Do You Follow the 50/30/20 Money-Saving Rule?

Saving for a deposit on a house can feel like an impossible task when there seems to be so many other responsibilities demanding your money. 

And, it’s not just things like bills and essentials that eat into your earnings. From the car that won’t start to the leaking roof and even the friend’s birthday bash you simply can’t miss - life has a way of throwing spanners in the works of even the most diligent savers. 

Jo Pocklington, MD of Purplebricks Mortgages, has 23 years of experience helping hopeful house-hunters get the keys to their dream homes.  She has shared her nine top tips to help buyers put some money aside every month.  

Budget planner

A great way to keep on top of your spending is to use a budget planner to see where all of your monthly spending goes and then review each item. This will give you a clear insight into your outgoings and how much you have to save, plus any areas where you could reduce your spending.   

Pay annually over monthly

Whilst it might seem convenient to pay monthly rather than a lump sum, paying for insurance such as home or car insurance annually can actually save you money by avoiding extra interest charges.  

Review your debts

While it might seem easier to pay off the smallest debt to have one less to worry about, it’s important to review all credit commitments and pay off those with higher interest rates first. Even a small contribution to a debt with a higher interest rate, rather than paying off all of one with a smaller rate will help to reduce your ongoing debt costs.  

Shop around

Reduce the cost of your debt by using a 0% interest rate credit card. Shop around and find one with a lengthy offer - this will help you reduce the debt by putting the money you were spending on interest towards the debt itself.  

Review your utility bills

Check your utility providers using comparison sites to see if you're getting the best deal. Quite often there are better deals for new customers. Or call your current provider when your contract is due for renewal to see if you can negotiate a better deal.  

Plan your weekly shop

Never go food shopping when hungry or without a weekly meal plan! We’re all guilty of going shopping with a list and then spending more than we intended, and often end up with food we have to throw away. A great way to stick to your list and reduce your supermarket spending is to plan your daily meals and add to your list only what is needed for the meals for the week.   

Cancel any unnecessary subscriptions

There are so many subscription services it is tempting to sign up for them all. But there are some big savings to be made by cancelling some of them. Don’t cancel them all however, as having an ongoing subscription service such as a TV or music service can actually work in your favour when applying for a mortgage.  

Follow the 50/30/20 rule

A great way to budget without feeling like you have to cut all luxuries is to try and follow the 50/30/20 rule. 50% of your monthly salary is allocated for essentials such as your rent, car, commuting, and bills; 30% on nice-to-haves such as meals out, cinema and clothes; and 20% to go into your savings.  

Set spending caps

When you are trying to budget it is easy to feel guilty when you have friends and family to buy birthday and Christmas presents for but remember your end goal and agree on a spending cap. Your loved ones will understand, and they may be feeling the same way so they could equally be happy to agree on a present spending cap.