So you want to save some money…yay! You know it’s the right thing to do. The clue is in the name: having a spare pot of money could literally, like, save you in a financial emergency. That’s so much better than going into debt, which can be expensive, complicated and damaging to your credit score (if badly handled). Eww, no thank you.
But perhaps it’s a struggle. If so, you’re not alone. Millions of people in the UK try and fail to save every month as life (and all its crazy costs) get in the way.
The secret to saving is to keep it small and keep it regular. You’re far more likely to give up if you set unrealistic targets or have to make a conscious effort. Thankfully, there is some brilliant tech out there that make saving a daily, automatic habit. So here are some suggestions on how to save money that will help you make a start. YOU CAN DO IT!
Round up your spending
Most banks today are offering clever apps with a savings feature. Here’s how they work: when you use your debit card, the app will ‘save the change’ – i.e. round up the difference to the nearest pound and sweep it into a savings account. These apps are brilliant for beginner savers because you don’t have to think about it! Once you turn on the feature, you can start saving money every time you spend. And it works particularly well if you’re the kind of person who spends a little, a lot!
Because think about it: a £3.50 takeaway coffee nets you the same saving – 50p – as a grocery shop costing £29.50. You can even do this if you shop at Sainsburys and use the supermarket’s savings account, using the Savebank scheme. The only drawback? The interest, i.e. the amount of money you earn from saving, is pretty low and sometimes even nothing on these accounts. So hopefully at some point you can upgrade to other options that will give you more bang for your buck.
But you can save up a surprisingly large amount this way. The consumer group ‘Which?’ reckons that by sweeping your change, you might save £1.22 a day on a typical spend. That adds up to £450 over a year. And imagine if you could target £10 a week on top of that. That would bring your yearly saving to almost £1000. That ain’t bad, right?
Nudge your way to higher saving
If you want to have a bit more control over your spending and saving, why not go for a chatbot like Cleo, Plum or Chip that lets you choose when to sweep money into a savings account? You can really up the ante by choosing to save 5% to 15% of your income automatically every month.
But maybe you’re not sure how much you can actually afford to save…again, chatbots can help you out with that. They’ll have a look at your spending and income, then decide when and how much you can afford to save. They’ll either do it automatically for you or send you messages nudging you to save the suggested amount. In the meantime, they’ll help you budget by keeping an eye on your spending and telling you if your coffee habit is getting a BIT too out of control. Kinda like a cross between your Mum and a financial adviser!
This option is fab if you want to save more money but struggle to know how much you can afford to put away. Again, the accounts linked to this tech don’t offer the best interest. But chatbots could work for you if you respond well to a bit of roasting (!) and need that regular push to do the right thing.
Go for EASY…EASY LIKE SUNDAY MORNING
Whether you use the round-up savings whizz, a nudging chatbot or simply open a savings account linked to your bank account, make sure the account you use is easy to access.
This is your Yikes fund, the pot you’ll be glad to have if your laptop breaks or you lose your job. Aim for a few months of your typical income, or enough to cover a rental deposit if you have to move out. (P.S. emergencies don’t include those shoes you MUST have or late-night pizzas!)
The reason why your account needs to be easy-to-access is that you don’t want to have problems getting your money in a real emergency. So avoid ‘notice’ accounts (which mean you have to give notice to withdraw your money, funnily enough) and investment accounts, which put your money in the stock market and are only suitable for REALLY long-term goals.
But going easy-access means you’ve got to be strict with yourself. If you can resist dipping into your Yikes fund during the good times, boy you’ll be glad when you do need it!
Suss out your savings goals
Beyond your Yikes pot, you’ll have other stuff you want to save up for. Whether it’s a holiday, new tech or Christmas presents, it’s important to figure out what really matters to you and how long you’ll need to save up for. Your savings are precious: they should only get spent on the stuff that brings you joy and moves you forward.
So figure out your short-term, medium-term and long-term goals. For shorter-term goals, you want easy-access accounts but in the medium-term, you can lock up your money for longer to get a better return: try looking at regular saver accounts, fixed-term bonds or even current accounts that offer great interest (just make sure you don’t use their overdrafts!)
For long-term goals which will take more than five years to achieve, you might want to consider investing. This is riskier because you might lose money. But historically, the stockmarket has produced more wallop than cash accounts across most timeframes. There are plenty of apps known as ‘robo-advisers’ which could get you started.
Switch your savings mindset
Finally, if you want to really learn how to save money, it’s crucial to get in the right mental zone for saving. Don’t think of it as a sacrifice but as an act of self-care. Remember, it’s still YOUR money: you’re just putting it one side to give yourself more options, choices and ultimately freedom in the future. That’s why saving is so empowering – and so worth doing.
