Nationwide shares spending ‘rule’ that could help you save up to £1,500 this winter

3 weeks ago admin

Nationwide Building Society has shared one "rule" which could help you put away an extra £1,500 over the next few months.

The building society shared the advice in its November MyNationwide newsletter this week. This week's newsletter focused on embracing "smarter spending" habits over the festive season. The newsletter noted that Christmas is a time of year when many face more financial pressure than at any other time.

The newsletter said: "It's that time of year again. There's often a lot going on, which can make it tempting to spend more than you meant to." Nationwide told readers that budgeting over Christmas is a good way to manage their finances and see when they can afford "those little extras."

The building society noted that the best budgets needed to be tailored to the customer and their circumstances. This helps customers determine their spending priorities and identify areas where they can reduce expenses. It added, "Doing this can keep you enjoying the things you love whilst living within your means."

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However, if you are unsure of where to start in making your own budget, the building society said that the 50-30-20 budgeting rule was a "great" place to start. Under this plan, you allocate 50% of your income to essential expenses and fixed outgoings. This includes rent, mortgage payments, and bills such as council tax, energy, wifi, and your weekly food shop.

A further 30% should then be dedicated to "wants." These are things you spend money on that aren't absolutely essential. These can include gym memberships, new gadgets, or meals out. The remaining 20% is then recommended for savings or debt management, which could include "paying more than your minimum payments or putting money into savings account, pot, ISA or investment."

Nationwide provided a practical example using a monthly income of £1,500 after tax and deductions to illustrate this budgeting approach. According to their breakdown, this would mean allocating £750 to needs, £450 to wants, and £300 to savings or debt payments. If you follow this rule, over the course of five months this would add an extra £1,500 to your savings by March next year.

However, Nationwide noted that the 50-30-20 rule is a basic framework for budgeting and should be viewed with flexibility. This means it can be "split in any way to meet your needs". This means if you need to allocate more to cover your essential expenses, then you should allow this. Overall, Nationwide says this structured approach aims to help people maintain a clear overview of their monthly spending and helps them strike a balance between necessities and discretionary spending.

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