Tips on How to Save

Saving money is hard – I get it. If you don’t have a desired goal to strive for, it’s unlikely that any motivation to save will arise naturally.

I once heard that you should have at least three times your monthly salary tucked away in a savings account for a rainy day. This may seem like a lot of money, but don’t focus on that for now, just focus on building up to that at your own pace as I would certainly recommend it as a solid starting place.

After Covid-19 struck, [to date] almost twelve months later, we (in the UK) are still facing local lockdowns and restrictions, with many people still left unemployed and struggling to make ends meet. Similarly, in any instance where you might see a decline in your income due to job loss or an increase in your costs, having a savings stash would certainly ease the pressures you would then face.

So, where to begin?

If you’re a newbie to savings, don’t stress – I’ll now take you through a series of my hints and tips to starting your saving journey and helping you to realise those goals.

Create a savings tracker

A savings tracker is a plan which outlines how much you wish to save in an allotted period and what it is you’re saving for – a goal. As I’ve already mentioned, saving is difficult when you don’t have a goal. So, by creating yourself a savings tracker, this will encourage the drive you need in order to reach that goal.

Depending on your personal finances, you may be able to save a constant amount each month, in which case tracking your savings might be quite straight forward. However, if you have costs which vary month on month, or perhaps pay some bills quarterly, having a savings tracker will help keep you organised and saving will become more manageable.

You can use your savings tracker for a variety of goals. Maybe you’re saving for your dream home, or perhaps that well deserved holiday. Create a savings tracker for each.

In your trackers, include a tick box, so when you deposit money into your savings account you can tick it off. This will give you a sense of accomplishment and more likely to keep you on track.

Set yourself a savings challenge

Challenge yourself! Obviously don’t set yourself an unrealistic target of saving £1m in one year, set yourself a goal within reach but enough to challenge.

Let’s say £10,000 in the next 12 months. That works out to be £833.33 per month, or £192.31 per week. This may be totally achievable to some, or not so much for others – but give it a go and see where it takes you (you’ll thank for me later).

Click the below image to download it as a PDF.

Cut costs

Analyse your variable costs. Are you paying for something you no longer need to pay for? Is there something which you can shop around for a better deal such as broadband, electric etc.? Comparison sites such as Moneysupermarket.com have made the ordeal of trying to switch providers a thing of the past.

Increase your income

A great way to help you save more is to earn more. See my blog on 50 Ways to Earn Extra Income to generate some ideas on how to do this.

Round up your spending

I’m not sure if I’m late to the party on this one, but since signing up to Monzo bank, I have enabled a feature which will round up my spending and put the spare change into a savings account. For example, if I spent £2.89 on buying myself some lunch, Monzo would automatically deduct the extra £0.11 from my account and move it to a savings account – pretty cool, right? I believe other banks offer the same service so it might be worth checking out!

Utilise a piggy bank

If you’re someone who stores their hard-earned cash in their mattress, this could be the one for you.

Buy yourself a piggy bank (yes, an actual piggy bank), one that you can only dip into by totally smashing it up. At the end of every week, empty out your purse and any loose change you have, bank it. It’s up to you if you track these values, but I quite like the surprise of opening up the piggy bank and being astounded at the amount I’ve managed to save.

Shop around for a savings account

Interest rates are at an all time low, making saving money even more difficult. Therefore, you’ll need to shop around for the best deal when looking for an account to set up. ISAs or premium bond accounts will probably be your best bet for high interest on savings.

Try to find an account which either won’t let you withdraw at all or won’t let you until you reach a certain amount/date. This will eliminate any temptation to dip into your savings and therefore help you reach your goals quicker.

If you’re a first time buyer and looking to save for a deposit or wish to start your own pension pot, a LISA (lifetime interest savings account) may be perfect for you. These are government backed schemes where when you deposit money, the government will automatically top your account up, usually by up to 25%. So if you deposit £100, you will receive a bonus of £25, not too shabby. The bonus is capped at £1,000 per tax year and you can only withdraw funds when either buying a property or reach 60 years old (or you’ll be charged a 20% fee).

I hope these have given you enough ideas to begin with. Ultimately however, savings should be backed by a good budget. As alluded to earlier, you can’t save if you don’t understand your outgoings.

Head over to my Beginner’s Guide to Budgeting for ideas on what to include in your budget.