regular bill. The only difference is you're paying it to yourself!
You are already making a regular mortgage payment, so why not write a slightly larger cheque? It can be as good as saving—it means you will own your home more quickly and end up paying much less interest.
One good tip is to look back at what you were paying before interest rates fell. Then pay that much now.
This article is part of our archival collection and was originally published in December 2003. While we strive to present historical content accurately, please note that circumstances and information may have changed since the article's original publication. Some individuals mentioned in the article may no longer be alive, and events or details may have evolved. We encourage readers to consider the context of the original publication and to verify any current information independently
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