Financial-Fitness

How to save money in 2021

Ever check your bank account and wonder how your pay cheque disappeared so fast? Don’t stress – saving money is a problem that most people face at some point in their lives. Whether you are looking to pay for a house, or treat yourself to a nice holiday, knowing about ways to save money allows you to do the things you enjoy without worrying about the cost. Thankfully, it is never too late to start saving, and 2021 is a perfect time to think about how you can improve your finances. Find out some of the best ways to save money by using our saving tips below.

Tips to save money

1. Get rid of any debt

Before you start saving money, the first thing you need to do is get rid of any lingering debt. Saving money is incredibly difficult if you are still paying high interest rates, so if you have a car or credit card loan, pay this off as soon as you can. It may feel like a pain in the short term, but paying off any debt will make your life much easier in the long-term, particularly if you are looking to apply for a mortgage. The sooner you pay off any debt, the sooner you can start saving!

2. Set savings goal

Having a savings account is imperative, but which one? Some are better for short term savings whilst others are better for buying in the long term, so be sure to compare, and look at government schemes, which can make a big impact on your deposit savings. Finally, consider changes in your personal life that will help you save, such as living with your family for a short period of time or moving into a shared house. Have a look at our detailed tips on saving for a deposit here.

It is impossible to start saving money without knowing how much money you want to save. Helpfully, most banks have separate accounts dedicated to savings, so you will need to work out how much you pay in on a weekly/monthly basis. Some banks offer better interest packages than others, so it is definitely worth shopping around for a bank that best suits your circumstances. Get used to putting money in your savings account at the same time every month. It won’t be easy to start with, but as you get used to it, you will find that the feeling of saving money is genuinely rewarding.

Taking into account how much money you make as well as any monthly bills, try to arrive at a savings target that you are happy with. Though you will want to save something substantial, try not to set any unrealistic targets that you will struggle to meet. There are ways to save money on a tight budget, but you don’t want to be stuck having beans on toast daily just so you meet your target. Setting an achievable savings goal is the best way to make sure your eye is on the prize, whatever it is you are saving for.

3. Frugal living

Now that you have an idea of how much money you want to save, it is time to think about how changing your lifestyle might help you meet your goals. If you spend a fortune on alcohol or takeaways every month, think about how you can reduce your spending in these areas. If you can’t remember what you have spent your money on, money saving apps like Monzo and Revolut give you breakdowns of how much money you spend on certain things. Discovering that you’ve spent a big percentage of your pay on McDonalds could be the kick that you need to break out of your habit.

4. Sell unwanted items

If you are really struggling, a great way to save money is by offloading items you don’t need. Is there a shirt you have barely worn, or an empty fridge that still works fine? Chances are that there will be someone out there willing to buy your things. Sites like Gumtree and Facebook marketplace are perfect for quickly selling unwanted items to people in your area. As well as boosting your finances, selling things that you don’t need will make your house a lot tidier.

5. Reassess your bills

You may not have put too much thought into who your energy, phone and broadband provider is, but now might be time to start. Review a couple of comparison sites online to see if you can get the same utilities for a cheaper price. You could even find out that you are overpaying for the services you have, so prepare to make the switch if necessary.

Make 2021 the start of your journey to home ownership – by taking measures to improve your financial fitness, you’ll feel more ready than ever to enter that all important new chapter. Read our First Time Buyer Guide, created in collaboration with First Home Coach, and download their free app which guides you through the entire house buying process, step by step, from saving up to moving in.

Last but not least, register with Pocket Living so we can send you updates on Pocket schemes related to the London borough where you live and work.

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