Are you a super saver? Or is your ISA in danger of ending up empty? Let's find out.
What does the year have in store for you? Whether you’re planning a magical holiday, big wedding celebrations, or you just want to enjoy an extra-festive Christmas, chances are you’ll be needing some funds.
Saving can be the most rewarding - and least stressful - way of financing the big stuff, but in a world of glossy advertising, dazzling shop windows and contactless credit cards, it’s not always easy.
If there’s one thing that can make or break your success as a saver, it’s habit.
Bad money habits can be broken, but first you have to be aware of the pattern you’re in - and know how to put it right.
Will your habits make you a super saver? Or is your ISA in danger of ending up empty? To find out, let’s take a look at the good, the bad and the ugly of savings habits.
Good saving habit No. 1: Setting goals
What are you saving for? How much will it cost? And when do you need the money by?
Using these questions to set clear savings goals is a great habit to get into. Goals give you a reason to save, help you stay motivated and focus your mind on what you need to do to get there.
All of this makes it more likely you’ll end up with the pot of money you’re after.
Good saving habit No. 2: Separating your saving ‘pots’
If your savings are in a separate account than the one you use for day-to-day cash, then give yourself a pat on the back. Separating your savings makes it much easier to track how much you’ve put aside - and how far you’ve got to go to reach your target.
Knowing which pot is for spending and which should be left alone also means there’s less temptation to withdraw what you should be saving.
If you’re saving for more than one thing, you can make your finances clearer still with multiple accounts, e.g. open a Christmas Saver and use your other savings account for your holiday.
Good saving habit No. 3: Saving direct from your salary
You might think you can rely on yourself to save what you can, when you can. But it’s easy to fall into the trap of spending what’s in your current account rather than transferring it to your savings.
The third good saving habit is to set up an automatic transfer, so a fixed sum of money will be redirected into your savings as soon as you’ve been paid.
Work for one of our Employer Partners? Simply opt in to payroll deduction, and start saving direct from your salary. Otherwise, you can set up a standing order to transfer money to your savings account on payday or the day after.
Top tip: Make sure you’ve worked out a budget so you know how much you can afford to save each month.
Bad saving habit No. 1: Saving when you should be paying off debt
Got debts? This may be disappointing, but it’s probably not a good time to be saving at all.
Debts usually cost more in interest than your savings earn you in interest. So unless you have a really cheap debt, or you’d be charged big penalties for early loan repayments, your best bet is probably to focus on debt repayment rather than saving.
Bad saving habit No. 2: Buying first, saving later
Do you fall into the trap of impulse buying? Perhaps you promise yourself that this is the last thing you’ll buy on credit - and you’ll start saving as soon as it’s paid off.
That habit of buying first, saving later will leave you worse off financially. So make it your New Year’s resolution to say no to temptation and start saving now, and you’ll have more money to pay for the things you enjoy in the future.
Bad saving habit No. 3: Making your targets unrealistic
Are you dreaming of a round-the-world tour? A Lamborghini Huracan? A penthouse apartment in Chelsea?
OK, maybe we’re exaggerating. But even if you’re not aspiring to the lifestyle of Cristiano Ronaldo, being overambitious with your savings goals is a common mistake - one that can leave you demotivated and frustrated.
Instead of setting yourself up for failure, ask, ‘what’s the best I can afford? Then use your budget to make sure your target amount and timeframe is realistic.
And finally… the ugly
Sometimes, the urge to save becomes so strong that people’s habits start slipping into the extreme.
If you’ve ever felt compelled to visit a friend just so you can recharge your phone at theirs, or collect dog hair to weave into clothes, it may be time to take a long hard look at your money-saving habits.
On second thoughts, maybe there’s nothing wrong with the dog hair thing. But if any of your money-saving habits are losing you friends or making you otherwise miserable, it’s definitely time to ditch them!
Want to save more this year? Create different pots for your savings goals from our range of accounts - including a Cash ISA. And if you work for one of our Employer Partners, don’t forget to sign up for payroll deduction and start saving the easy way.
Visit our savings page for details of what we offer.