LESSON 3

THE TRICK TO SAVING

Doing without something today so that you can have something even better tomorrow is a skill we can get better at as we get older – but it’s not a natural state of affairs. Put simply, the brain hankers for instant gratification. That’s why it might be hard for someone in their 20s to start saving for a comfortable retirement, few people have adequate life insurance and over half of women (of all ages) are expecting to rely solely on the state pension in retirement.

REWIRE!

◆ Timing is everything. Dan says that when making a monthly budget, typically people are most likely to overspend in the first few weeks and run out of money towards the end of the month. Switching to a weekly budget overcomes this. Making budgets that start on a Monday rather than a Friday also helps. If you start on Friday you’re likely to overspend at the weekend and run out. If you start on Monday you have more incentive to save.

◆ Timing also helps with long-term savings. Divert cash into a savings account at the start of the month, so it’s not around to spend. Technology can help: apps like Chip use algorithms to evaluate spending and tell you how much you can afford to save each month. Anyone new to this should start by transferring a small amount to a savings account at the start of the month and increase it over time.