Saving has the power to positively transform your life. It can provide you with a financial cushion, enable you to do the things you want to and help you cope with unexpected shocks. It can even help you sleep better at night.
Indeed, there is a strong correlation between financial wellness and overall feelings of wellness – and the two feed into each other in numerous ways. People who have savings and are on top of their finances are generally happier and worry less, according to research from the Office for National Statistics. They can expect knock-on positive effects on everything from their work to their health to their relationships and family life.
The finance experts at Monzo, the digital bank, note that it can be difficult for many people to start saving. “Even though we know it’s important, it can be hard to make room for savings in a budget that already feels stretched,” they write in The Book of Money, the bank’s guide to personal finance matters. But they add: “Saving represents freedom. Savings are your lifeline when your washing machine breaks down, or your key to unlocking that dream holiday … Saving – wherever and whenever you can – is something positive you can do for yourself.”
Being financially fit is a lot like being physically fit – it improves your whole life. But how do you kickstart your savings routine?
Get into a savings mindset
For many people this feels very difficult even if they don’t have debt. There can be an inertia that sets in. You know you should save more, but life stuff happens and you never get around to it. Your money sits idle in your current account instead of growing.
Moreover, when people view themselves as not particularly good with money, they can experience a sort of helplessness. They don’t believe they can start or they think that saving isn’t for them – and so find themselves in a sort of vicious circle where good habits are never developed.
But building a saving habit is easier than you think. There are two key steps to helping you get over your inertia: making the process very simple and making yourself feel motivated.
You don’t need to fill out a dozen forms to start. Monzo’s app is designed to tear down the barriers between you and saving – making saving so easy you won’t even notice that you’re doing it.
Features that automate the process make it simple to build a habit. For example, the app can automatically split your salary into Saving and Spending Pots. Another feature automatically rounds up spare change from purchases and diverts them into your savings.
Monzo’s Saving Pots are particularly useful when it comes to putting money aside for specific goals. On the Monzo app, you can just tap the + icon from the home screen and select “Start Saving” and then “Set up a Savings Pot”. You can name your Pot – for instance, you might call it Holiday in Rome, add a picture of the Colosseum, and then make your first deposit.
You can set simple savings goals and targets and then easily track your progress. You can even use a “lock Pot” feature to stop yourself from withdrawing money until a specific date.
The goal aspect is key, which is why the Pots and Savings Pots Monzo customers create often have a specific goal attached to them. As Monzo’s finance experts note in their guide book: “Whether you’re saving for a coffee machine, a home deposit, or just to feel more secure about your finances in general, having a clear goal gives you a target and helps you figure out the best saving strategy for getting there.”
How to stay motivated
The second key step to saving is about improving your motivation. A lot of people find saving a bit, well, dull. This means they don’t start or they do start and then lose interest – in both senses of the word.
“Saving is like any other life skill; the more you do it, the better you get at it,” write Monzo’s finance experts. “And there are plenty of ways to make it easier. Automating your savings is a game-changer. Set it up once, and you won’t even have to think about it.”
The bank’s tools, features and fun challenges don’t just make saving more intuitive: once some people start saving, they discover they really enjoy it. They’re happier, they have less stress and they’re in control. They feel like they’re working towards something.
To find out more about how Monzo can help you save, visit monzo.com/savings-isas
Monzo’s The Book of Money: How to feel good (or better) about your finances is published by Penguin
Disclaimer
Monzo current account required for Pots and Savings Pots. UK residents, 18+, Ts&Cs apply. This guide does not constitute financial advice.