Steps to help you balance your spending and saving

Successful finances involve planning for both spending as well as saving.

08:37 20 May 2014

Spending is an important part of creating economic stability, but we have to spend sensibly in our lives and also save wisely. Successful finances require a delicate blend of spending and saving. Financial difficulties are one of the most stressful things in life, particularly in relationships. 

 

Here are a few steps to establishing a good balance. 

 

• Set priorities—you could think of this as goal setting. You need to set limits for extra spending, and ideal amounts for your savings. Sometimes it is not clear what amounts you need, which is why it helps to set priorities. If you have dreams, events, or desires you can prioritize them in the order of importance. 

 

• Get organized—while you are prioritizing you might as well use the opportunity to find tools that can help you stay on track, and even measure your progress. These can be a simple record book, app, or more advanced like specialized financial software. These are helpful whether you are using them for business finances, or personal finances. 

 

• Think small—most of us have heard the phrase “think big”, but when it comes to saving, we should start by thinking small. Many of us cannot afford to put aside £500 per month, but even £1 put away whenever possible will sooner or later add up to an amount that can get you a savings account. The key is to make sure you eventually put those small amounts into an investment that will earn you interest. 

 

• Remember retirement—even if you are decades away from retirement, now is the time to plan for it. Even if you put away £25 a week- automatically- the amounts will accrue interest and it can add up to a significant amount by the time you are ready to retire.