With the majority of millennials admitting that they don’t save enough and often finding it hard to save, Barclays1 has come up with some suggestions that could help them meet their financial goals.
Those who fear that this could mean giving up on nights out or regular treats, will be pleased to know that the solution could lie in making just a few simple swaps.
The survey found that millennials spend on average £3,312.72 a year on new clothes, socialising with friends, eating out and takeaways. Three quarters of those who took part in the survey said they would be willing to make a few lifestyle changes if it would help them reach their financial goals, like a deposit for a home.
Rather than consigning themselves to a life of frugality, research shows that making small ‘swaprifices’ with free alternatives could be the answer. Suggested swaps included replacing every fifth takeaway with a home-cooked meal, having a regular night in rather than always going out, avoiding the coffee shop once in a while, and joining a local running club rather than paying for gym membership. It’s estimated that these simple tactics could add up to a saving of around £662 on average a year.
Clare Francis, Director of Savings and Investments at Barclays, says: “There’s a common myth that you have to become a hermit if you want to save money. But that’s not the case. Think swap, not sacrifice. That could mean making yourself a coffee in the office once a week, or inviting friends over every now and then instead of going out. The beauty of these small swaps is that by simply tweaking your lifestyle, the savings you make can be huge.”
Developing a savings habit and sticking to it requires discipline. That’s why many people find that if they adopt the principle of ‘paying themselves first’ they manage much better. When they get paid, money is automatically transferred into their savings account on the same day, helping to remove the temptation to spend.
One of the easiest way to get saving is to have a goal in mind – do you want to go on a holiday, buy a car, maybe even buy a home? If you know what you are working towards, it’s much simpler to make the swaprifices that will help you get there. And, as you see your savings pot grow, so will your excitement for the goal ahead.
Thinking long and hard before making purchases can also work. Asking yourself questions such as “Do I really need it? What impact will it have on my savings goal? Can I get the same thing much cheaper by shopping around or buying second-hand?” can all act as a wake-up call that will help keep expenditure under control.
Don’t look to revolutionise your life overnight. Start by making one or two changes and slowly add to this as you find more swaprifices you can make. As the changes become the ‘norm’, it will become easier and easier to get into the swing of a lifestyle that allows you to spend on the things you really enjoy, and save for the things you want in the future.
The benefits of ISAs
If you are building towards a longer term goal ISAs are a great solution. Make the most of your available tax-free annual allowance of £20,000. Contributions into a pension attract tax relief too.
1Barclays, Feb. 2019 – Small ‘swaprifices’ could save millennials up to £10.5bn* a year
*£10.5bn figure worked out by multiplying annual savings (£662) by the number of people aged 20-37 (Source: ONS).