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How budgeting can help you reach your goals faster

How budgeting can help you reach your goals faster

Category: Money Saving

Updated: 15/06/2017
First Published: 15/06/2017

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

How much money do you think you'd need to fulfil your ambitions? Chances are, it's a fairly hefty sum, but don't despair! Research shows that effective budgeting could help you reach those goals far faster.

Forward planning

Research from Ford Money shows that it would cost an average of £59,305 for people to realise their most important life ambitions, a figure which rises to £68,820 among those in their 40s. This is understandably encouraging people to save, with the top three reasons for doing so being to live life to the fullest (29%), to stay motivated (29%) and because they have reached a certain age (21%), while a further 12% don't want to miss out on key life experiences.

But what exactly are the savings goals of many Brits? Well, buying a home is the most common goal for people in their 20s (50%) and 30s (27%), after which redecorating takes priority, favoured by 25% of savers in their 40s. Family outings and travel are also high on the list of savings priorities, with the former particularly popular among those in their 30s, as 21% cite family outings as a goal.

"Making a house a home is clearly a priority, but it's no small task. Saving can be more difficult in some months compared to others, but getting yourself into the habit of putting money aside can pay dividends later on," said Julian Hynd, chief deposits officer at Ford Credit Europe, the parent company of Ford Money.

Better budgeting

Happily, many seem to be working hard to achieve their savings ambitions, with people saving an average of £194 per month towards their goal – yet even this means it'd take them 25 years to build up the full £59,000. However, if you could squirrel away an extra £187 more each month, you could reach your savings goal around 12 years sooner – halving the time it would take to reach your ambitions – so it could pay to be a better budgeter.

To help you achieve what may seem like a daunting task, life and career coach Honey Langcaster-James offers her top tips:

Create a savings plan

To be able to put aside £381 each month, it's important to plan out your spending for the month. However, don't deprive yourself of little treats every now and again, as they'll help to keep you going and make it easier for you to stick to your plan. Indeed, by making them part of the plan, you won't have to feel bad about indulging, and you'll be more likely to see it through.

Start early

The younger you are when you start your savings habit, the more likely it is to stick, and the more benefit you'll receive from compound interest. That said, it's never too late to start, so if you want to stand the best chance of fulfilling your goals, go to the savings Best Buys today to find an account that suits your needs and put in your first £381, if you can.

Have a 'no spend' week

Honey's last tip is to try and have a 'no spend' week once a month. Make sure you have all the groceries you need to last for a week, and then try not to spend a thing. Sure, there might be essentials that will need to be bought, but by not buying anything else for a whole week you can prove to yourself that you're able to save if you want to, increasing your self-discipline and confidence at the same time.

Honey concluded: "Finding ways to boost your savings can seem quite a daunting task at first, but breaking your goal up into smaller sub-goals can make it much more manageable. Saving is all about getting into the right mindset and making a habit out of it. Being more aware of where your money is going can help you to achieve your goals quicker."

What next?

If you're just starting out, a regular saver might be the account for you, as they offer some of the highest rates available and are designed to encourage (or even force) you to put some money in every single month.

If you've already got a decent pot, consider putting it in one of the top-paying long-term bonds to maximise returns.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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