For many of us November and December can be the most expensive time of year. Buying gifts, attending/throwing parties and using more energy all contribute to rising costs in the winter. It is easy to go overboard or feel pressured to spend more than we can afford to. This can become a big problem where our finances are concerned however. With this is mind, December’s money-saving tip is to Save First, Spend Later.

Save First, Spend Later sounds easy but it can be very difficult to visualise saving anything, especially during the festive season. The principle behind this tip is that putting money away in savings will help future you be able to spend it on the most important outgoings.

The 50/30/20 Budgeting Rule

For a simple way to work on this, try the 50/30/20 budgeting rule.

When you get paid, split your earnings like so:

• 50% of your salary goes on needs such as your bills, food, debt, and essential maintenance.
• 30% goes towards entertainment such as restaurants, birthday gifts for the kids and clothes.
• 20% goes into savings for emergencies, big purchases and paying off more debt.

Everyone’s circumstances are different, if you need to adjust the percentages you can.

For example, you could adjust the 30% of fun money to 15% in the summer months so you grow your savings quicker. This will then mean your savings are greater by the winter and you can take that excess to spend on festive activities and the higher energy bills.

Now vs. Later

When you get paid, think about what is actually important right now. Ask yourself, what needs to be paid for right away? And what can be left for a month or more?

Everyone deserves to have fun but by reassessing what is actually needed in the moment, gives you the opportunity to put that money aside. The ‘save first’ mentality guides you towards less spur-of-the-moment spending, and more towards planning ahead.

It is not an easy habit to change. You can try turning your saving into a challenge or competition or set yourself a target to reach.

Look ahead and learn more about your finances over the whole year. Do you always forget your MOT until it is too late? Knowing what upcoming expenditures you have, can help you feel better about putting your money aside for them.

Use a direct debit to automatically transfer savings from one bank account to another before you can spend it.

For When You Do Spend

Buying presents, treating others (and ourselves) and donating to charity feels good, there is no denying that. Rather than restrict yourself too much, think about saving even when you do spend.

Some tips for spending less can be:

• Buy pre-loved toys and clothes
• Make crafts to gift to people
• Donate unwanted clothes etc. to charity instead of money
• Go to free attractions/days out
• Try growing fruit and vegetables at home
• Plan your food shop to suit your budget
• Avoid wastage such as food or water
• Stop paying for services you do not need
• Review your bills for better deals
• Cancel any unwanted automatic renewals
• Make your own lunch and eat more home-cooked food
• DIY what you can (safely)
• Shop around for the best deal when you do need to hire a professional
• Sleep on a decision before making a purchase

Save First, Spend Later is a challenge, but it can be done. Use the tips in this article to start saving and change your mindset around spending.

If you are looking for financial advice about mortgages please get in touch for an impartial, no obligation talk with our expert advisors.