What is the best way to start saving money when you are young?
We would suggest turning this question on its head…
I’m going to turn this on its head and suggest that the question you ask yourself is ‘What is the best way to start spending money when you are young?’
I’ll answer that question for you by suggesting that you set out some defined spending plans. Think about what you want to spend on food, fun, accommodation, internet, travel, etc. You might have to make some tricky choices so the total is less than your income (or else you are looking at the best way of getting into debt when you are young).
Then, make sure your income is paid into a savings account, not a current account. Each month transfer the amount you calculated in your spending plans into a current account for spending.
What is not used for spending just accumulates in your savings account. Once you have built up a reasonable sum you can look at moving into tax efficient / investment accounts.
Its well with reading The Richest Man in Babylon by George Classon whose key premise is that ’a little of what you earn is yours to keep’. I’ve included his book (plus a link) in a short list of important books on personal finance that you can read here.
You might also want to read this post (an answer to another question about saving money and what little things you can do to help you save).
Both legislation and technology can help you today in ways they never could in my youth. A significant piece of legislation from Europe, the Second Payments Services Directive (PSD2) and the UK’s Open Banking project are fast unlocking the power of the digital revolution in financial services.
Apps are now available that use your spending information to help you control your spending and save money. Please see my post on the subject for more information.
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