If you’ve been in full-time work for the last year, you have probably only been paid 12 times. Out of a possible 365 days of the year, 12 of them were pay day. That leaves 353 days of the year that aren’t your friend. Where special occasions occur, you will have to spend your disposable cash for that month on them (if you don’t have any savings), instantly reducing the amount of money left in the pot to spend on yourself. Once that special occasion has passed, are you now safe for the rest of the year to spend your 11 other pay days, minus your bills, on yourself? No. There are more special occasions right around the corner. What you need is a special occasions savings pot.
Start with a budget calculator
Using a budget calculator is not something for the faint of heart. In your mind, you probably earn more than the cold, hard, light of day figures confirm, and the ‘outgoings’ column for our personal expenses is most-likely in need of more straightening out than any of us would care to admit. However, special occasions are lurking, and without a means of funding them, you may have to turn down that invite to your friend’s wedding in a different part of the country, because you simply can’t afford to go. A budget calculator to identify exactly how much you can afford to put away each month, is the first step in starting that savings journey.
Introduce a ‘no-spend day’ to your week
This might sound like a fad, but it actually works. By choosing a midweek day to not spend, you can really make some reductions in your outgoings. You’ll be amazed at how much your morning coffees and your lunches at work add up to. By preparing your meals in advance and taking your own coffee to work in a travel mug, you can bring down the total number of days in the week that your expenditure is going to be racking up the numbers against you. Sounds like it won’t help much? Over the course of a year, there are 52 Wednesdays. That means that you can reduce the number of days that your outgoing bank balance is in action per year from 365 to 313. Once you’re used to it, why not introduce a second no-spend day. It’s easier than you think. Then at the end of the month, put that money that’s left in your bank balance into your savings as a top-up.
Read my post on How To Be Smart With Your Finances.
Open a savings account
Once you have a budget, aim for a monthly savings plan that represents about 20% of your earnings. This sounds steep, but life is expensive and you are going to be called upon to attend all manner of events over the coming months (some of which you may even be hosting yourself, depending on what milestones you have in the pipeline). With this kind of saving per month, you can be sure that you have a reliable cushion to help deal with every birthday gift and family celebration that comes knocking on your door with its hands out asking for money.
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