How to create a budget to save money

This article is part of the Zurich Investment Academy, a set of resources designed to increase your financial wellbeing and give you the confidence to save and invest.

Zurich has been meeting the financial needs of people in Ireland for over 40 years. Our award-winning* investment team, in Dublin, is responsible for funds under management of approximately €28.4 billion, of which pension assets amount to €17.1 billion**. And more than 23,000 people in Ireland have a savings plan with Zurich***.

From creating your first budget plan to investing your first €100, the team at Zurich Ireland have designed a learning path for you to follow based on our leading experience in saving and investing. The Zurich Investments Academy learning material is free to use and has been created to give you the tools and material you need to start investing with Zurich.

In this article we are going to cover: 

1. How to start a budget
2. Understanding the difference between monthly and yearly budgets 
3. Setting a savings target
4. The Zurich budget planner

How to start a budget step-by-step 

Step 1: List your expenses 

The first step to budgeting is to get an overview and understanding of how you are spending money. Look at existing outgoings such as your rent or mortgage. Think about all other costs such as household spending and bills such as energy costs. Now look at all other spending such as your mobile phone, broadband and any TV subscriptions you might have. Once you have a list of all your outgoings, add them all up.

Step 2: Add up your Income 

If you only have one source of income, this step will be easy, but think about any other sources of income that you may have such as rental income, investments, or passive income such as tax rebates, for example. Once you know your incomings, add them up. 

Step 3: Calculate your net income

Once you have established your incomings and outgoings, subtract expenses from your income. This will show you how much you have left after you have covered all your expenses. The more accurate the costs you have included, the more realistic this budget will be. 

Step 4: Define your savings goal

The strongest starting point for successful saving is having clear goals in mind. What are you saving for? What is your target and how much time do you have to save? Then you can work out how much you need to put by each month.

For example: If you are saving for your child's education you can read Zurich’s Cost of Education research to find out how much you could save to meet your children’s education needs. If you are saving for retirement, our pension calculator can help you with your retirement planning and will show you how much you need to put away for later in life. And if you are saving to buy a house, read our blog about the costs involved when buying a house. 

Like anything in life, having clearly defined goals makes it easier to stay motivated and on the right track.

Step 5: Set aside the excess

At the beginning of the month, set aside the excess or surplus money you have left over after your outgoings and expenses and earmark this for saving. You can open a savings account or a free bank account with a provider such as Revolut or N26 if saving with a bank. 

It is worth pointing out that saving on deposit in banks has often been considered a safe option because the amount of money in your bank deposit will never fall. However, the value of your money on a bank deposit can fall. This happens when inflation is high. High inflation means the price of goods increase, for example, your weekly shop costs more due to the price of milk, bread and cereal increasing. If you have money saved in a bank and have it ear marked for a future purpose, high inflation could mean that when you go to spend the money, the item that you are purchasing may be more expensive than what you put aside for it.

Therefore, investing in funds is a common strategy used to ensure your money is not eroded by inflation. You could consider investing your savings in a regular savings plan with Zurich. With our Regular Savings plan, you can save from as little as €100 per month and potentially grow your investment.

Generally speaking, over the medium to long term, higher risk investments offer the potential for higher returns compared with lower risk investments. Over the period, the Zurich LifeSave Savings Plus plan has shown swings both up and down in price compared with the bank deposit or building society account which shows straight line growth, but the investor has been rewarded for this risk through a higher return. The capital in a bank deposit, building society or post Office Account is normally secure.

Step 6: Monthly budget planning

Having a monthly budget can help you make sure you are sticking to the habit of saving and reaching your goal. Using our budget calculator will also give you a better idea of where you can make cost savings throughout the month and how, by spending less, you can save or invest this money.

Step 7: Yearly budgeting 

A robust yearly budget plan can help you see how much you are spending and define your financial goals for the year. Our budget planner looks at your monthly income and outgoings and works out how much you are spending each month. It then looks at your expenditure for the year, shows you how you can plan for events throughout the year and where improvements can be made, which will help you meet your future financial goals.

Zurich budget planner 

We are coming to the end of our Investment Academy guide on how to create a budget to save money.

In this article we have talked about managing your expenses and incomes, setting a savings goal and budgeting each month, and throughout the year. We hope that these budgeting tips have been useful and provide you with the tools you need to plan your budget and start saving.

Financial Health Check

From pension and life insurance to savings and everyday money, our Financial Health Check tool is a quick and easy review of your personal finances.

Answer some financial health questions, and at the end, we’ll provide you with helpful tips, ideas and steps you can take to improve your financial wellbeing. What are you waiting for? Get your Financial Health Check results in just 5 minutes.

Get started with our Financial Health Check  Get Financial Advise  Contact Form  

Sources:

*Brokers Ireland, Awarded Investment and Pensions Provider Excellence in 2014, 2015, 2016, 2017, 2018 and Investment Provider Excellence in 2019, 2021 and 2022.

**Zurich, 31st December 2022.

***Zurich, May 2020.

Call our Financial Planning Team 0818 804 164

Arrange for us to contact you

Get local advice