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How to build up savings while renting

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28th Feb 2020 at 8:00 am

If you’re currently renting a property and working up the career ladder as a young professional, you may feel like you’ve no chance of amassing any savings.

Does it matter? Well, we think so — savings give you peace of mind that if something unexpected occurs, you can deal with it comfortably. They also enable you to make big purchases further down the line, such as buying a vehicle or property.

So, we’ve written this blog post to explain how you can put some money on one side ‘for a rainy day’, whatever your monthly income.

What is the advantage of saving?

You might be sat there thinking “but what’s the point of saving?” That’s a fair question, so let us illustrate. Whatever your current situation and future plans, savings can be helpful.

For example, here’s a list of scenarios in which you would benefit from having savings:

  • An unexpected bill or fine
  • Car maintenance costs — MOT, tax, insurance, servicing, etc.
  • Unexpected health care costs — prescriptions, dental care, new glasses, etc.
  • Buying a car, bicycle, moped, or similar
  • Needing a deposit for a flat or house
  • Being made redundant or losing your job

How do I get started with saving?

Getting started can seem daunting if you’ve not saved before. So, we’ve broken it down into manageable steps for you.

Firstly, it’s time to take a look at what you spend.

Assess your situation

a woman going through her finances on a laptop

This step is arguably the most important. Take a look at your incomings and outgoings for the past six months and see exactly where your money goes. This can be an uncomfortable step, but it’s essential to know where you are spending your money in order to make some cuts.

When it comes to the outgoings, it might be helpful to put it all in a spreadsheet and categorise each purchase. This will highlight the type of spending you are prone to. For example, if you’ve bought lunch every day for the past three months, then that will be a flag. There are bank accounts and apps on the market that can do this for you.

Make some initial changes

When looking at your outgoings, you may find, for example, that you are signed up to four different subscription boxes — three of which you’re not really bothered about, but you never got around to cancelling. Get them cancelled ASAP. If each cost £15 per month, you’ve immediately gained £45 per month, which you could be saving instead.

That Netflix subscription might be essential but do you really need Now TV, Prime and Sky TV too? Choose your favourite and ditch the rest.

If you’re buying expensive lunches every day at work, try making a packed lunch or taking leftovers in from the night before. You’ll be amazed at the difference that one simple change like this can make!

If there’s anything else that you’re spending a lot of money on each month that isn’t essential — new clothes, for example — set yourself a budget and stick to it.

Shop differently

Changing your shopping habits can make a big difference and quickly.

While your local supermarket might be a Waitrose, why not travel a little further afield and go to Aldi or Lidl? The same food shop will cost a fraction of the price.

If clothes are your bank balance drain, then consider buying second-hand instead of brand new — a change that’s also better for the environment. If rooting through clothes in charity shops doesn’t appeal, then work on creating and maintaining a capsule wardrobe instead to curb your spending.

Live within your means

friends sat outside a pub, drinking and smiling

Don’t live within your friends’ means; live within your own. While your friends may be splashing the cash on nights out and fancy meals, you don’t know their financial circumstances — they may be living outside their means but not discussing it.

So, concentrate on your own situation and, if you are determined to save, start saying “no”. Do you meet your mates at the pub four nights a week? Cut it down to three and arrive later on the nights you do go. Are your mates out clubbing every weekend? Explain you’re saving money and join them every other weekend instead. That’s still two big nights out per month!

Get a second job

If you are already living a frugal life and can’t make any of the changes we’ve previously discussed, then it is worthwhile arranging a meeting with your boss to discuss a pay rise, searching for a new job, or seeking out a second income.

If you have no debts, then your second income could be purely for saving, or you might need to dip into it for various things sometimes. Either way, you’ll be better off.

Set up a savings account

The only way to ensure you don’t spend your savings is to place them in a separate account. The Money Saving Expert site is an excellent resource for finding the best savings account for you.

If you’re able to, set up a direct debit from your current account to your savings account for the day after payday each month. If it’s not in your account, you can’t spend it!

Find affordable accommodation

If you feel like you’re paying too much for your rent, then now is the time to reassess your needs and priorities. Could you move to a cheaper area and commute a little further?

Here at Pickard Properties, we have a wide range of professional properties available in Leeds, Halifax, Huddersfield, Horsforth, Headingley, Brighouse, Morley and Burley.

There’s something for every budget, and our house shares are particularly popular with those who want to save a chunk of money on their rent.

House shares are also ideal for those leaving university and those professionals who prefer the company of others to living alone.

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Pickard Properties Ltd

26-30 North Lane
Headingley
Leeds
LS6 3HE