2. Set a realistic budget
Now you’ve got your goals, you need a budget.
A budget is basically setting your income against outgoings – which includes how much money you're planning on putting into your savings. If you have a monthly income, it's a good idea to break this down on a month-by-month basis.
Start with your immediate costs. These are the items that you have to spend money on, like rent, bills, travel and food. If you can, put this money aside as soon as you get paid so you know those costs are covered.
Next consider anything less essential that you'll need to spend money on during the month. This could include events you have coming up, any birthdays you'll need to buy for or clothes you have your eye on. If you've budgeted for it then you know you can afford it.
Now consider how much money you spend day-to-day. You could check your banking app to see how much you normally spend and start from there or you might already have some idea of how much money you need. Consider things like buying coffee or trips to the pub – anything that it's difficult to exactly predict.
How much does this leave you? If you'd like to be putting more than this in your savings account, take another look at your budget and work out where your costs could be squeezed. Or is it possible to increase your income with another job or a side hustle?
It’s important to be realistic. If you make £400 a month from your part-time job, it would be great to save £300 a month towards a house deposit but you probably won’t stick to it.
