The Struggle to Save

By Iona Bain,
Founder of the Young Money Blog and Young Money Agency
Author, journalist, consultant, commentator and speaker
Freelancer of the Year 2018 (IPSE)

If saving is a struggle, you’re not alone. Millions of people in the UK try and fail to save every month as life and all its crazy costs gets in the way.

The secret to saving is to keep it small, keep it regular, and be realistic.  Thankfully, there is some brilliant tech out there that will help you make a start. You can do it!

Round up your spending

Most banks today are offering clever apps which will ‘save the change’ –  whenever you use your card they round up the difference to the nearest pound and sweep it into a savings account. Smaller spends mean you save more because think about it: a £2.50 coffee nets you the same saving – 50p – as a £29.50 meal out.  The interest, that’s the amount of money you earn from saving, is pretty low and sometimes even nothing on these accounts. But once the pot builds up a little (it will) you could shop around and look at moving it to a more generous savings account.

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. They monitor your spending and work out when and how much you can afford to save. They’ll either do it automatically or send 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!

Easy like Sunday morning

This is your Yikes fund, the pot you’ll be glad to have if your boiler breaks down, your granny isn’t well and you need to go and visit, 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!)

Be sure that your account is ‘easy access’ – you don’t want to have problems getting your money in a real emergency.  So avoid ‘notice’ accounts (where you have to wait) 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

You’ll have other stuff you want to save up for, like a holiday, new tech or Christmas presents.   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 could get you started.

Switch your savings mindset

 Finally, 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.

It does mount up.  The consumer group ‘Which?’ reckons that just 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. Wow!

Good luck on your savings journey. Starting it today is a decision you won’t regret!