Are you a spender or a saver?

The truth is you can be both, but a good starting point is to identify whether you naturally lean towards spending more or saving more.

The reason is straightforward. If you are more of a spender, you might need to curb your spending to achieve balance. If you are more of a saver, you might find it beneficial to allow yourself to spend more on things you need or enjoy.

Spenders and savers typically exhibit certain characteristics.

Spender traits

Spenders generally worry less about money. Typically, this means they:

• Are comfortable with spending money on enjoyment and also on impulse buys;
• Have a higher risk tolerance and are, often willing to take on debt or invest;
• Prefer buying new possessions or paying for experiences over saving money.

Saver traits

Savers are often more 'money vigilant.' Being money vigilant means they are typically:

• Are cautious about spending, especially for enjoyment;.
• Have a lower risk tolerance, being less willing to take on debt or invest;.
• Value a healthy bank balance over new possessions.

How to create a balanced budget

Creating a budget is a key step towards effective money management. A well-structured budget limits overspending, and helps you manage expenses, debt, and savings. Implementing spending and saving ratios can help you to achieve the right balance.

A simple yet effective method is the 50-30-20 rule:

• Spend 50% of your income on essentials – mortgage/rent, bills, groceries, and transport.
• Spend 30% of your income on wants – dining out, shopping, subscriptions, and holidays.
• Save 20% of your income on savings investing or repaying.

You might need to adjust these ratios depending on your financial situation and personal circumstances. The key is to ensure your essentials are covered and to set a realistic savings percentage.

This means your discretionary spending should be the most flexible part of your budget. By prioritising essentials and savings, you can create a balanced budget that works for you and helps you enjoy life whilst retaining financial security.

What should spend money on?

In addition to essential expenses such as housing, utilities, food, and transport, you may also want to consider the following:

Your physical and mental health

It is crucial to invest in your health, especially in challenging times. This could mean spending on a gym membership to stay fit or pursuing hobbies that keep you mentally engaged. Consider whether it is more beneficial for you to spend more money on a more expensive gym that you are likely to use regularly or a cheaper one which you are not likely to use.

The things that make you happy

Life is meant to be enjoyed. Whilst it is important to be financially responsible, it’s also important to spend money on things that bring you joy or improve your life. Ensure your budget includes a section for discretionary spending alongside essentials and savings.

Your personal goals

Remember why you are saving. Setting clear savings goals helps you know when it’s time to spend. Whether it’s for a house deposit, a new car, a holiday, or your children's future, be comfortable with using your savings for their intended purpose.

Quality products that benefit you

Investing in certain products in the short term can improve your quality of life. This might include a good, durable item of clothing to promote self-worth, nutritious food to enrich your health or technological products that can save you time and stress in the long run. Some seemingly luxury purchases can be worthwhile investments in the long-term if you can afford them.

Get your savings in order with RCI

We have been helping people save for their futures for over 9 years and have a wide range of savings accounts for different saving habits.

Compare our full savings range today by visiting our savings accounts page and blog section for more useful tips on how you can save more.