There is an immediate association that self-care involves incorporating relaxing, worry-free activities in your weekly routine. Of course, you wouldn't be wrong for thinking this - in fact you're far from it. Believe it or not, self-care can be financial too.
Although it may seem like a boring, menial task, ensuring your bank accounts are in good-standing and that your expenditures are all taken care of will enhance your self-care experience. If you think about it, this scenario makes a lot of sense. Unfortunately, we are unable to predict our financial future; however, we can put the steps in place to ensure we are in the best position possible.
Just like our fingerprints, the state of our credit scores and bank accounts are completely unique to us. While more serious debts, or details on stocks and shares, should be discussed with a financial adviser, there are certain actions that we can take at home. Our financial situations shouldn't be something we feel ashamed to discuss. Set yourself a target to be more confident talking to people you know about it. After all, sharing your worries, concerns or tricks could help someone else. It also allows others to understand your restrictions too, in turn they may have ideas that can help you.
Become a trickster
Although we regularly admit to ourselves that money doesn't grow on trees, there are ways that we can make our savings go further. With the right mindset and organisation, you can arrange your savings in such a way that you actually receive more from your investments.
In a previous blog post, I discussed how to become a Money Magnet. While these methods take time, they are good steps you can put in place to help your finances grow. Believe it or not, you won't be penalised for having more than one savings account, and having a selection can work in your favour, especially if you have lots of different types. These are the types of accounts I tend to use:
Instant saver - I use the saving bot Chip.
High-interest easy saver - ideally, you want one that won't penalise you for withdrawing and has no minimum monthly deposit
Lock away and forget about - these can be locked accounts or simply ones that you put to the back of your mind until the date of renewal
Mortgage fund/Lifetime Pension fund - also known as Lifetime ISAs
I hear you asking:
Doesn't this get expensive?
Do you remember all of these accounts?
Isn't it a lot of work to organise?
The simple answer is: no. This is perfect with the lock away savings account too - the idea is that you forget it is there, check it a few times a year and minimise the temptation to withdraw from it. My instant saver has a buffer and won't touch my overdraft; you can set this up with ease. The high-interest easy saver takes the money from my instant saver every month. We put £25 each into the lock away fund a month - easy to maintain. And we set our own rules for our LISA, because most of these don't have deposit restrictions. All of these accounts can have pennies saved in each month if finances are tight.
Taking a little time to read up on a good savings account will get you excited for the savings you receive by the end of the year. You need to develop the mindset that savings don't wrack up instantly. Just like tree plantations, these need to be nurtured and will take time to grow.
Never miss a payment
Do you get worried about your expenditures and all the money you need for bills? Are you someone who constantly watches the money moving out of your account?
Stop right now!
You don't need to have such an intimate relationship with your bank. Of course, incorporating a routine check around significant dates in the month is worthwhile (for example rent or mortgage deposits) to ensure there has not been an error with your funds, however, continuously checking can make you feel paranoid and self-conscious about your money.
No matter which online bank you use, you will always have the option to set up direct debits and standing orders. In fact, you should already be using these features to pay your utilities and rent/mortgage. Using these same functions when approaching saving, can actively help you put money away without realising. And rather than see one huge lump sum go into savings at one point in the month, spread it across. Here is what I do:
- £10 every week into my easy saver
- £25 at the end of the month into my joint saver
- £60 in the middle of the month into my lifetime ISA
- £200-£210 a month taken from my Chip account and placed into my easy saver
- £50-£80 a month taken into my Chip account
Although this sounds like a huge amount, this is something I have been able to achieve after three years of persistent saving. At first, it was only feasible for me to put £5 away a week, followed by £25 into a joint saver and £20 into my lifetime ISA. I allowed Chip to take whatever it needed - knowing it wouldn't borrow into my overdraft. As you start to accrue more money, and cut back on some payments you no longer need to make, you'll find you have an ability to start dedicating more towards your savings.
Similarly, you should conduct a general health check on your account. Are you still paying for memberships that you're no longer interested in? Do you keep forgetting to cancel subscriptions to magazines or Amazon bi-monthly offers? Do you play the lottery on a weekly basis but never see anything in return? These are all things to look at. Although it may be annoying if you've missed out on cancelling these, at least you have actioned it sooner rather than later.
Once you have put the steps in place, you really only need to review standing orders to your savings account when your interest rate is cut or at the end of the deal. Otherwise, keep saving until that point - hassle free!
Rich in your savings, poor in your current account
Unless you get significant benefits from keeping all your money in your current account, why leave everything in there? Bog standard current accounts offer no interest or perks to keep any amount of money in them. Unless you've really shopped around, it's unlikely that you are receiving more than the basic perks - which is fine.
As banks have limited resources, and exciting deals, to entice us into new current accounts, you are more likely to get more for your money in a saver.
I used to hold onto the ideology that I needed £1,500 in my current account - by the end of the month - to ensure the health of my account. In reality, this actually created dire consequences for my stress levels. Whilst studying at university, I used to work two jobs on minimum wage, suffer long hours and completely cut back on my spending to ensure that the above amount was feasible. What's more, if I had actually removed £1,000 and placed it into a high-interest earner, I would have achieved more with the money I was earning.
Mistakes are there to be made, and I am now more frivolous (less serious) about having so much money in my current account.
It's much more realistic that you'll have enough to cover your bills, insurances and standing orders while leaving the rest to grow in a savings account. And just as I mentioned earlier, if you know several expenditures are likely to come in the year, leave your savings in an easy access-style saver so that you can dip in and out.
If you live with someone else, you most likely have a joint account. If you don't, or if you live alone, I recommend setting up a second account just to allow your bills to come out of it. Certain current accounts, particularly where so much money is paid into it, will offer some form of interest or benefit. It also allows you to personally keep track of your bills and how much you expect to pay each month.
These are just some quick and easy steps to help you feel more secure with your finances. If you are someone who continuously worries about the health of your credit score or account, then you are unlikely to fully appreciate the time you take for self-care. Your financial well-being is a vital part of your self-care journey.
Moral of the financial self-care story:
Checking the health of your finances is an important task that shouldn't be ignored
Discussing your money and savings isn't taboo and could help others
Being a trickster with your money can earn you serious rewards