Sometimes it’s hard enough to keep up with bills and make ends meet, let alone save money. But building up savings means more than just putting money away for long term goals. It also means saving for:
- Irregular costs that come up over the year, like repairing a house
- An emergency cost, like a medical bill
- ‘A rainy day’ or emergency fund, like if you lose your job.
Building up savings helps you when you need to borrow later, as you will have a strong habit of saving along with a deposit and track record that you can show the bank.
Learning how to assess your spending and draw up a budget plan to include regular savings (no matter how small) will allow you to prioritise savings and gain some financial security.
Here we have advice and information to help you get on track with a good saving habit to help you reach your saving goals.
Getting into the habit of saving can help you achieve your financial goals and be prepared for life’s surprises. The main reasons for saving regularly include:
You know they’re coming – electricity, gas, heating, and property tax. The list can seem endless. These regular bills come in every month, every quarter or every year – and we have to be ready to pay for them.
Cars break down, washing machines stop working, our homes are flooded, or you or your partner may lose your job. Dealing with the event is hard enough in itself, without having the money worries on top of it.
The big events
Christmas, birthdays, weddings, holidays, Communion and Confirmations or other religious events are all big expenses and it’s difficult to pay for them unless we plan ahead and save a little each week or month.
Peace of mind
Having a cushion to fall back on will give you greater peace of mind. Knowing that you have some money put aside to deal with expected and unexpected events will give you a greater sense of control over your money.
For a track record
Being a regular saver gets you into the habit of saving. Having a saving account with a bank, post office, building society, or a credit union also shows your consistency and this can be a factor if you ever need to borrow money.
The first step in saving money is finding the money to save – which often means prioritising spending in some areas over others. Generally, it means putting a little thought into how and where we spend our money to make sure we get the best value possible.
Do a budget
Take a look at your current financial situation by working out how much money you have coming in and going out. To help you work out how much you can afford to save, you can use My full financial picture and My budget tools.
Having a clear picture of your expenses and spending habits can help you see where you could cut back and save.
Setting a savings goal
The main reason for saving is to help you reach your financial goals. It is important to set realistic goals. Savings plans often don’t succeed if they are too ambitious or you are trying to save too much money too quickly.
Your savings goals may be:
- Short-term, like saving for a holiday
- Medium-term, such as saving for a house deposit
- Longer-term, like saving for retirement
To help you get started, fill out the CCPC’s goals worksheet (pdf).
Finding money to save
While it may seem difficult sometimes just to make ends meet, you may have extra money you didn’t even know about. Here are some ways to try to find it:
Use these money saving tips from the CCPC to find easy ways to cut your spending.
Saving for an emergency fund
An emergency fund is money that you set aside to cover urgent or unexpected costs. This could be car repairs, unexpected travel or an urgent medical bill.
It provides a financial safety net so you don’t have to borrow money if something happens to you or your family. Having an emergency fund gives you more financial control and peace of mind.
How much you need in an emergency fund
A good rule is to have enough saved for 3 months of essential outgoings. So if you lose your job, you will have 3 months to find a new one.
If money is really tight, even a small amount is a good start. Saving smaller, regular amounts can be more effective than saving larger amounts now and again. This is because you get into the savings habit, and you’re not saving too much money that you could use for other things.
Keep adding to your emergency fund
Take advantage of every opportunity that can help you increase your emergency fund. If you get some extra money during the year (for example a tax refund, a raise or a gift) use this to boost your emergency fund.
When you finish paying off a loan, it’s a great opportunity to increase your emergency fund. Take the money you were paying monthly and put it into your savings account instead. These payments are already included in your budget.
When to use your emergency fund
While your emergency fund should be easy to access, it’s very important not to leave it intact for a real emergency.
You should keep your emergency fund to cover expenses when:
- You need to pay them quickly
- It can’t wait for a few weeks to save up and pay for it
- You have no other money available
- Your only other option is a high-cost loan
If you need to dip into your emergency fund, remember to top it up again afterwards.
Choosing a place to save
Once you’ve decided to put aside some money each week, the next decision is where to put it.
We generally recommend that saving and deposit accounts are the best place to save money. These accounts are available in post offices, credit unions, banks and building societies.
When comparing options, you need to consider:
Top tips for saving
|Tip||What to do|
|Make it a habit||The best time to put a bit of money aside is just after you’ve been paid, so set up your standing order to go out on, or just after pay day.|
|Save automatically into your account||The easiest way to save is to set up a regular payment from your current account into a savings account. You will automatically add to your savings each month and won’t be tempted to skip payments or dip into it.|
|Eliminate an expense and save the amount||
If you change one regular spending habit, you can save that money. Small spending changes can add up to big savings in the long run.
Examples: Cut back on eating out, takeaways and alcohol – it will save you money and can have health benefits. Make your lunch at home. Saving even €5 a day on buying lunch can add up to over €1,250 over a year.
|Shop around for the best deal||The CCPC is a good starting point if you are trying to find a savings account to suit your needs. Check out their regular savings money tool.|
|Review your goals||Review your financial goals on a regular basis. Changes to your family, personal or work situation can affect your budget plan. Even minor changes can have an impact on the time you’ll need to reach your savings goal.|
Get more help from MABS
If you’re struggling to manage your money or to make ends meet, or you feel like borrowing more is the only solution, help is available. Contact MABS.