Is your wallet always empty? Here’s how to change your mindset and embrace saving once and for all.
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Are you a saver or a spender? According to new research, one in five (20%) of us think of ourselves as a spender, while two in five (39%) favour saving over splashing out – leaving the other 41% somewhere in the middle.
While splurging may bring a burst of excitement, spenders could be leaving themselves vulnerable to financial shocks if they face an unexpected bill, as well as storing up other problems for the future.
Hargreaves Lansdown’s survey of more than 2,000 people found that just 29% of spenders say they feel confident they’ll be able to afford to retire, compared with 39% of savers.
Savers, of course, tend to have more in the bank too, with just one in 20 savers saying they have less than £500 (AED 2,402.76) in their account, compared with one in five spenders. Furthermore, only a fifth of spenders feel confident about meeting their savings goals, compared with two-fifths of savers.
They also risk running out of money if their circumstances change: Some 40% admit their savings would last less than a month.
“Big spenders might be having all the fun, fun, fun right now, but there’s a risk they’ll come to regret it,” says Sarah Coles, a personal finance analyst at Hargreaves Lansdown. “We can all be tempted to spend too much every now and again: There’s a multi-billion pound advertising industry designed to persuade us to do exactly that.
“The risk is that we get into dangerous habits,” she adds. “Overspending becomes part of our mindset, and we come to think of ourselves fundamentally as ‘spenders’.”
So can you change your ways? Coles says yes, there are steps spenders can take to break the cycle. While it may not be easy to change your habits overnight, here are Hargreaves Lansdown’s tips to help you start thinking like a saver…
1. Let go of the idea that it’s OK to be a spender
Identify your spending weak spots and use techniques to keep them under control. If you enjoy the thrill of buying on impulse, try giving yourself a 48-hour ‘cool-off’ period to see if you still want the item.
Those with a weakness for splurging could also consider trying to avoid temptation by banning themselves from specific shops, avoiding online shopping when they are feeling particularly vulnerable, or trying not to buy anything in the week after payday – to make their income stretch for longer.
3. Engage with where your money is going
Don’t just dump your emergency savings it into an account with the same bank as your current account, look for a competitive rate on an easy access account. If you know you won’t have time for regular searching and switching, consider an online savings marketplace, which lets you compare and switch between banks in a handful of clicks. Also, make sure you understand how your pension is invested.