How To Stretch Your Savings

With countries worldwide in the grip of a cost of living crisis following a turbulent start to the decade, all of us are looking for ways to make our money go further. These ways to stretch your savings are easy to adopt and could have a big impact in the long run.

Track your expenses

To find ways to save you need a clear understanding of where your money is going. Create a comprehensive budget that provides an overview of your monthly spending against your earnings. Identify essential costs and separate these from your everyday leisure spending.

Use your budget to find opportunities to spend less and save more. This could include setting limits on non-essential purchases, ending unnecessary subscriptions and renegotiating contracts and policies like internet access and car insurance that tend to creep up unnoticed over time.

Create saving strategies

Ensure your savings keep growing steadily by applying strategies and sticking to them. One example is the 50/30/20 method where 20% of your monthly salary is automatically reserved for savings. Being strict with your savings like this will help you build and sustain a healthy emergency fund for sudden expenses like car and house repairs or holiday deposits.

Once you know how much you can save each month while remaining in the black, think carefully about how to secure these funds. Look into fixed-rate bank accounts with higher interest rates if you leave your money untouched for a pre-set period. These are a great option for long-term savings, keeping future funds separate from your emergency spending pot.

Consider investing

You could also consider investing some of your savings into the financial markets via assets such as stocks and shares, bonds and ETFs. You can find assets with higher interest rates than standard bank accounts helping your savings outstrip inflation. However, these markets are always moving so you must be prepared for the possibility that asset value could drop at any time.

Using online platforms such as Tradu you can keep your investments in one place and easily access this portfolio from anywhere in the world. The platforms are connected to the markets, showing real-time movement and trend analysis, and you can instantly buy and sell accordingly. They also have useful features such as stop-loss orders which help prevent significant losses.

Reduce your debt

Money owed will naturally reduce your ability to save effectively. However, only certain types of debt should be prioritised over saving.

Long-term loans with standardised repayments and low interest such as mortgages can be sustained alongside saving strategies, but debt from short-term borrowing should be cleared as soon as possible. This is because the high interest can make repayments unmanageable and eat into your spare funds. If you have a lot of short-term debt, consider consolidating them so you can make one manageable monthly repayment.