8 min read

How to turn saving into a habit that sticks

Andre Spiteri
15 January 2018

This year, turn saving into a habit that sticks with this one simple tactic of 'paying yourself first'.

If you’ve ever found saving tricky, you’re certainly not alone. We’re not a nation of savers. In fact, 40% of working-age Brits have less than £100 set aside.

Yet saving is one of the most important things you can do for yourself financially. By having some money put aside, it can help you out in an emergency (without having to rely on expensive credit) and help set up a more secure future for yourself.

But even when you know you should be doing it, it can be hard to stop thinking of saving as an afterthought, and start seeing it as a priority. The best way to combat this is to turn saving from something you do now and again, into a habit. But as we all know, forming new habits (and shedding bad ones) is a difficult business. But this one simple step of ‘paying yourself first’ could help change your mindset and put you on the road to a long-term saving habit.

What does 'pay yourself first' mean?

When payday rolls around, many of us account for our bills first, then go about our daily business saving whatever is left at the end of the month. But with the ‘pay yourself first’ strategy, saving becomes one of the very first things you do. By setting aside money for your savings straight away, as if it were just another bill, it can help you build up healthier savings habits, change your mindset towards saving, and make it less of a drag on your lifestyle.

So how do you do it?

The idea is to transfer your savings out of your current account, and into your savings account, as quickly as possible after pay day. A good way of doing this is to set up a direct debit to come out of your account on the same day that you get paid.

That way, you can't be tempted to spend any of the money you want to save. And because the money comes out straight away, it's like you never really had it in the first place, meaning you can't miss it.

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How much should you save?

How much you save each month is really up to you, and depends on how much money you have to spare and how much you want to save.

However, a good starting place is to make sure you have at least 3 months salary in savings to cover your emergency fund. If you have a set figure in mind, such as the cost of a holiday or a deposit, then the Money Advice Service have a useful tool you can use to decide how much to save each month.

If you’re not saving for anything in particular, but still want to make sure you’re putting some cash away regularly, you could use the popular 80/20 rule as a guide. This is where you save 20% of your income and use the other 80% for everything else: bills, food, your hobbies, ASOS.

It's crucial to not pay yourself so much that you can't get through the month. A good idea could be to start off with a small amount and build up, rather than immediately saving half your salary.

To give you a good starting point, take a look at your bank statements to see how much you tend to spend in a month, and whether there are any obvious cuts you could make to your spending. This will give you a better idea of a minimum amount you could afford to put away.

While you're getting used to this method, consider keeping your savings in an easy-access savings account. This means you can withdraw the money at anytime if you need it. So, if you do find you've put too much away initially, you can access the money in your savings without having to rely on expensive credit. Next month simply re-adjust accordingly and try again until you hit upon the magic formula for you.

Not got a savings account?
We’ve got an article all about the different types of savings accounts if you’re not too sure where to be putting your savings. It covers everything from ISAs, to easy access accounts and bonds so you can make sure you’ve got the right savings account for you.

How this tactic can help you develop better savings habits

A tactic as simple as transferring your savings out of your account first, can make a big difference, and that’s no understatement. For many people, this strategy is a very effective option as it helps change your mindset while giving you the freedom elsewhere in your budget. Here's the 3 key reasons why it can help you save better and hit your goals.

  1. It’s more flexible than traditional ways of budgeting

    Traditionally, budgeting means working out exactly how much you want to spend on every expense from food, to shopping and subscriptions, to bills, in order to work out how much you have left to save.

    This approach can work for many people – but if the thought of getting into the nitty gritty details fills you with dread, you can use this method to budget in a way that better suits you. The money that's left after your take off bills and savings is yours to spend. From there, it can be easier to budget realistically. You know exactly what you have to spend each week without fear of dipping into your savings.

  2. It helps you change your mindset

    Ultimately, habits are all about mindset. For many of us, saving can mean not spending money on something we want. This can make us feel deprived, which makes it harder to resist temptation.

    By paying yourself first, it can help you start looking at your savings as just another deduction, like income tax, national insurance or your student loan repayments. It’s easier to part with something if you didn’t feel you had it in the first place, making saving less of a chore and more of an instinct.

  3. It makes it easier to turn saving into a habit

    It takes 66 days, on average for a habit to become automatic. That's actually quite a long time. But the best bit about this tactic is that it's an easy habit to form. You can simply set it and forget it. Once you set up your standing order, everything takes care of itself.

    Those 66 days will fly by without you really having to lift a finger. And after a while, you’ll be so used to living with a little bit less each month, that your habit will be even easier to maintain.

The only thing left to do is bask in the glory of seeing that figure in your savings account go up and up.

In a nutshell:
  • When you 'pay yourself first' you deduct your savings from your salary on payday, instead of saving what’s left over at the end of the month.

  • To make this work decide on an amount to set aside, settle on your savings goals and set up a standing order. The amount is deducted automatically, so you won’t be tempted to skip it.

  • 'Paying yourself first' helps you to make saving a priority, making it easier to change your mindset and build a habit.

by Andre Spiteri

Andre is a former lawyer turned financial writer. Andre has written this article especially for ClearScore.

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