Point of view: You’re my online banking app and you’re once again waking up to my thumbs podging all over the screen as I pour over balances and transactions like Thorin and the Arkenstone…
I suppose I have caught the Dragon Fever during the lockdown but I think money has always fascinated me. I can’t say I’ve ever had a lot of it but I remember spending many a Saturday afternoon tipping out my piggy bank and inspecting all the dross change for hours on end… I’m not much of a Royalist but I liked to group up the 1p and 2p coins by their portrait of the Queen… ah, what a total loser.
Early on in the lockdown, I started to hear rumours of strange, mythical people in their mid-20s getting ready to snap up property with all the money they’ve been saving – I thought that was just a thing you started in your 30s. My ‘savings’ was a childhood piggy bank I brought to Berlin, full of British coppers, how embarrassing.
After that slap in the face, realising that people my age are actually responsible with their money, I decided to see how much I could save during the lockdown.
Honestly, I didn’t expect much because I didn’t really do much pre-lockdown: I wasn’t in Berghain every weekend (lol, imagine); and I’ve never taken advantage of the Burgermeister nearby, so I just assumed all my money was going on weekly food-shops and bills and I just didn’t earn enough to save. Boy, was I wrong! Not to toot my own horn or do the unGerman thing and discuss wages and money (God forbid), but I’m impressed with how much I’ve saved in the space of 9 months. I reckon by May 2021 I’d have the right amount to put down a deposit if I wanted to (on a small house I mean – what city folks would call a ‘shed’).
So if you too would like to buy a garden shed, here’s my finest advice to help save your schmoney:
Review your Spending
Knowing where your money goes will give you an idea of how much you can save and where to make cuts. Especially in a pandemic where we’re mostly paying by card, it should be easy to track each transaction on your online app. Your bank may already have options to categorise each transaction, for example ‘groceries, shopping, family’ etc, and create a chart for you, but you can also manually create a spreadsheet or draw up a list and look at it that way.
Learn to Budget
I love a good budget – it’s also a hilarious autocorrect of my name. There are many different rules of thumb that can help control your spending, for example: your rent should be about 30% of your wage; keep aside 10% of your wage for retirement; if you’re buying a car, check the 20-4-10 concept. For general budgeting, there’s the popular 50-30-20 rule: ‘50% Needs’ (Rent, Bills, Food etc), ‘30% Wants’ (gym, Netflix, travel etc) and ‘20% Savings’ (retirement, rainy days, loan repayment etc).
During the pandemic a lot of ‘Wants’ in the 50-30-20 rule are not fulfilled: gym memberships; travel; bars & restaurants, to name a few. These are all things that can be recategorised into Savings. Personally, I save over 30% of my wages – I know, I lead a very quiet life… but now I can buy a shed, so.
Set up a Realistic and Exciting Goal
Once you’ve reviewed your spending and calculated how much enters/ exits your account, you’ll be able to set up a realistic goal. Whether you want to stick to saving 20%, or more or less, you can now work out what this monthly/annual figure looks like. I’d also make your goal something you’re really passionate about, or a challenge, as you’re more likely to make the contributions. Maybe you want to save £100 a month, or £5,000 by the end of the year, find what works for you – maybe even set a few goals, go wild! …but not too wild.
Create Space
Maybe you still have your childhood piggy bank, but most online banks will have ‘pockets’ or ‘spaces’ where you can set aside this money. This feature has genuinely revolutionised my budgeting and savings. Depending on your account plan you may be able to create a few for different things: savings, food, new car, bills. Each month you can drop money into the space – or you might be able to set up an automatic transfer each month from your main account to your space… but then you don’t get to enjoy the precious feeling of handling pretendy, digital money and swooping it around your spaces.
As a rule (to control all the savings fun), you should Save First before you spend. So when your money comes in, allocate the amounts to each space to block it off for the month ahead. It kinda sucks watching your main account balance dwindle so quickly but it’s the overall balance that counts. For example, I put 240€ a month (4 x 60€/week) into my ‘Food’ space and use it to reimburse my grocery shopping after each trip to the supermarket.
Note: Some banks will let you set up outgoing payments directly from the space, whereas others can only debit from your main account and then reimburse from a space , so make sure you have the right amount of money in the right place for any upcoming debits.
Use ‘Round Up’ Feature
These days ‘Round Up’ doesn’t just mean a beautiful garden lawn without weeds (but that kind of Roundup would go nicely in my new shed); it also describes the process of saving up the little pennies. Now, given that I used to spend my Saturdays counting coppers, I really should have cottoned on to this sooner because it’s genius! People can save up hundreds without even noticing – pure joy! This feature automatically rounds up spending each time you use your card and pings the spare change into a space. If you spend £3.49 on some questionable wine, your little bank will round it up to £4.00 and put the spare £0.51 into a little space… and that sometimes helps you regret the wine a little less.
Buy Sustainably
Yes, here she goes, off on the eco spraff, BUT, you will absolutely cut spending and save loads if you are more conscious and mindful of what you buy. Do you really need it? How often will you use it? Does it spark joy? Can I repair the one I already have? These are all questions to ask when you’re feeling that retail therapy itch.
This section should be a guide on its own and luckily Tara Button, founder of Buy Me Once, has already written an excellent guide (and book) to be more considerate and reduce impulse buys. Maybe you’re a ‘Treater Imp’ and celebrate every occasion with a purchase; if so, try adding it to your basket and going back 24h later when you’re less excited. I used to be a (rather unfortunately named) ‘Faddy Imp’ who gets into a hobby, buys all the stuff and then gets bored after two weeks days, so to limit my spending I should shop second-hand OR give up hobbies altogether and become a sad, little blobfish. Spoiler, it’s the latter…
Well, actually, does saving count as a hobby? The amount of time I spend checking my accounts, I think it should be considered as one. Feel free to join me in this extremely safe and boring hobby – I look forward to next year when we can all compare sheds, or whatever it is you’re working towards. Happy saving!
Bridget McMillan 