What are you saving for?
If you’re anything like us, you’re probably attempting to squirrel away money in the hopes of one day having enough for a deposit on a home.
Or you want to fund a holiday. Or you’re being smart and creating a cushion in case of any life emergencies.
In our weekly series, How I Save, we look at the reality of saving and spending, tracking a different person’s money habits each week.
Jake*, 36, is someone who’s already achieved one of the big savings goals, having put down a deposit on a flat in East London.
Now, the freelance media relations manager is still working on saving for the future, just now without the goal of London’s sky-high property prices
I’m a 36 year-old Freelancer Media Relations Manager working with consumer and lifestyle brands living in East London.
How Jake saves:
I earn, on average, £40,000 a year, depending on how many contracts I take on and how often I work.
In my savings account right now I have £500, which makes me feel miserable! I did have more this time last year but I used that for a deposit on a flat.
I’ve saved this much money since November by budgeting my daily spend and moving any surplus into a savings account at the end of the day. This could be as little as £7 or as much as £11.
I’m saving for my future. One of the pitfalls of working for myself is not having a pension. I spent all of my savings last April (mostly made of inheritance) to buy a flat with my partner.
Once we have finished renovating our flat I will then be able to save properly. 20% each payday will go into an ISA – need to find one that has a high-interest rate.
I struggle with saving because I wasn’t given pocket money when I was younger. My friends were given a weekly allowance and learned how to budget. I’m not saying I went without but I did have to ask my parents for money. My Mum always said no but my Dad would give it to me – the odd £10 (which would have bought a cinema ticket, snacks and bus fare… the good old days!). Money now burns a hole in my pocket.
My spending got so out of hand last year that I’ve asked my boyfriend to take all my earnings and pay me weekly. We sat down over lunch and worked out all my outgoings – rent, travel to work, coffees/treats and food. He and I also worked out how much would need to be spent on the mortgage, renovations – builders, paint and essentials and my NI and Tax contributions – a massive responsibility for someone like me whose natural instinct is to spend spend spend.
We’ve been trialling since last summer and I can honestly say, it’s been a game-changer. My aim is to save at least £5,000 this year.
My last big purchase was a piece of art from The Glasgow Print Studio and it was £700.
How Jake spends:
Monthly expenses:
- Travel: £135 is the amount for a monthly travel card. I now take the bus instead of the underground and am spending on average £90-£110 a month.
- Mortgage: I pay £500 a month – less than what my partner pays – he pays the bulk as he earns considerably more than me.
- Phone: I managed to get a loyalty discount of 10% from my provider – unlimited data, texts and calls for £52. I have a new iPhone as part of the deal. I used to pay only £16 a month but always went over my data allowance, so this makes more sense to me
- Council Tax – £140
- Utilities (electricity, water & broadband): £200
- Service Charges £140
- Pet Insurance £70
A week of spending:
Friday:
Today is my payday – I get £200 to spend a week. When my boyfriend helped me budget, we worked out how much I’d need to live on for a week – coffees, drinks, nights out and of course clothes.
£200 a week would see me live comfortably on £28 a day – not a lot but my intention was to scale back on my spending and any surplus at the end of the day remaining from the £28 would be lived into my savings account.
Last year I decided to switch to Monzo banking so I could see live updates of my accounts as and when I spent and so I could create pots for different occasions/reasons – one is for my NI & Tax contributions, another for treats (every time I reach £250) and one is for monthly travel top-up if it’s not in my current account I won’t spend it
For breakfast I discovered a really good meal deal at Leon. Porridge and coffee for £4.45 and I get 45p off for using my own cup. I always say that I’ll eat before I leave but I’m never hungry until I’m near the office. I wonder if it’s my subconscious trying to keep me away from work.
I was meant to make lunch last night but crashed in front of the telly watching re-runs of Louis Theroux documentaries. Typical case of ‘just one more’ … then before I knew it, it was past 11 and I was in no mood to be fussing in the kitchen. So I had a veggie sushi pack from M&S for £3.30.
Total for Friday: £8.20
Saturday: Walked up to the village to collect a parcel from the designated shop and treated the boyfriend and myself to a coffee before we parted – I was on my way to meet my bestie for breakfast. £6.90 on two coffees – don’t even batter my eyelids anymore, bloody London prices.
Topped up my pay as you go Oyster with £15.
Breakfast came to £14.65 as I ordered the veggie full English, black coffee and a juice. Tempted by the cakes on offer but decided to be good.
I popped into an outlet Levi’s and bought two pairs of jeans for £98 (bargain!) – had to dip into my savings but I really (really) wanted them – they went perfect with my boots which I got for Christmas but was reluctant to wear as I didn’t have the ‘right fitting’ pair.
Was meeting boyfriend so we can go paint shopping. I arrived early so stopped off at the cafe and had a tea while I waited – spent £2.81.
Bought the paint on the credit card, £170.
Ordered a Deliveroo because the kitchen was like a war zone and we were shattered, £33 – food arrived late, cold and incomplete so got a full refund and some credit applied to my account. that means dinner was £0.
