In our weekly series, How I Save, we’re taking an honest look at how people spend and save their hard-earned money.
Each week we ask someone to track their spending for a week, chat with us about how they manage their money, and then we get them some expert advice on how they could boost their saving.
This time around we’re nosing around the finances of Phil*, 34, a journalist living and working in London.
How Phil saves:
I earn £32,000 a year and in my saving acount right now I have £750.
I’ve saved this much money by having an automatic payment thing that shoves in £50 a savings account each month on payday, and topping it up when I can (also having the savings account be really hard to get into, I don’t have a bank card with it so everything has to be online).
I’m saving for my car inevitably exploding and needing replacement, again.
The main way I save is slowly but by automating it so the money never existed, as far as I know.
I try to cut back on things and bung extra money in when I can which is sometimes successful but more often not.
I struggle with saving because London is expensive! More than a third of my income after tax goes on rent and the rest goes on stuff like car maintenance, because I buy cheap ones that need fixing all the time. I live the Sam Vimes Boots Theory but for cars – my savings took a hammering last year when my old one broke down in France as I was heading off on holiday, and I had to buy a new one in a hurry, and that’s turned out to need new bits put on it (tyres are expensive).
Lockdown has affected my spending and saving because I’m not travelling to work and eating expensive food from the shops and the office canteen anymore.
Also I’m not going to the pub. Before the lockdown I was spending around £600 a month on food, travel and going out and now I’m not doing anywhere near that. It’s good I’ve been able to pay off debt, partly because my monthly spending is down and although the festival season being canceled is a bummer I’m not spending loads booking travel and doing all that business.
How Phil spends:
- £700 rent
- £120 on bills for phone, internet, gas, electric, council tax
A week of spending:
Monday: £41 spent in Lidl, where I bought hopefully enough food to last me the month! Or at least most of the month.
Tuesday: £9 spent in the off license because I forgot to get beers at Lidl. £15 on video games after I’d drunk some of the beers and decided it would be a good idea to get myself some more entertainment.
Wednesday: Spent nothing.
Thursday: Spent nothing.
Friday: Spent nothing.
Saturday: £5 on more beers
Sunday: £10 spent at the corner shop because I have run out of bread and eggs, and I forgot to buy coffee at Lidl.
Total spent this week: £80
How Phil could save
We spoke to the experts over at Plum, the smart app for managing your money to find out how Phil can save better (and what we can learn from his spending).
Here’s what they said:
Hi, Phil! Thanks for sharing your week with us, now let’s dive into your spending diary and see what’s going on…
You’ve shown some admirable self-restraint when it comes to spending during lockdown – three days in a row without spending a penny is impressive!
It helps that not going out has reduced your spending costs massively down to the bare necessities, allowing you to develop some good spending habits.
And you’re not alone – in the Plum community, we’ve seen an increase of 5x in saving since the start of January, with the biggest increase during lockdown.
We suspect it will be a lot less easy to do this when things return to normal. One thing you might want to think about is how you can continue to keep spending costs low. That way, you won’t go straight back to splashing the cash on food, travel and going out in the same way as before.
Creating a monthly budget would be a helpful way to organise your spending, so you can keep an eye on exactly where your money goes.
Another way to easily cut down on spending is to see if you can switch to any cheaper bills. Plum can help you with this, telling you automatically if you’re overpaying for things like energy.
You’ve made a good start with £750 in the kitty but you’re still some way off having a comfortable amount stashed away. Having an emergency savings fund for things like car issues is really important and will stop you from getting into problem debt – you’re already getting on top of this, which is great.
That being said, there are definitely a few things you could do to increase your savings, and, let’s face it, save for something a bit more appealing than an emergency! Even with £600 a month going on food and going out, you should be able to set quite a bit aside.
Plum’s algorithm could do the job for you and help boost your savings without you having to think about it. You say you regularly set aside money to save on payday, as well as ‘bunging in’ extra cash when you can.
Plum would do this automatically, using AI to calculate how much you can afford to save, squirreling away small amounts here and there without you having to lift a finger. You can even switch on the Pay Days boost, so a chunk of your money will automatically be put aside when you get paid! Hopefully that will mean even more festivals in 2021 (we’re crossing all our fingers for you).
Fun savings aside, you also might want to think about investing as a more long-term savings strategy. Having an emergency fund in a savings account is great, but with interest rates being so low at the moment your money isn’t going to grow much just sitting in a bank. Check out automated investing, which is designed to make it super easy and accessible for people who are investing for the first time.
Please note that, as with all investments, your capital is at risk if you use Plum’s investment platform.
*Name has been changed.
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 our Facebook Group, Money Pot.
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