Saving and Spending Habits

Written by Mark Salter

Do you know how much you save or spend each year?

It’s easy to get caught up in the hustle and bustle of daily life from work commitments to family responsibilities, leaving little time for a close analysis of our financial habits.

I believe the foundation of sound financial planning begins with a clear understanding and grasp of one fundamental aspect: your saving and spending habits.

Why?

Being able to answer the question on how much you save and spend provides an invaluable insight into your financial health and gives you a compass to help guide you on your financial journey. It’s the first step towards creating a realistic and effective plan which should be tailored to you and unique to your own personal circumstances.

Points to consider

Here are some useful tips to help you on your way

Tracking Expenditure

Take a moment to reflect on your monthly and yearly spending. Are you aware of where your money goes? Categorising your spending can reveal patterns and highlights areas of potential adjustments. How much are you spending in the supermarket each month and how many Amazon parcels are being delivered?

Income vs Outgoings

You need to establish the balance between your income and outgoings. Are you spending within your means, or is there room for improvement? Understanding this balance is key to building a sustainable financial future.

Identify Savings Opportunities

Once you know your spending habits it enables you to identify areas for potential savings. Whether it’s reducing some non-essential spending or re-directing funds towards savings or investments, this awareness empowers you to make informed choices.

Actions

Budgeting

Consider creating a detailed budget to track your monthly expenses. This not only helps you understand where your money goes but also enables you to allocate funds with more intent. Some online banks and mobile apps help make budgeting easier for you but a spreadsheet can be just as effective.

Emergency Funds

If you haven’t already, evaluate your ability to set aside funds for unexpected expenses that may crop up during the year. Knowing your spending habits allows you to calculate an appropriate amount for an emergency fund.

Financial Aspirations

Armed with the knowledge of your spending and saving habits, you’ll be in a good position to start setting realistic financial goals. Whether it’s savings for a significant purchase or event or planning for you and your family’s future, your awareness lays the foundations to achieve your financial aspirations.

February 2025