While it may not be apparent to some, there’s a savings crisis looming large in the UK. Not only is a relatively high rate of inflation contributing to a rising cost of living, for example, but just one in 10 banks have upped the interest rate on savings following the Bank of England’s decision to increase the base rate to 0.75%.
While this may be making it difficult for Brits to save a proportion of their hard-earned cash, it is possible with the right outlook and a willingness to learn from the behaviours of successful savers.
Below, we’ll consider some of most important habits of successful savers and ask why they’re so important.
- They have an Ability to Control their Emotions
Emotion is one of the biggest obstacles to successful saving, with unplanned and impulsive purchases preventing us from optimising our disposable income levels.
According to a 2017 survey conducted by finder.com, a whopping 78.2% of British adults have succumbed to the lure of impulse buys online, at an average spend of £32.69 per session.
This equates to a total spend of £1.06 billion on impulse purchases, highlighting the challenges that shoppers face when looking to control their emotions.
Make no mistake; successful savers are able to control their emotions and immediate response in the face of relevant triggers that could cause them to overspend.
- They Never Spend their Raise
Successful savers tend to have a deterministic outlook, and one that encourages them to maintain consistent financial behaviour regardless of their real-time circumstances.
This means that they continue to spend in a responsible and frugal manner even when their income rises, whether this is due to a sudden windfall or a promotion in the workplace.
More specifically, successful savers do not automatically or impulsively spend their raise, or they at least commit a significant portion of it into savings.
This not only helps to achieve longer-term financial security, but it also creates a modest lifestyle that can be sustained at all times.
- They Understand the Impact of Borrowing
On a final note, successful savers also understand the impact of borrowing on their credit score and long-term financial security.
While both secured and unsecured borrowing can help you to achieve underlying financial goals and improve your credit rating, it can also lead to mounting debts when used irresponsibly.
Failing to understand how interest rates and APR may increase the cost of borrowing can also trigger rising debts, as these factors will determine precisely how much you have to repay under the terms of a financial agreement.
With a willingness to learn and comprehend the requirements of borrowing, successful savers are able to make informed decisions in any given set of financial circumstances.