Simple ways to start saving now

Setting your savings goal

Traditional – and – unusual – ways of saving money

Saving money with digital banking features

What is the 30 day saving rule

Make a savings account work harder for you

Changing your perspective on saving

Setting your savings goal

Before starting to save, it’s important to consider why you want to do so, the amount of money you want to save and how much you can realistically afford to put away. Start by looking at how much money you have left after paying for essentials each month to understand what’s affordable for you. Also think about how soon you want to reach your savings goal.

It can be sensible to begin saving a small amount each month, stick to it to embed the habit into your life and then increase the amount if that is possible. If you start by trying to save too much money, budgeting for other bills could become difficult. Saving up £1,000 for an emergency fund, for example, could mean ten monthly payments of £100 or twenty months at £50. The end result is the same, but the latter option may be more sustainable. Saving money could even be your New Year’s resolution for 2023.

Traditional - and unusual - ways of saving money

When it comes to saving tips, there are some classic methods which remain popular year after year. Opening a savings account (more of which later) is one of the traditional techniques. And for children embarking on their first financial lessons, you can’t go wrong with a piggy bank to teach your child the value of money.

But you may not have heard of the envelope system technique. This involves grouping your spending into different categories, such as bills, groceries, eating out, entertainment, saving, and shopping. You then decide how much money to place in each category and create an envelope for each one. Through the month you use the cash in each envelope to pay for the relevant items - and once it’s gone, it’s gone. This is a simple but powerful budgeting technique which traditionally uses physical cash and envelopes but can be adapted for digital implementation.

Prepaid debit cards are a different, cashless, way of separating your spending money from bills and savings. There are a variety of prepaid cards in the UK, which can be pre-loaded with the money you have available for spending each month. This separation of finances can stop you from dipping into money that is needed for bills - or having to rely on a costly emergency overdraft due to accidental overspending.

Use our prepaid card UK comparison tool for more insight into which one may be best for you.

It’s a good idea to review your expenditure - seeing exactly where your money goes can be quite revealing. Go through your bank statement to see what you spend on. Are there certain times when you spend more? Is there any unnecessary spending you could tackle?

Reviewing the cost of suppliers, from insurance to energy, and your subscriptions or direct debits can also add up to significant monthly savings. One of the biggest costs for all of us, with the rising cost of food, is the weekly grocery bill. Check out our expert guide on ways to reduce the cost of your food bill.

Saving money with digital banking features

With the rise of online-only banks and digital banking, it has been easier to manage money faster and conveniently. Some digital banking apps now give consumers real time spending or payment notifications, helping you keep aware of your spending.

Here are three simple savings features you could employ through digital banking, depending on availability at each bank:

• Round ups. Several high street and online only banks allow customers to round up their transactions - such as a takeaway coffee - to the nearest pound and send the spare change to their savings account automatically. So, every time consumers spend, they save a little, too, with no extra effort.
• Automated savings. Remembering to transfer £50 into your savings account on payday is not a problem with this function. Most banks now allow consumers to set up standing orders as automatic recurring transfers, which transfer money from your current account to your savings account on a set day each month (the closer to pay day, the better).

• Digital spending pots. Like the envelope method, digital spending pots separate your money for different purposes. Depending on the bank you use, they can be pre-loaded with cash or managed month-to-month.

Technology has made saving even more accessible. Here’s our five favourite budgeting apps to help you save even more.

What is the 30-day savings rule?

There are lots of spending and saving challenges out there which can make cutting back more enjoyable. The 30 day savings rule is a simple but functional tool to curb impulse purchasing and aid better financial decision making. To use it, when you see something you desire, wait 30 days before actually purchasing it. The chances are you will have forgotten about the item or decided it is not necessary after all. This requires a lot of willpower, though!

Make your savings account work harder for you

A savings account isn’t just a place to watch the money you have set aside add up. They can also add to the total value of your savings depending on the amount of interest they offer so it is worth comparing savings accounts with high interest rates to see which works best for you. There are a lot of different types of savings accounts on the market, and most banks offer savings facilities.

Individual Savings Accounts (ISAs), could be an option worth exploring. The amount you are allowed to save in these types of accounts in 12 months is set by the government (for 22/23, it’s a limit of £20,000). There are four different types of ISA, and you can only put money into one of each kind of ISA each tax year, and there are other restrictions to be aware of, too. However, they can be a good option as they allow you to earn interest on cash in an ISA, or income or capital gains from investments in an ISA, without paying tax on it.

Instant access savings accounts can pay less interest than other types of savings accounts, but as the name suggests, can be dipped into if needed, so can be good if you need maximum flexibility on your savings.

Fixed rate savings bonds, however, are better for longer term savings. They guarantee a set interest rate over a fixed term, but some do not allow withdrawals, and may charge penalties for doing so.

Spending some time to consider and compare savings accounts for your savings goals is time well spent, as choosing the right type of account for your situation will help maximise the amount of interest you earn.

Our savings account comparison tool is a good place to start researching.

Changing your perspective on saving

Thinking about how to save money can often feel like a pain - at first. But once you start to save money and see the funds growing, people often find they begin to enjoy being more frugal.

To help you change your mindset, why not write a list of the ways having savings in the bank will make a difference to your life? This could be relieving the worry you feel about not having an emergency fund right now or looking ahead to the relaxing holiday you are saving towards.

Visualisation and budgeting tips can also make streamlining your finances and even make budgeting fun. Think about savings as a way of opening new opportunities for you in the future, rather than just being restrictive to your current lifestyle.

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