Income over Spending: The Forgotten step to Financial Savings

Back in 2013, banking giant HSBC conducted a continent-wide survey that uncovered a pronounced failure to save in Europe, the U.S and the UK. Covering 15 countries and 15,000 respondents, it was revealed that the vast majority were failing to save enough capital during their working life to fund their retirement. This gap was particularly prominent in America, where the average retirement lasts for 18 years while most citizens have only enough money to cover 10 of those.

Why it is crucial that you optimise your earning potential

It is also a huge concern in the UK, where too many residents have been forced to rely on state pensions to fund their retirement thanks to poor financial planning. Too many people focus on their inability to save money from their existing income, rather than seeking out ways through which they can boost their earning potential as an individual. This can be a false economy, as earning more creates more disposable income and boosts the amount that you can save without compromising on anything else.

So how should you look to achieve this? Consider the following ideas: 

Pursue Passive Income streams

This is every individual’s dream, as passive income refers to money that is accrued incrementally but not in relation to activity or effort. Think of investments, for example, which can earn money and deliver a return automatically without any further action once orders have been executed. The ultimate embodiment of this is property investment, as you invest in buy-to-let structures and rent these out in exchange for a fixed monthly fee. The yield in this market has been particularly high recently, and while this may be impacted by new government regulations it is well worth consideration.

Market your skills as a Freelancer

If the idea of passive income is one for your future rather than the present, why not see if your skills can be transferred to the freelance market. Many individuals are choosing to combine freelancing with full-time work (at least at the beginning of their careers), as this helps them to optimise their earnings for a fixed period of time. If you have the determination and organisational skills to pull this off (and avoid double-dipping in the office), you can increase your income significantly over time.

Make simple investments with Reliable ROI

We have already talked about passive income and investments, but this idea can be extended to include simple, modest and reliable saving options. From Cash ISA's to bonds and the type of specialist investment accounts hosted through groups such as Nutmeg, these accounts can be tailored to deliver a measurable ROI without placing your income at risk. So even as you do save additional income that has been earned through work or taken from your home, for example, you can optimise its return during a specific financial year. 

Save on the Basics

We’ve so far covered how to make money, now onto how to save it. For Instance your office or study room, use a laptop instead of a PC. Laptops typically use 85% less energy than PC’s and this all translates into saved cash. Turning down your thermostat by just 1 degree can cut bills by 10% saving you a hefty £85 a year. This could be put towards Christmas presents for your loved ones. There are savings to be all around the home, you just need to be on top of your game and monitor your energy consumption. 

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