Although the economy has improved in recent years (pre-COVID), salaries have not increased enough to keep pace with rising living costs.
Even if you can't save much, it's worth saving what you can. Starting small and saving regularly is the best way to increase savings.
While you may want to save a lot of money quickly, saving $1,000 per month isn't feasible when you can only save $100.
Saving $100 per month beats saving nothing.
Top Tips:
Set Savings Goals
Saving money may not be important to you, so setting realistic goals is critical. Are you saving for a home? Holiday pay? Christmas prep? It's easier to save money when you know why. Saving for saving's sake can be pointless.
Choose Where To Save
Now that you know why you're saving, decide where to save it and start earning interest. Savings interest rates are low due to the low Bank of England base rate. Savings accounts pay less than 0.5 percent currently, but some do pay more, usually those that require you to lock your money away for a limited time.
Even the best savings accounts only pay around 1%. A fixed-rate savings account requires you to keep your money for a set period.
Save money in a bank by using savings accounts linked to current accounts that pay up to 3% interest. These often have a maximum deposit amount, so you may need to split your savings.
Take advantage of compound interest whenever possible. This is when interest on interest is added to your savings. Look for a daily-compounding account rather than a monthly-com So you get the most interest.
Have A Savers Mind
Having the right mindset is key to increase savings. Sadly, these messages often encourage us to overspend and live beyond our means. Try to be more aware of your spending habits. Open Banking apps help us save money by showing us where we can save.
Here are some tips for saving money:
- Before buying anything, always check for a cheaper alternative.
- Make a list before going shopping and stick to it.
- Don't buy on (checkout areas are notoriously bad for encouraging impulse purchases)
- Use debit over credit cards to avoid overspending.
- Avoid payday loans due to high-interest rates.
Set Up A Savings Direct Debit
The lack of it is not missed. Set up a direct debit from your checking account to a savings account as soon as you get paid.
Some people find that saving regularly by direct debit is the best way to save. With some regular saver accounts currently paying up to 3% AER, this can be a good way to build a healthy nest egg.
It works like your pension, which is deducted from your pay. In both cases, you'd set up a savings direct debit from your net salary, not your gross salary.
You can't use your pension until you die. This means it should be an addition to your savings, not a replacement.
Track Every Penny!
This may sound extreme, but without knowing what you spend your money on, it's difficult to save.
There's an app for that. There are plenty of apps for that. Some app-only banks like Monzo and Starling even categorize your spending by category.
If you find yourself eating out frequently, consider packing lunches or cooking more at home.
Step 4: Think like a saver!
Some accounts let you save the difference if you round up to the nearest pound.
A $1.89 item is rounded up to $2 and 11cent is put into a separate account. You don't miss the 11cent and can save a lot of money over time.
Some accounts let you save the difference if you round up to the nearest pound.
A $1.89 item is rounded up to $2 and 11cent is put into a separate account. You don't miss the 11cent and can save a lot of money over time.
Repay Big Bills First
Got a bonus or a gift? It could be the saving boost you need. Or you could use it to pay off debts. Debts often charge higher interest than savings, so paying off high-interest debts first is critical. Paying off a loan faster can also help your credit score.
These six tips should help you to save more money with the stress. Do you have any other tips that could you achieve your savings goals? Please share some of them in the comments below.
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