Total for Saturday: £307.36
Sunday: Went out for breakfast as we were not in the mood and kitchen was still unusable. £23.00
Skipped lunch and boiled some pasta for dinner which we had with a jar of pesto.
Total for Sunday: £23
Monday: I had breakfast at home due to a late start and had time to make my lunch – but I bought a fresh juice from Planet Organic (£4.95) on my way in.
Bought a coffee from the canteen for £2.93 and iTunes took £3.99 for my iCloud storage
Worked through lunch and headed home for dinner. Beans on toast – greatest meal ever!
I didn’t use my daily allowance (£28) so I transferred £16.13 to my ‘treats account’.
Total for Monday: £11.87
Tuesday: Breakfast – ran out the door late this morning, barely had enough time to make a lunch up.
I Grabbed the breakfast porridge & coffee meal deal from Leon – £4, with 45p off for using a reusable cup)
I ate my lunch at my desk and wandered around the shops. Dipped into my treats account and bought a sweatshirt for £20.
I bought a bag of M&Ms and crisps from the canteen for £2.30.
Had dinner at home and made enough for my lunch tomorrow.
Total for Tuesday: £26.30
Wednesday: Late to work so grabbed an Egg McMuffin and added an extra egg – £2.59. I grab a coffee for £3.30.
Ate my lunch and went for a walk around the shops. Stopped off in Liberty as I needed deodorant – £23 (expensive but effective and not full of chemicals) – and wanted something sweet so got a pudding and a popcorn bar from Pret for £4.60.
Was peckish so bought a bag of crisps from the canteen for £1.30.
I ate dinner at home.
Total for Wednesday: £34.69
Thursday: Last working day in the office for the week and thought I’d treat myself to coffee from Kaffeine £3.30, breakfast from Leon for £3.15, and a fruit pot from Pret for £2.79.
Crisps for lunch as I had work through my lunch break and treated a friend to a bag too – £3.
Picked up dinner on the way home, pasta and pesto for £6.85, and needed some dog food, which cost £3.40
Total for Thursday: £15.64
Total spent this week: £427.06
How Jake could save:
We spoke to the experts over at Plum, an AI assistant that aims to boost your bank balance, to find out how Jake can save better (and what we can learn from her spending).
Note: the advice featured is specific to one individual and doesn’t constitute financial advice, especially for a London budget.
Here’s what Plum said:
Hey, Jake. Thanks for sharing your week with us!
Ahh, maybe it’s the time of year, but there’s something romantic about sharing your finances completely with your partner… you obviously really trust him, which we think is beautiful.
However, it’s good to build your own self-esteem when it comes to money as well, and that comes through doing things yourself. If you do want to gradually regain control over your finances and become your own budget master, there are lots of great ways to do that too.
Savings
You bought a flat last year (congrats on that, by the way!) which is no mean feat and an important financial investment. Though it may feel like you’re starting from scratch when it comes to savings, this is actually a very exciting position to be in, because you have the chance to set up habits that will keep your finances healthy for the rest of your life.
The big question is, what are you saving for now? Without a goal in mind, it makes it 100 times harder to save. So it’s wise to separate each of your savings goals into different pockets so you can pay the right amount into each.
You’ve already started to consider your long-term future, which is great as this is often a stressful subject for freelancers. If you are serious about saving for retirement, getting your pension sorted would be a very good start. As you are a freelancer, another option could be to set aside some money every month and invest it. This money should be totally locked away and added to whenever you get paid. Remember that with investing, your money can go up or down depending on the market.
That’s not to say you can’t save for fun stuff too! Use an auto-saving app like Plum to squirrel away small amounts into special pockets for treats. Then you’ll have no guilt when you feel the urge to splurge as your main savings will be left intact.
At the end of the day though, your heart has to be in it if you’re going to ramp up your saving. Knowing what you want at the end is an important first step.
Budgeting
Saving 20% of your salary is a noble aim (and the one often cited by experts who promote the 50-30-20 rule (50% of your income on necessities, like housing on bills, 30% on wants such as entertainment and meals out, and 20% on financial goals, such as paying off debts or saving), so we’ll take it as a good place to start).
It’s also quite a tough ask and requires you to be very disciplined with budgeting, even with your partner acting as your budgeting boss. You’ll have to make a few lifestyle changes if you really want to save more.
Using Monzo to track your spending is an excellent way to engage with your finances. It’s a good place to look if you want to find places where you’ll happily cut back to make a saving, as it helpfully displays all your spending in categories.
The odd meal out here and there doesn’t look like much, but once it’s all added up, it’s much easier to make a decision about where to save.
You’ve already implemented some good habits, so now it’s all about finding new manageable ways to budget better without compromising your lifestyle. The bus instead of the Tube is a good example. Think about implementing something like this every month so you’re finessing your budget step by step.
How I Save is a weekly series about how people spend and save, out every Thursday. If you’d like to anonymously share how you spend and save – and get some expert advice on how to sort out your finances – get in touch by emailing [email protected].
If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join Money Pot, our new Facebook group.
*Name has been changed.
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