New decade, new habits

2021 has finally arrived and it’s likely that most of us have never been more glad to wave goodbye to the previous year.

And perhaps things are looking a little different for your bank account in comparison to previous years. Most Januarys look a bit gloomy. There’s even a day dedicated to it; the so-called ‘Blue Monday’ that comes as a result of that post-Christmas gloom and the effects of being a bit strapped for cash as a result of Christmas spending. But this year, could your bank balance actually be looking a little healthier than previous Januarys?

A combination of being in lockdown for months has meant, amongst other things, not spending money on going out or paying for unused gym memberships or commutes to work. In fact, data shows that between April and June 2020, people in the UK were saving over 29% of their disposable income, up from 9.6% .

Typically, January is the time to start ‘self-improvements’. Adverts, news, emails are full of great ideas on how to create a new and improved you or make this year the best year ever. You can’t even indulge in a little social media without being deluged with your friends bragging about their newfound virtues (unless giving up social media is one of you virtues…).Yes, it can be a little irritating. But the truth is there’s nothing like a solid start date to begin new habits, and unfortunately 1st Jan is arguably the cleanest break there is.

2020 taught us some lessons, one of which was the importance of savings. Our research carried out during Lockdown 0.1 found that 78% of people agreed that coronavirus has made them realise how important it is to have savings to fall back on. Did you know ‘Saving more money’ was the 4th most popular New Year’s Resolution in 2020*? And in a sad twist of fate, it seems that many were actually able to keep their resolutions. (Please note resolutions 1 to 3 all involved being physically healthier in some way. With saving, it’s really about being consistent and knowing what tools are out there to help you.

Let’s talk saving…

Saving isn’t fun at the start, but once you start to see that savings pot go up it brings peace of mind no new gadget or dress can buy. Getting to that point doesn’t need to be difficult but does take some commitment. Firstly, by understanding your options and secondly by making saving a priority.

1. Identify your saving goals

You might have something specific in mind that you’re saving for like a deposit for a first house. But even if nothing springs to mind, there is always the need to save for the unexpected. Just getting into the habit of putting something aside on a regular basis will help you when it comes down to it. And don’t forget the longer term. Were continually being told that we’re not saving enough for retirement. That may be many many years away for you, but what happens when you get there? We all need to be thinking about the lifestyle we want now and in the future, because money is the main thing that will influence this.

2. Investigate all savings options

There are different types of savings accounts and options out there for specific savings goals. Obviously pensions are for retirement, but have you heard of the Lifetime ISA? It exists to help you save for your first home. But it also helps you save for retirement with a 25% government bonus. Don’t overlook the importance of pension contributions in their own right. Thinking about how best to save for your children’s future? The Junior ISA is designed purely for this reason.

3. Work out your saving style

Do you prefer to save in cash or are you more of an investor? If you’re more of a cash saver, have you considered how investing might help you get more out of your money? Why not do both. In one tax year you can save into a Cash ISA and an Investment ISA (also known as a Stocks & Shares ISA), up to £20,000 for the tax year 2020/21.

4. Amounts

For most of us, it will be about saving consistently. Looking at your monthly income vs outgoings, and working out what you can allocate to monthly savings is a great way to begin your journey. Even if it’s just £10, it will give you some peace of mind, knowing that you’re building up a savings pot.

Rainy day funds

We talk about rainy day funds, but what do we mean? A rainy day fund is money set aside for things that you just can’t really plan for, like a drop in income or any kind of disruption to your finances. It’s a pot of money you can turn to if you were to experience a pay cut, the boiler packed in or you found yourself in-between jobs (just to list a few).

So where can I make savings?

One of the only silver linings of the pandemic, was a chunk of us started to make savings across areas such as travel, work lunches and daily coffees, and not going out. And as we mentioned, that has resulted in people saving on average nearly 30% of their disposable income. But we need to continue this. Setting up a set amount you can allocate to savings each month is a good way to start saving, and then you can adapt to live off your new net pay.

Little life hacks you can incorporate into your daily life can really add up over time.

• Costa coffee it’s an oldy, but a goody! Ditch the daily coffee for instant and you could save yourself up to £864 a year! Those £2.40’s add up! 

• Comparison sites can give you huge savings. It may seem like an effort, but actually the tools are there to make it really easy and quick for you to save money. Money Saving Expert do weekly emails with relevant saving tips.

• Supermarket own brands have come a long way! They’re often the same in taste but totally different in price! Don’t be a brand snob, shop around and see what savings you can make.

• Sell unwanted goods! Post-Christmas is prime time to be selling old stuff, especially after getting lots of new bits! Have a look at Ebay, Depop etc. which you can easily manage from your phone. Be mindful of their fees.

What does Cushon do?

Cushon makes it easy to save. No matter what you’re saving for, you can build your savings pot with just £10 a month straight from pay. We’ve got an array of ISAs, with cash and investment options. We’re here to help you get comfortable with your finances.

If you’ve got questions about ISAs, products or how we work – please book a 1-2-1 with one of the team here at Cushon.

While Cushon can give you plenty of information about the options available to you, we’re not able to give financial advice. It’s also important to recognise that no form of investment is guaranteed. The value of investments can go down as well as up.

Article by

NatWest Cushon