The Truth About Saving MoneySaving money can be daunting, but it's important to have some spare cash sometimes. Here are some myths about saving that could be keeping you from saving effectively.
There are some myths about saving money that might make you believe that saving money is difficult. However, saving money is not quite as hard as sometimes it is made out to be.
Let’s discuss why you shouldn’t believe everything you hear about how you “should” be saving money…
Myth nr.1 -
"You have to save a set amount each month."
You have likely heard that if you want to save money it’s best to save a set amount of your income per month. However, this is not the case!
How much money you save completely depends on your situation. For example, a month that you have little going on you may save £100. But if the month after, you have a birthday gift to buy, and two meals to attend, it is okay not to save any money that month…
Please don’t feel that you must save large amounts of money each month. Just saving what you can afford will be beneficial to you in the long run. You don’t need to meet other people’s expectations and match other people’s financial actions, the only person that matters here is you!
Myth nr.2 -
"You have to be earning a lot to save."
This isn’t true!
The truth is that saving what you can is great. Everyone has different a different income, and each persons saving should be proportionate to what they can afford.
Once all your priority bills are paid (i.e mortgage and rent), any leftover money is yours. Therefore, it is up to you how that money is used.
If you can afford to save some then great! If you can’t then that is not an issue, there may be a time that you can in the future.
Myth nr.3 -
"You don’t need to save, if you need money for an emergency, you can just get a loan"
This isn’t a great mentality to have. Saving money is a great way to prepare for the unexpected or perhaps treat yourself when needed.
Taking personal loans every time something unexpected happens may be harmful to your credit score. Additionally, personal loans are often paired with high interest and charges which can make it difficult to make repayments.
- Saving money is different for everybody;
- It is okay to save different amounts each month;
- You should not compare your saving habits to other people;
- You should try to save what you can afford each month; just in case you need money fast.
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Unsecured Loan Representative 69.9% APR
Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
Secured Representative 11.7% APR
If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.