One day, you will stop earning and will rely on your assets to meet your everyday living expenses. At MUVADO, we call these assets, your money mother dough. Your money mother dough is your family’s life savings. This week I write with 3 things you can do today to help build your savings.
- Maximise your employer pension contributions.
Many employers will match your pension contributions up to a certain % of your salary. Check you are maximising your employer contributions, it’s an effective pay rise into your pension! If you are a high earner (£200,000+) or have projected pensions when you stop work valued over the lifetime allowance (£1.073m), you should get independent financial advice about any pension contributions.
A pension is a long term investment not normally accessible until age 55 (soon to be 57 and increasing in line with normal state retirement age).
- Notice your spending.
Don’t bury your head in the sand over your expenditure. Own it.
Record every expenditure item and note it down. The key things you should record are
- WHEN, WHERE, WHAT and HOW MUCH was spent?
- Is it important to you, and WHY?
- Is there a BETTER way?
You can quickly weed out any miscellaneous direct debits for things you aren’t using, and remove the expenses that don’t bring you joy – go full Marie Kondo on your spending.
- Set up a monthly standing order to a cash savings account.
For short (1-2 years) and medium term (3-5 years) savings held as cash, you can set up monthly standing orders from your bank account to a separate cash savings account. You could use them to save for your next car or big holiday – saving you money compared to using finance deals, loans or credit cards.
For additional top-ups, when you save money on something direct it straight to your separate cash savings account. From re-negotiating your car insurance at a lower price to saying no to that stag/hen do of a friend of a friend’s stepsister’s cousin – if you save money, send it to your separate cash account.
You should monitor your separate cash savings balance each year. If there is surplus cash to invest for the long-term, this could improve your money mother dough (your lifetime savings pot).
I spoke about the options for your alternative cash account in my previous blog 3 ways to hold your cash savings.
This article was written by Gregory Deer at Muvado Money Limited, an appointed representative of Sense Network Limited. Dated 8th March 2023.