Putting money aside – whether it’s for short-term goals or major life changes – can be difficult. There’s the unappealing prospect of forgoing stuff, toning down your social life, or taking on a side hustle. But with a bit of careful planning, and a clear goal to motivate you, you can pull it off. We spoke to three people who did exactly that.
How to save for a mortgage in your 20s
Local newspaper journalist and blogger Sarah Howells decided in 2012 that she wanted to get on the property ladder before her 30th birthday – in May 2019. “My friends were all buying houses and it felt like the right move,” she says. Sarah’s original goal was to raise 10% of the price of a house in her area as a deposit – at the time around £15,000. But with a competitive housing market, she eventually had to add an extra £5,000 to her target. “I’ve managed to hit £20,000 in seven years, which I reckon isn’t too bad going,” she says.
To overcome the daunting prospect of putting away thousands of pounds, she broke her goal down into setting aside a few hundred pounds from her salary per month. When Sarah eventually started The Gluten Free Blogger alongside her day job, she set a new goal: to put away all the money she raised from the website. “It made it easier knowing I didn’t have to sacrifice everything and could still live my life, by funding my savings goal through a side hustle I was passionate about,” she says. Sarah’s savings plan was fairly traditional – using an ISA to build savings and putting away a little each month. Eventually, she shifted to a savings account that gave her better interest rates.
Sarah recommends that anyone trying to save for a mortgage should set a monthly goal and stick to it. “I enjoyed being able to save and spend at the same time, but in hindsight it would have been nicer to commit a set amount each month and perhaps reach my goal a little quicker,” she says. Day-to-day she made small sacrifices, such as eating out less and forgoing takeaway coffees. She also decided to put off some overseas holidays until after she had raised her deposit. “As the end came nearer, it felt easier to somehow find the money.” Her next goal? Finding her dream home.
How to save to leave a legacy
As Kay Brown began planning a financial legacy to leave her daughters, she found herself facing slightly unusual circumstances: the home that she owned would be passed to her husband, 10 years her junior, to live in before it passed on to her daughters (from a previous marriage). “Statistically I’ll likely be the first one to go,” she says. “But my daughters won’t inherit the home until the second death. I wanted to make sure they were going to be all right [in the interim].”
Kay, 63, approached HSBC – where she once held a part-time role – for guidance on how to grow a savings pot for her daughters. “My priorities had changed through the years: at one point my children were at university, and now it’s retirement,” Kay explains. “Savings [account] interest rates weren’t particularly good and HSBC realised that I could have something much more suited to my needs.”
She set up an investment portfolio and chose a lower-risk option. “I have always tended to take guidance and invested my money, I got an insurance policy paid out and it was all invested, for example.” Kay says that it was simple enough to amass the capital she needed to invest, by living a little more modestly. “It’s not the fact that I don’t like spending, but I’m just an ordinary, day-to-day person – I don’t yearn for fancy things,” she says. I’m very content. If I can live like I’m living now from today until tomorrow, I’ll be more than happy.”
How to save to travel the world as a volunteer
Dorothy Selleck, 86, has spent 40 years travelling the world, volunteering in schools via the World Organisation for Early Childhood Education (OMEP). While she was still at university, Dorothy, who speaks Welsh as a first language in addition to multiple other languages, was approached by a friend who convinced her to use her skills in charity work. For weeks at a time, Dorothy would take time out from her job as a school’s inspector and visit places around the world, including Japan, India and South America. “We were still at our jobs – you couldn’t leave them for very long, but you could leave them for long enough,” she says.
Dorothy paid her own way volunteering. Flights, accommodation, travel expenses and a membership fee to OMEP were funded through a full-time job and living a modest lifestyle. “I didn’t spend a great deal of money on myself,” Dorothy says. As well as setting up four separate savings accounts where she could budget her money for travel and day-to-day living expenses, Dorothy put some of her money into a house and approached HSBC for guidance on setting up an investment portfolio.
Dorothy says being afforded the freedom to volunteer has allowed her to see hidden corners of the world and master three languages. Even now, long after her retirement 27 years ago she still volunteers at schools a few days a week – although much closer to home. “I’m still doing voluntary work,” she says. “It’s very important to me.”
Top tips for saving for a major life goal
Set realistic goals and be patient, says Sarah, who raised £20,000 in her 20s for a mortgage deposit: “You can’t just magic a vast sum of money out of nowhere.”
Whatever your goal, make sure it is something you really care about. That will help you stay committed. “I still go to the local school to do voluntary work,” says Dorothy, 86, who travelled the world as a volunteer while still working.
As well as keeping a watch on your weekly spending, try to be disciplined with any windfalls you might receive, says Kay, who put together an investment portfolio to take care of her daughters and who invested the money when paid out by an insurance policy.
“Work out how you balance short-term savings and longer-term investment horizons; taking a considered approach to risk might enable your investments to grow more than keeping everything in cash,” says James Hewitson, Head of Wealth & Advice at HSBC.
Investments can carry a higher risk than cash savings and you may not always get back what you put in. Most investments should be considered as a medium- to long-term commitment, meaning you should be prepared to hold them for at least five years.
Whatever your situation, and no matter your level of confidence, HSBC could help you make better-informed investment decisions. From first-timer to experienced investor, wherever you are in your investment journey HSBC could help you take that next step.
Fees and eligibility criteria apply when investing or taking advice with HSBC.
