How to get debt free in a year
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Tips on how to start saving again once you’re debt-free.
So, you’ve pulled yourself out of debt and you’re back on your feet financially - well done! Now could be a great time to get yourself into the habit of putting a little bit away each month to build up a savings nest egg. A savings pot means that you don’t have to borrow money to pay for those little disasters life throws at us - whether that’s replacing a broken washer or emergency dentistry! Or, even to give yourself a little treat – like a summer holiday to recharge your batteries.
So, how do you start saving again?
Well, first off - the golden rule – don’t do it unless you’re able to meet all your outgoings each month. The last thing you want to do is start to save at the expense of paying your rent, council tax or other key bills, or perhaps leaving yourself short on food bills. Of course, if you can find ways to cut back that won’t mean you’re missing out, go for it.
Work it out
Pretty obvious, but, sit down and work out your budget each month. Although, if you’ve been making contributions to a debt solution you’re probably well aware of what your monthly incomings and outgoings are and, so they’ll not be much to work out. But, if you’ve had a change in circumstances and you’re not sure what you have left over now, make sure you find out before you decide on anything else. If you have been making monthly payments into a debt solution you might even consider paying the whole amount into a savings account each month – after all you’ve probably grown used to that money going out each month.
Get into a habit
One of the best ways to make sure you put something away every month is to open a savings account and set up a transfer that comes out as soon as you are paid. This way the money is gone from your account before you have the chance to notice it in there, so you don’t miss it as much – it’s a psychological trick.
Set a goal!
People who set savings goals do much better than those that don’t – that’s a fact! Why? Well, we imagine that it’s something to do with having a finish line in sight, something to aim for. However, contrary to the advice of the last few years, it’s better not to share that goal with anyone – apparently just announcing that you’ve got a goal makes you feel you’ve already achieved it and so you lose motivation to actually do it! Who’d have thought it? So, no sticking bits of paper up all over the place, or telling your friends what you’re doing, just get on with it.
Goals can be modest – perhaps to put aside enough to pay for Christmas or Birthday presents, or ambitious – say, saving for a dream holiday, for your daughter’s wedding or to replace the car.
If you’ve nothing in particular to save for, why not try making saving a goal in itself. What we mean by this is to challenge yourself to see how much you can save, each month. The key here is to ensure that your finances are sustainable. Don’t overdo it – make sure you leave yourself enough to live on.
Choose where to store your hoard well
If you are going to save you’ll want to know that your money is safe and that it’s earning the best return it can – right? So take care when choosing where to store your savings. Shop around, make sure you know the different rates you’ll get and what the withdrawal policies are, so if you need to take the money out at short notice, you can. A good place to start would be the savings account checker by Which – it’s a comprehensive list of all the accounts available in the UK.
So, do you think you’re ready to start saving now? We hope so and wish you the best of luck.
by Shelley BowersBack to blog home