Many people would love to see an extra £1,000 in their pocket by the end of a 12 month period. My husband and I are pushing for more than this within the next 12 months, but £1,000 would be better than nothing. That’s why we’ve decided to take the following steps to secure our financial dreams. Maybe you can follow along with our six steps to save £1,000 in one year.
Note: I say pounds because I’m in the UK. You can do this for your own currency, too!
Consider Debt Consolidation
I don’t often recommend taking out a loan to cover another loan, but debt consolidation can be very useful. We’ve recently opted for this option when we worked out just how much we were paying each month. Rather than paying almost £500 on separate debts with various levels of interest rates, we’re now paying £300 on one debt with a much lower interest rate than most of the others.
That consolidation loan has cleared a previous loan, three credit cards, and two overdrafts.
Now that we’ve taken out the loan, the credit cards have been chopped except one—that is kept for just emergencies and the limit on the card has been lowered considerably. The overdrafts are there, but will definitely not be used. One of the accounts with the overdraft will be closed down soon, the other one a little later once a few other financial details are ironed out. One of the accounts is so old that it really helps credit rating and regularly has money going into it.
It’s important to change the way you spend when it comes to debt consolidation. Just because the credit cards and overdrafts are cleared doesn’t mean they can be used again. As I mentioned, one card is there for emergencies only.
We did have a little money left over from the loan. That went straight into a savings account.
Be Honest With a Budget
Creating a personal budget is essential. We now have a clear view of when money will go out of our accounts, just how much goes out and what our incomes are. Knowing exactly when helps our cash flow.
There are certain outgoings that we have more control over than others. We can’t change our rent, but we can lower our utility bills and food costs. We have a strict budget to stick to.
With the one loan payment, all the rest of our excess money goes straight into a savings account. Some of it will be there for spending in the near future—we know we already need a new mattress and have a car MOT due soon—but the rest is to build a deposit to buy a house.
Being honest makes it much easier to save. Start with the amount that you currently spend, and then look for areas you can cut back on. More on that in the next step.
Cut Back on the Small Outgoings
How often do you buy lunch? Do you enjoy that morning coffee on the way to work? It’s time to consider cutting back on them and stopping some small outgoings all together.
For example, did you know that £4 per work day on your coffee, 47 weeks of the year (if you take out five weeks of vacation) is £940 over the course of a year. Put that £940 into a savings account and you’re only £60 off that target!
Don’t go hungry, but make your lunch before you go to work. It’s tastier, healthier and cheaper for you. If you do need to eat out, make sure it’s worth it. There are some great deals out there, but only for one-off lunches.
Cancel Your Subscriptions
You may have a number of subscriptions, with some that you just don’t use. It’s time to look at cancelling as much as possible. You’ll be surprised at the amount you can save.
Start by looking at your phone bill or TV package. What add-ons do you pay extra for that you just don’t need? Some people have international call packages or sports packages that they no longer want. Get rid of them as soon as you can and put that money into a savings account.
If you can, look at cancelling your TV subscription all together. In Britain, we have Freeview channels. All you need is a TV, an aerial (if not completely digital) and the TV license. Most of the popular channels are available. You could consider getting Netflix or Amazon Prime instead of having TV subscriptions where the majority of the channels are a waste of time.
Start Negotiating Deals
When you do come to cancel subscriptions, there are high chances that you will get companies offering you deals to get you to stay. They want your money, after all.
I made the decision that I was paying too much for my phone contract. With the need for a new phone (I’d cracked the screen on mine) and my contract up for renewal, I searched online for a better deal and then went direct to my current provider. In the end, I got what I had currently for a much lower price—and a lower price than anywhere else was offering.
Likewise, we had a company last year offer us money off our bill each month so we didn’t go to a competitor. It worked out cheaper for us, and offered everything we needed.
Negotiating is a great way to get a better deal. Of course, there’s a line. The companies can only go so far and you may only be willing to pay so much. If you can’t get the perfect deal, you need to be willing to leave.
Get the Best Savings Account
You’ve likely read me mention savings accounts a lot. That’s because they are a great way to keep your money that you’re saving separate from the rest. You can also keep an eye on it to make sure you’re saving the exact amount that you want each month.
However, not all savings accounts are created equal. Banks will offer various interest rates to get you to come to and stay with them. These interest rates don’t always stay, so it’s important to see how long they last. Don’t be afraid to open a new savings account that has a better interest rate. This is money you get free based on the amount you’re already saving. You want it to be the best possible!
It’s also important to check any terms attached to bank and savings accounts. Some require a certain amount to go in each month, while others will make it impossible to take money out until the end of a specific term in return for an excellent interest rate.
It’s time to save up. You can save £1,000 in a year, as long as you’re willing to make some changes. The steps above are the ones that we’re doing at the moment to help build up a deposit for a house within the next 12 months. As I mentioned, we want to save more than £1,000 in a year, but I’m setting it small in this instance to make it realistic for you.
I'm a full time freelance writer, Weight Watchers leader and mummy. I love writing about all things entertainment and lifestyle. Making residual income has become a passion; one that I'm working really hard at making a great reality.