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How to save money - even if you're struggling

The idea of saving money may seem a bit unrealistic when you're battling to make ends meet. But regardless of your current financial situation, it's important to try to save money and manage your finances properly. This is a key first step in your personal finance journey.

How to set money saving goals

Do you feel overwhelmed by your financial situation? Not sure how to get started with saving money? It helps to think carefully about where you are and where you want to be. And then set goals to help you get there.

You can start by thinking about these questions:

  • How can you turn your finances around, to spend less and save more?
  • What high interest debts would you like to clear?
  • What do you need or want to buy in the next 12 months?
  • What are your medium term financial plans (e.g. saving for a big purchase)?
  • What savings might you need for your long term future (e.g. your retirement)?
  • Do you want to be financially dependent on your loved ones or be in a position to be able to provide for them?

Write your goals down

Place them somewhere visible like the fridge door, record them in a savings app, or make a note in your phone. The idea is to make sure you see them often so you're reminded of them regularly.

Break big savings goals down

Break down big and long-term savings goals into a series of smaller targets. Big goals like saving for an expensive purchase can seem daunting. And it can be tempting to give up when you don't seem to be getting much closer to them. Breaking these goals down into smaller goals will make it easier to see the progress you're making and keep you motivated.

Get friends or family involved

Share your savings goal with your loved ones and ask them to check up on your progress on a regular basis. Better still, make it competitive and encourage them to set their own savings goals so they can see the benefits of saving money. Sharing goals can make you feel more accountable for them, and encourage you to keep going.

Think about timescales

It can be helpful to think about your savings goals in terms of short term (like paying off a debt and becoming more financially stable), medium term (e.g. a house or car deposit) and long term goals (e.g. saving towards a retirement fund). By separating out your goals in this way, you can enjoy the gratification of reaching short term goals, while still having plans in place to reach your longer term goals.

5 ways to get into a saving habit

If you're new to saving it can be hard to know where to begin, especially if you don't think you can afford to save. Here are 5 money saving tips.

Create a budget

Identify opportunities to save money by creating a budget, if you don't already have one. We show you how here.

Keep savings separate from regular income

It's often easier to build up savings if you keep them in a dedicated savings account, and separate them from your everyday banking.

Track your spending

Use a personal finance or banking app, such as the digital money tool Budget on HSBC HK App, to monitor and track what you spend. Frequent, small purchases soon add up, and you may spot areas to cut back on spending and save more instead.

Save a little and often

Saving any amount of money, however small, is worthwhile. It can help you get into the habit and realise the importance of saving money. You could make saving easier by setting up an automated transfer, from your main bank account into a savings account, for the same day each month. Choose the day you're paid, and you'll save money before you're tempted to spend it.

Compare and save

Use comparison websites to check if you could be paying less for your household expenses, like utilities, phone, internet or groceries. If you switch to a cheaper deal, try putting the amount you've saved each month into your savings account.

Should I save or pay off debt first?

Getting into a savings habit is important, but so is managing any high interest debts you have.

There are 3 key things to consider:

  1. Interest rate
    If you have high interest debt, such as payday loans and store cards, these should usually be your number one priority.
  2. Unexpected costs
    It may be sensible to build up an emergency savings fund, to cover unexpected costs, before paying down other debt.
  3. Early repayments and break fees
    Certain loans and borrowing come with penalties or fees if you pay them back early.

If you're paying more interest on your loan or debt than you're earning on your savings, it makes sense to pay off the debt first.

A blended approach could make sense. For example, you may want to:

  • Tackle high interest debt first, like store cards and payday loans
  • Build an emergency savings fund next, to meet unexpected costs like emergency repairs or losing your job
  • Get into a savings habit by putting a regular amount each month into a savings account
  • Make a plan to pay off lower interest, longer term debts
  • Plan longer term savings to meet your financial goals