To reach your financial goals you must save money for investing. Some people might have a large sum to invest but that is rare. For most investors, the funds come from personal savings.

Set your goals and targets

First you need to work out your goals. What are you saving for and how long have you got to invest? These are the two of the most important things to work out before you start your investment journey.

Once you have worked out your goals and know how much money you need, you can work out how much you need to save.

For example, I want to have a pension that pays £30,000 a year for 25 years. To be safe I will need £750,000. I have 35 years in which to achieve my goal. If I can average 6% growth with my investments, I will need to save £746.63 a month.

Develop a savings plan

To save you have track what you are spending first. I have created a free budget sheet for you to work out how much you are spending.

Once you know what you are spending you can work out how much you can afford to save or how much you must cut your costs.

Before you start saving for investing make sure you pay of your debts first as the negative effects of compounding are detrimental to your financial health.

To work out a debt repayment plan use an app like Open Money. If you are struggling with your debt reach out to a non-profit charity like StepChange or National Debtline.

The best way to save money is to make sure you are paying the best price for all the services you use from water bills to mortgage payments. The MoneySavingExpert has an excellent section called the Money Makeover which goes into detail on this.

Finally, if you need to save more you will have to make a few sacrifices. Think about foregoing somethings today so you can achieve your goals. Work out what you can cut back on.  Which has a good article on 50 ways to save money.

You can also use some money saving apps like Yolt, Snoop or Money Dashboard to help you save more.

Pay yourself first

Paying yourself first is the one of the most effective techniques for saving and investing. You already worked out how much money you need to save. Make sure the first thing you do when you get your salary is send that money to your investment account.

This way you will always take care of your investment goals. If you wait till the end of the month, it is much more difficult as you could easily spend the money on something else far less important.

How to save money for investing conclusion

To save money for investing first work out your financial goals and time horizon. Then, you can work out how much you will need to save each month to achieve your goals.

To increase your savings, you can either earn more or save more. To save more work out how much you are spending then you can work out how much you can save. Pay off any debts first and then make sure you are getting the best rates for any services you use. Only then will you need to make sacrifices in your lifestyle if you need to save more.

Once you have your savings the key is to pay yourself first. You and your future are the priority. When you look back, you will be so proud you had the foresight and discipline to create the life you wanted. You are in control of making your financial dreams come true.