From my experience, saving money is very much like losing weight. There’s no point going on a diet and depriving yourself of everything you love for 6 weeks if you’re only going to go on a massive binge afterwards, undoing all your hard work. If you want to stop living pay cheque to pay cheque, get out of debt, save a deposit, or prepare for retirement, you need to transform your attitude towards money and change your lifestyle. Otherwise it’s going to be a case of one step forward, two steps back.
Here’s are just a few tips to help you transform your finances in a big and sustainable way.
Track your spending to see where your money is going
First thing’s first, you need to identify your habits and figure out where the hell your money is going.
Track your spending for a whole month. You could do this by jotting each expense down in a notebook at the checkout, keeping your receipts, adding your transactions to a document on your phone or using a handy tracking app. I was recently introduced to Starling Bank and it’s been a real game changer for me. Starling is a mobile-only bank that tracks every purchase you make before presenting this information in handy charts and tables. It’s SO much easier than the methods I was using before and it even tracks your spending if you go abroad and doesn’t charge you any fees.
You also get real-time spending updates to your phone, as shown in the screenshot below. So there’s no lying to yourself and pretending you didn’t fork out £3.50 for lunch from the butty van because you’d already eaten the sandwich you brought from home by half 9.
Focus on your big money goals and realign your priorities
Once you know what you’re spending and where, you can analyse your behaviour and figure out what changes can be made. If you want to transform your finances in a substantial way, you have to make a few sacrifices. As American personal finance blogger Paula Pant says “you can afford anything, but you can’t afford everything!”
If you have big expensive goals that you wish to achieve like home ownership, debt repayment or financial freedom, you have to make these a priority before you can truly live a care-free life filled with the things you love. For example, I’ve made a lot of sacrifices in the last 3 years to save a deposit, but once I’ve moved into my place in the next few months and have settled in, I’ll be able to get back to focusing on the other things that matter to me.
I’m not telling you to give up the good stuff completely. That’s no way to live. But let’s be honest here, if you’re on an average salary and you go on three city breaks a year, have an Urban Outfitters addiction and love eating out, you’re going to struggle to save a house deposit. You have to make some compromises.
If you really want your big money goal enough, you’ll push the non-essential stuff to one side until you’ve achieved it. If you’re not willing to move stuff to the side…. you don’t want it enough!
I watched a brilliant video from Dave Ramsey last week. It’s since been removed from YouTube for copyright reasons so I’ll have to explain it to you. In the video Dave says: “Let’s pretend for a second that a disease had broken out. And there was a vaccine that was needed to save the life of your child. And that vaccine costed $5,000 cash and you had to save that money before the end of the year. If it meant the life of your child, how many of us could save $5,000?”
Obviously this is a pretty bizarre and unlikely scenario, but I think it makes a great point that if you really really had to find and save money for a life or death situation, you probably could do it. You’d do everything within your power to save that money. You’d make so many sacrifices. And… I bet you’d manage to save the money needed.
So… why don’t we do it anyway? Why don’t we do this for our big money dreams?
Whether you wanna buy your own home, travel the world, get out of debt or quit your job and start your own business, if you *really* want to achieve it, you will find a way to do it. You need to make your finances your number one priority.
Get a little bit obsessed with money
Try to become a little bit obsessed with money. Let it take over your life a little bit. Make it your hobby. Surround yourself with people who are either good with money already, or have similar hopes and dreams as you. Cheer each other on. Have fun along the way. Listen to podcasts, read books, subscribe to blogs, watch TED Talks about money. Let your end goal influence everything you do.
This post was sponsored by Starling Bank but, as always, all opinions are my own. Keen to give Starling a try? The signup process is quick and easy to complete and ou can download the Starling Bank app for Apple and Android devices here.
Since Starling Bank is in high demand right now, they have a bit of a queue for new signups, but if you use the code SWINGCAT when registering, you can skip the queue!