Why saving money is always important

Warning: Late repayment can cause you serious money problems

For help, go to moneyadviceservice.org.uk

Representative APR

This article is not intended to contain information about, or advertise, products offered by us but is intended to contain information, give opinions or discuss generally available products/services.

Author: Internal 


Very few peoples situation is the same as someone else. Most people have different paid jobs as well as different expenditure from month to month so the disposable income someone has will most likely be different to other people’s disposable income. This is the amount of income that someone has left to themselves for a month after all their financial commitments are maintained and people should never exceed this amount as it could lead to other payments being missed as a result. Missing any debt repayments for example will nearly always result in severe negative consequences for any person involved. I am in this article going to explain in detail why saving money is very important and how to action this successfully.

People need to calculate their disposable income regularly each month so they know what money they have to themselves  after all their bills and paid. This is nice to budget for as they know they can survive financially for the month until they are paid once more. If this amount though is ever exceeded then other repayments may be missed as a result and this is definitely not good. The best way to access this information would be for someone to right down all their incomes expected for that month and for this take everything into consideration so wages, any benefits due and other income and then from that total figure then take off all outgoings and expenditure for the same month so rent costs and other bills due and the figure left after that calculation is the disposable income. If someone then is looking to save money then they will have to take the amount they are requesting to save from their disposable income amount and then still look to pay their remaining bills as they have previously agreed to. People should do this if they are comfortable they can still budget for that month ok.

When it comes to money and particularly saving money I think people should be well disciplined and they should be aware that the money they are doing this with is still theirs and they still have constant access to it if they need it. People however should be disciplined themselves and only take money from savings if the matter is urgent and if any sudden cash emergencies arrive that were unexpected. People should not just remove this money for a night out or a purchase that was not really required. People can do this is moderation but ensure that money is transferred back into savings as soon as it possibly can be. People can save money in some accounts that can pay interest so when they request their balance after a prolonged period of time they may soon realise that the balance has increased and they have more than what they originally thought in the first place. To find the right savings account that person may need to explore the different options here so they can find one that has decent interest rates and as a result is a fair savings account for what they intend to deposit it there. Normally the more the balance being saved the better the accounts that can be offered are.

There can also be a time when someone looks to use their savings for a major purchase in someone’s life such as a car or even a deposit on a house and it is here where that person can be really proud of what they have achieved. People can save money throughout their life or they can be handed money from family and friends whichever way they get it they can enjoy teh knowledge that they have it available if they need it. People who withdraw the cash at the earliest opportunity and they do this frequently will realise that their balance is much lowered. People who have families to support will have heavy monthly expenditure and they will realise that their saving days are now probably over for a while, they just can’t possibly afford to save much money. They should keep trying where possible but most of the money is going into their family and their everyday life. People who have well paid jobs and not much monthly outgoings can save the most and they should take this opportunity wherever possible to enable this to be actioned.

Top tips for saving money

For a consumer to survive in today’s economy they must be able to shop smart and save money wherever possible to do so. As the cost of living continues to increase there is a greater need for consumers to be able to ensure their finances remain within budget and wherever possible disposable income remains available. For many consumers their monthly commitments are at the highest levels they have ever known and as a result there is a greater need to keep control. An average consumer now faces the classic array of living expenses as well as the new selection of commitments, thanks mainly to the change in how we as consumers choice to make purchases. Nowadays it is common place for consumers to have a number of borrowing facilities as well as loans which demand monthly repayments and these must be paid, like all the other commitments of the overall budget.

The modern day consumer spends money in a very different way to that of years gone by and that means we need to ensure wherever possible savings are made. In fact in today’s market a consumer may think nothing of obtaining a credit resource specifically for buying clothes or electrical items or home furnishings. Although of course none of these are really essential items as such, the modern day consumer often views the purchase of such items as fundamental and therefore will happily made room for them in their monthly budget. This means buying in bulk, so to speak, and then making agreed instalments monthly to repay the amount borrowed. The change in consumer spending habits from ‘need’ to ‘want’ was bound to happen as the years have gone by. Today you cannot listen to the radio, use the internet or watch television without being presented with a whole range of advertisements for various different goods and services. As a result of course consumers are more aware of what is available and therefore what to be able to purchase these items. The internet therefore provides a wonderful resource to do just that, spend money. With very little though a consumer can join an online catalogue if they wish and start buying. In fact it would be fair to say the modern day consumer doesn’t even need to leave the house in order to shop.

The internet not only increases shopping potential though of course. In fact it has become a useful resource in a number of areas. The internet houses a wealth of advice when it comes to managing money correctly and in a fashion which is affordable. So in many respects a consumer is presented with a very useful resource when it comes to the internet. A great example of this is discount voucher based sites who will offer the opportunity to save money in a number of different areas. Whether this be off shopping items or specific services, there are a wealth of offers which are only a click of a button away for most of us. The number of consumers who use the internet to complete most day to day tasks continues to rise and as a result companies are more keen than ever to make the effort to ensure your money is spent with them. It is for this reason that it is more important than ever that as a consumer we take the time to shop around for deals. Often websites will offer the opportunity to save a percentage off your purchase simply for being new to their site. Equally there are a large number of companies who will offer specific deals to those who join their site. This of course is of benefit to the shopper but also the company as they hope you will return to them again and again in the future.

