Keep track of your expenses

Before you start saving money, it’s important to know exactly where your money is going, much like businesses do when looking to become more efficient. In business, everything from IT support services (more information) to procurement will at one point or another be checked to see where savings can be made, and your personal finances should be no different. 

You might be surprised at how much your daily coffee, weekly groceries or restaurant bills are costing you each month. Start keeping track of your expenses, either by writing them down, keeping a spreadsheet or using an app to help you track your spending. 

Once you have data about your spending habits, you can look at the breakdown between the different categories and understand more about where you are spending the most money, for example, utilities, groceries or dining out. You can cross-reference your tracking against your bank statement to make sure you have included everything. 

Make a budget which includes saving

When you know your spending habits better, you can create a budget relative to your income so that you can plan your monthly expenses and live within your means. Your spending tracking will highlight areas where you might be able to cut back and will also identify essential spending - all of which will help you create a realistic budget. 

As part of your budget, you should also include a savings category - aiming to put aside a certain amount of money each month to save. The exact amount of this will depend on your income, your essential spending and what you feel comfortable putting aside. Ideally, you would plan to increase the amount you are saving each month to around 15-20% of your income.

See where to cut back on spending

If you want to save more money, it might be time to cut back on your non-essential spending. You can identify these expenses when you are tracking your spending and, depending on your lifestyle and priorities, this could be anything from dining out to entertainment to buying new clothes. It might even be possible to cut back on spending on your fixed expenses - compare and contrast different available deals to see if you could be paying less on your insurance, utilities or mobile phone. 

Having fun on a budget is still possible. There are many options available for free entertainment such as free activities in your area, creating activities at home or taking up hobbies that are free or low cost. For example, you could do home workouts on YouTube or go for a run in the park rather than pay for an expensive gym membership.

Review your outgoing expenses and see if there are subscriptions that you are not using which you might be able to cancel. If you dine out regularly, consider trying to create some of your favourite dishes at home for half the cost.

Set savings goals and stick to them

Because saving is done over a long period of time, it can be difficult to have the end goal in mind. One of the best ways to stay motivated is to set saving goals, thinking about the types of things you might want to save for. These could be short-term goals, such as an emergency fund of three to six months, or long-term goals such as a down payment on a home or a retirement fund.

Set up automatic payments

The majority of banks offer the option of doing automated payments between your current and savings accounts allowing you to save money each month without any additional effort. Companies and startups for example often automate payments for ongoing and regular expenses like their office space (source: bOnline) and their business rates. Set up the automated payments and choose how much money to save each month so that it goes directly into your savings accounts.