Saving money can be a tricky task, especially when we hear the likes of “Life is short!” and “Treat yourself!” all day long. But are our spending habits completely of our own free will, or is there some science behind how we choose to splash out or save?
To find out, we asked Simonne Gnessen, founder of Wise Monkey Financial Coaching, to talk us through how our minds really work when it comes to money. Can you relate?
Why do we spend?
Whether it’s a bad day at work or something to celebrate, retail therapy is something most of us have indulged in at least once, right? Turns out, there’s a psychological reason behind that impulse to spend.
“Some people are simply more inclined to spend, using shopping as a way to lift their spirits,” says Simonne.
“When this is linked to other issues, such as anxiety and unhappiness, these should be worked on. But for others, it’s simply part of who they are as a person: a little bit impatient, impulsive, or more likely to take risks.”
“For many of us, spending can be a way of regulating our emotions. It might be that when feeling down or lonely, we want to nurture ourselves by shopping. But spending can be something we turn to when we’re happy, too, a way of celebrating or rewarding a hard week at work,” explains Simonne.
“However, spending-induced mood improvements are often short-lived. While it can feel worth it in that moment, a temporary high could lead to a lot of tension, stress and anxiety in the long run.”
How to spend more wisely
The key to cutting back on emotional spending? “Find the balance between the future version of your life and the present version. It’s not about sacrifice or having to give things up, but about feeling a sense of control and freedom in your finances,” says Simonne.
Here, she shares her four top tips for keeping your spending in check.
TIP 1 - SET A BUDGET
We know it might be painful, but having a budget in mind could really help you to keep track of where your money is going.
Firstly, make a note of your take-home income each month, fortnight or week (however you’d like to set your budget), then deduct all of the bills you have to pay; we’re talking rent, credit card payments, food shops and phone bills.
With the amount you have left, set a budget for non-essential spends, like cult beauty buys, Netflix subscriptions and takeaways, leaving a solid but affordable chunk of your income to move into a savings account.
“It’s important to be aware of your spending. Often when we don’t know where our money is going, there’s an unhelpful sense of chaos around our finances,” says Simonne.
“One way to take control is by using an app that can help to track and categorise your spending and saving,” she adds.
The NatWest Mobile App Spending feature* will break down your outgoings into groups, so you can see exactly how much of your money goes on different spending habits.
With clothes and shopping being the second biggest drain on our bank balances, according to a recent poll in our Cosmopolitan’s Money Makeover Facebook group, that’s not such a bad idea…
TIP 2 - CREATE A SAVINGS GOAL
You might have a figure in mind about how much you’d like to put away, but having a specific item or goal in mind to save towards could make you more likely to make better financial decisions.
It’s easy to set a target with NatWest’s Savings Goal Tool**, where you can choose what you want to save for, from dream holidays (one day...) to paying off credit card debt.
Keep your eyes on the prize and you could get there faster.
TIP 3 - SAVE FIRST, SPEND LATER
“If you’re looking to save more regularly, try a different approach,” says Simonne. “Instead of spending your money and then saving what’s left of it that month, try saving a certain amount and then spending what’s left, shifting the emphasis in your mind.”
Putting money aside into a savings account first may mean we’re less likely to be tempted to dip in and spend it, as it isn’t just sitting in an account as ‘leftover’ money.
For an account that’ll help you save little and often, check out the NatWest Digital Regular Saver account***.
TIP 4 - TRY A DIFFERENT APPROACH
The language we use around spending and saving is hugely important, so it could be time to keep your inner monologue in check.
“People think they’ve got to ‘stick to a budget’ and that means they’ll have to ‘sacrifice’, and the focus becomes on what you have to ‘give up’,” explains Simmone. “But we can actually think about things in a different way, like, ‘What’s the benefit of saving money?’ and ‘What do I gain?’ It isn’t a sacrifice; it’s a way of being in control and having options.”
Simonne also says that changing how we view saving money could be really helpful. “View it like another one of your bills and place the same importance on your savings goal as you would on your rent or mortgage. It’s one of the most important bills of your life: your future.”
So, are you ready to save?
Do these money behaviours sound familiar? Get your savings journey started with NatWest
*NatWest Mobile app available to customers aged 11+ with compatible iOS and Android devices and a UK or international mobile number in specific countries. You must be aged 16+ to view Spending in the app. Spending feature only available for Personal and Premier Current accounts.
**NatWest Savings Goal Tool available within mobile or online banking. Only available with Instant Access Savings accounts.
***NatWest Digital Regular Saver Account, online only. Must set up a standing order when opening the account. Save maximum of £50 per calendar month. 18 or over. UK residents and existing current account holders. Conditions apply
