Why savings needs to be a habit rather than a task?

Why savings needs to be a habit rather than a task?
14th July 2022

Why savings needs to be a habit rather than a task?

“If you are going to achieve excellence in big things, you develop the habit in little matters. Excellence is not an exception; it is a prevailing attitude” -Colin Powell

Saving is usually money that can be set aside for either an emergency or saving goals such as saving towards a car or mortgage. Saving is often seen as a task rather than a beneficial habit, leading to some people having a lack of discipline to save regularly. And others want to start saving but don’t seem to be able to start because of insufficient motivation. Nevertheless, saving is vital to increase financial stability and independence. However, 11.5 million people in the UK hold less than £100 in savings. Almost nine million of the population have critical debt, and roughly a third are getting assistance.

Society’s perspectives towards saving can differ and depend on their financial situation and ability to save money, employment rate, economic condition, tax rates, and consumer trust. The UK’S saving rate fluctuated between 5.7 and 11.9 per cent (Statista, 2022) in the last 20 years, but once the COVID-19 outbreak struck, this topped nearly 16%.

The Yorkshire building society researched attitudes towards saving and found a link between financial stability and mental health, as more than a fifth (22%) reported not being able to sleep due to worrying about money, ‘two fifths (40%) said feeling stressed about money (Shaw,2021), more than a third (35%) revealed that the financial constraints caused by covid-19 mounted their stress levels further.

Furthermore, 61% of them do not consider the future of their finances, and 47% are not confident in making decisions on financial products and services. 49% of savers revealed that they could rely on their savings for three months or more without borrowing if they were made redundant and no longer had their primary source of income. 53% have a plan covering their financial goals for the next five years.

Moreover, 55% of those of working age feel that they do not have enough knowledge about pensions to make good decisions about saving for retirement. And a further 43% of adults who are 65+ do not know how to manage their finances to cover them if they ever need to go into permanent residential care.

How to get into the savings habit?

  1. Decide what you would like your saving goal/s to be before opening a saving account?

    Before taking the plunge, think carefully as you will need to consider different factors such that you will need the saving account for, whether you will need to access the account regularly and if there are any fees on the account for withdrawing early.

  2. Pay any outstanding debt before starting the saving process

    If you have accumulated any substantial debt on credit cards, store cards, utility bills and overdrafts; make sure to pay these off before opening a savings account. Alternatively, if you would like to open a savings account to pay off your debts then open a savings account once you have decided on which account is most suitable your requirement.

  3. Set up automatic transfers

    Set up automatic transfers from your current account to your savings account. The perfect day to set these payments for is payday.

  4. Save what you can

    Start off saving what you can, no matter the amount and adjust the amount up and down depending on how your circumstances change. For example, if your salary increases through a promotion at work, increase the amount you save per month, but if your income stays the same but the rise in the cost of living is making it challenging for you to save the same amount every month then decrease the amount you save until your financial situation improves but still try to maintain the monthly saving habit.

  5. Write down all the reasons why saving could be beneficial to you

    Don’t look at saving as a task but as a beneficial habit that could bring you closer to achieving goals or the financial cushion you need if your financial situation becomes dire. Write down all the reasons it would be good for you to save and what goals you could achieve if your consistent with your saving

How could Intellisaving help widen the gap between habit and task?

Intellisaving is a fintech money-saving app, facilitating the integration of multiple saving and ISA accounts with a range of features such as a comparison feature to compare the highest interest rates per saving category such as Easy access savings accounts. The app also can add accounts manually or automatically—a personalised portfolio with a summary of your finances, including balances, cash deposits and returns. The website has several money-saving tips articles on finance and other 21st century related topics such as Covid 19, ‘The impact of the pandemic on lifestyle and the ability to save’. Intellisaving is passionate about having a platform that gives savers more confidence to stay on top of their finances. In fact, according to Fincap, 39% of adults (20.3 million) are not confident in managing their finances.

Habits can take time to form, but you will begin doing them more regularly and willingly once you become accustomed to doing them. It can take time to become consistent with saving, but it is an essential investment of your time as it could help you sail through stormy financial times. Saving could also be the financial cushion you need to experience more of what life has to offer. Sometimes our actions and decisions can determine the course our life takes, so don’t worry about not being able to save a lot when it comes to saving. Start saving what you can and be consistent with it, and you will start to see your savings take shape over time. As Tony Robbins says, “In essence, if we want to direct our lives, we must take control of our consistent actions. It’s not what we do once in a while that shapes our lives, but what we do consistently.”