For consumers to keep their budgets manageable it is important constant effort is made to shop smart and save money wherever possible and in actual fact this in itself is not that difficult to achieve. There are now a wealth of comparison based sites who will do the work for you when it comes to insurance products and luxury based purchases. Making use of all these resources will in time have a positive and beneficial influence on how spending as a whole is conducted.

Don’t Borrow Unless You Have To

Before you resort to taking out a loan, you should take a few additional factors into consideration beforehand. This includes whether you’ve exhausted all other options of financing. These other options typically revolve around borrowing from close friends or family. It may be potentially straining to your existing relationships with your loved ones, but only if you choice to postpone its repayment constantly and not take the matter seriously. Money, after all, is a highly sensitive subject. Holding onto money that isn’t yours is equivalent to stealing if you choose not to pay it back. But these risks and restraints shouldn’t prevent yourself from looking towards your loved ones for a bit of financial help. It may be a little embarrassing, but it’s pretty much almost certain that if the person you’re asking money from cares about you enough, they’ll respect you for mustering the courage to humble yourself and ask for help. If they don’t receive your requests with such open arms, it’s still not the end of the world as you can still look towards other avenues of temporary short term financing.

Instead of leaving the matter until the very end where you have no choice but to borrow, you should maintain an emergency fund and keep it on standby. The most common guide to keeping your emergency fund is to save up at least twice the amount of your monthly income and have it all stored somewhere safely and easy for you to gain access to. Leaving the money in the bank is a more secure method of storage. The interest rates that banks offer aren’t exactly substantial enough to make an impactful difference on your income but at least it is secure. So if possible, keep that rainy day fund and don't dip into it unless you have to. You’ll never know when’s the next time that you need to pay for something unexpected. Life is after all, fragile and unpredictable.


Here’s another reason why you shouldn’t borrow unless you absolutely have to. Taking out a loan is a commitment that most people arefamiliar with, but tends to be taken far too lightly. This lack of dedication leads to the repayment being missed. Regardless of the money being borrowed from a financial institution or a friend, neither of them is going to like the fact that you’re taking their money too lightly. Straining your relationship with your bank or financial provider can put you a tough spot, but there’s no spot tougher than the moment you’re confronted by a close friend for money that you still owe.


So instead of resorting to borrowing money, your next best option is to save. If your need for immediate financing isn’t exactly time-sensitive, and is something that can you wait, your best option will almost always be to wait. Whether its a tangible and materialistic possession or bills, it’s most of the time wiser to skip ahead on these things that you aren’t able to afford and live within a specific and comfortable budget while saving your hard-earned money for its purchase. This will make the purchase far more worth it than if you chose to simply borrow the money.


This places an even greater importance in drafting out a budget for you to properly manage your finances. Typically, it’s recommended for each person to set aside at least 20% of their earnings for their emergency funds. The rest of the money can be used for utilities, food, and your general livelihood. However, it’s important to bear in mind that developing the best budget in the world doesn’t necessarily you carrying it out. In fact, most of the time, people who have budgets already created for their specific uses exceed their daily expenses just the day after. Nevertheless, it’s still important to keep an appropriate budget for you to keep track of your expenditure. At the same time, it’s equally important for you to maintain a strong sense of self-discipline and stick to the budget regardless of whatever circumstances are presented to you. Purchasing a branded gift for your office crush does not constitute as being a legitimate reason for you to exceed your budget, and neither does getting the new Playstation 4 any more permissible than that.


So, unless you’re in need of immediate financing for an emergency, or any other situation of similar time-sensitivity, you should never ever borrow money. But this means that you need to start saving right now and be as disciplined as you can be about it. You can’t enjoy the fruits of your labor until you’ve actually put in some hard work.


When asked the question “When should you borrow money?” The answer should almost always be “Never.” It is common knowledge that being in debt is not a good thing, yet the average household debt (excluding mortgages) in the UK is £7,975. If you are tempted to take a loan out, first ask yourself these questions.

Do you need to spend the money?


Unless it is a medical or family emergency, or something important that is extremely urgent, think hard before spending money that you do not have. Of course, you will tell yourself that you can pay it back with your next payday. However, the more you tolerate this negative behavior, the more you will continue to borrow until you are caught in a huge pile of debt.


Can you wait and save?


If you do feel that you need to spend the money, ask yourself if it is an immediate concern. Often we blindside ourselves because we are so focused on instant gratification. A good rule of thumb is if you are at the store and see something you want to buy, wait two to three days and see if you still want it. The time away from the item will help you decide whether it is a necessity or not. Also, check if you can acquire a cheaper version of what you want, for example, a used bike or second-hand furniture and clothing? Unless it is a necessity, it is better to take a little money out of each paycheck to save for the purchase.


Can you borrow money from a friend or family member?


If in the worst-case scenario you do urgently need money, think about the people in your life whom you have a trusting relationship. This could be your parents, your siblings or other close relatives, or even trusting friends. Most likely, they will be understanding of your financial needs and help you out. Even though this is still borrowing money and you have to pay it back, it is a step better than borrowing money that acquires a large interest.