How Can I Afford to Save?
(Disclaimer: This article is not a financial advise. It is to raise awareness only)
Many of us have hard time saving because in general. These days, many people have t hard to keep up with the rising cost of living which leaves them with debts rather than savings. However, there is always a way out and solution to adapt. It all depends on how are we willing to adapt to the new changes that we decide to make to improve our lives.
How difficult it is to save?
It depends! Are we saving to collect interest or are we saving for a rainy day?
Let's breakdown the saving strategies. There are many options to save and it depends on the goal of saving. Anyone can save, even with little income. It takes a lot of discipline, here what you should think of when you start saving:
Can I stop buying unnecessary things? We all fall for the temptation of buying things online, for example. It's easy, home delivered and they look awesome. But what do we do with what we bought? leave on the shelf.
Can I spend less on takeaways? A takeaway meal for 2 people can cost £25-£30 in general. How many times do we order takeaways per week? Can we order takeaways once or twice a month instead? Try to learn easy cooking, it is cheaper, and creates good and healthy habits.
Can I drink less? We all agree that alcohol is one of the major health risks. It is not easy to stop drinking, but it helps if we cut one pint every few weeks. Gradually cutting drinking is more effective than a sudden shock to our bodies. Are we willing to though?
Can I smoke less? like alcohol consumption, cutting it one at a time is the right way to walk out of an addiction.
How much can I save per month?
While it is difficult to set a specific amount, there is a way to find out our own capability;
Imagine you decided to take our a loan. How much can you afford to pay back per month?
If you answered £150, then that is the amount you can afford to save per month. Here is why;
If you can pay out a £150 out of your pocket every month, it means that amount can be saved.
What type of saving account?
Let's take the £150 as an example. To be able to decide what type of saving account you want to have, it is a good idea to have a goal first. Let's say you're saving for a mortgage, driving license, new car, renovation, rainy day... Here are some types of savings accounts that suits the right purpose:
Saving with interest: if you are saving to make a larger purchase, visit your bank, HMRC help to save scheme or ISA. The features of such saving accounts are binding times and percentage of interest to collect. It is worth checking out if the plan is saving for a bigger purchase in the future.
Saving for unforeseen events: This type of saving is what we, credit unions offer for local community. It is harder to put money aside normally without a goal, but with what credit unions, this is the best way to keep aside an amount that keeps you dry on a rainy day.
The major difference between both saving accounts is the interest collection. You must complete the timeframe as per contract to collect interest. Otherwise you lose the interest if you take out the money prior to end of term. While with credit union saving, you can take out the savings any time of need.
There are other types of saving accounts that financial institutions offer but the above mentioned are the most common.
Does saving prevent you from taking out a loan?
Yes and no. With us, you can save, but if the amount you saved is not enough to cover the expense, you can simply apply to complement it with a loan.
Or on the contrary, you can apply for a loan and start saving while paying back the loan. Next time you need cash, it's in your credit union saving account.
How to save while paying back a loan?
With us, when you you apply for a loan, we ask you how much you would like to save. For example; Borrowing £500 over 12 months will cost £50.23 per month. That is our Family Loan amount anyway. You can decide to save £30 on top of it each month. Each month you set into your credit union account £80.23, you make a loan repayment and save money at the same time. In 12 months, you have paid off the loan and saved £360 for next time you need immediate cash. You can then keep saving, either the same amount, or more.
If you need help with any borrowing or saving visit our website clevr.money for more.
