Finding money to save can be difficult at the best of the times, but it’s even harder when costs are rising everywhere you look. But that’s not to say it’s impossible.
If you're concerned about how to save money to help ease the pressure on your family's finances, there are things you can do that will help you to get into a savings habit, without having too much of a negative impact on your budget.
Goodto.com's Money Editor, Sarah Handley says: "With living costs still high, saving money can feel almost impossible as families struggle to make ends meet. But with a little bit of know-how, most people can start saving little and often, which is all you need to start developing a healthy saving habit that can be maintained."
Whether you’d like to top up your rainy-day fund, or need extra cash for a big birthday or family holiday, there are plenty of minimal effort ways to start squirrelling money away. Find out how with our hacks.
1. Make any savings you already have work harder
If you tend to keep any unspent money at the end of each month in your current account, or even in envelopes or money boxes at home if you prefer to spend cash, it might be worth opening a regular savings account instead. These types of bank accounts pay good rates of interest to people who can commit to saving regularly and you can usually start saving from £25 a month.
For example, First Direct pays 7% interest on it's savings account (but you need to have a current account with the bank in order to open its savings account). If you save £25 a month, you will have saved £300 after a year. If you have that money in a savings account that pays 7% interest each year, you will actually end up with £321. That's £21, just for putting your money in this type of bank account. It's best to keep your money in the savings account to maximise how much interest you can earn, so this might not be an option if you need to keep instant access to your money.
Once you’ve set up your regular saver, (you can pop into your local branch or phone your bank to open a savings account or even apply for a bank account via your mobile banking app), you can set it up so the money you want to save is moved into your savings account automatically, so you don’t need to remember to save each month.
2. Claiming benefits? See if you qualify for the Help to Save scheme
Anyone on Universal Credit or working tax credits could get free government top ups when they save with the Help to Save account. The scheme – which many people aren’t aware of – rewards those on low incomes with a bonus, when they pay money into their account.
For every £1 you save – up to £50 a month – the government pays in an additional 50p for four years (with bonuses paid at the end of the second and fourth year).
Laura Suter, head of personal finance at AJ Bell explains: “The good thing is that the accounts are really flexible and you can withdraw your money whenever you want. For example, if you saved £50 a month for 10 months and built up £500, but then needed to withdraw all of that to spend, you would still get a government bonus of £250 after two years – as it’s 50% of the maximum amount you saved. The maximum that can be saved is £2,400 over four years, topped up to £3,600 with the bonus.”
3. Start rounding up
Round up payments is an easy way to start saving without really noticing it. The idea of rounding up is that if you buy something that costs £4.50, you round it up to £5 and save the 50p difference. You could even round up the nearest £10 so if you buy something that costs £17, you could round it up to £20 and save the £3 difference.
But you don’t have to move the money yourself – your bank might do the leg work for you. NatWest, Starling Bank and Monzo let customers round up payments, with the difference paid direct to a linked savings account, where you might also be able to earn interest on the money you save.
It might not seem like you're saving much, but if you think about how often you buy something that isn't a nice round number of pounds, you'll see the savings soon add up. NatWest says that customers can save around £10 a month using round ups.
4. Automate your savings
If your bank doesn’t let you round up, you can use a standalone app – which links to your bank account – to do it for you. These apps can also step up your savings game with more features to help you save small, affordable sums.
Savings app Plum, for example, offers an automatic savings service that analyses your spending and works out how much you can afford to save, without sending you into debt. Alternatively, you can set it up to move money into savings on pay day or arrange weekly deposits.
Other quirky features include ‘Rainy Days’ where a little money goes into your savings account every time it rains where you live, or the ‘Naughty Rule’ which moves money into your savings pot every time you shop at your chosen ‘naughty’ stores.
5. Start a savings challenge
Another way to increase your savings is to set yourself a challenge. This could be the popular 1p savings challenge or a no-spend challenge. Personal finance expert from AJ Bell, Laura Suter, explains: “The idea is that on the first day you save just 1p, then you double it every day – so 2p on the second day, 4p on the third day and so on. Just by putting these small amounts away you’ll end up with £668 after a year. It’s a great way to get kids involved in saving too, as you could have a family piggy bank you put money into each day.”
Depending on how you plan to save the money, you might find it easier to split the savings into equal monthly amounts, rather than rooting around for actual coins to put in a money box.
No spend challenges can be harder for families to achieve. But try starting with a regular no spend day, then try a no spend weekend, and work up from there to whatever you can manage. Some hardcore savers even set themselves no spend months. Whatever challenge you tackle, it will encourage you to think more carefully about what you spend and become wise to all those sneaky tricks that retailers use to encourage you to spend.
6. Try boosting your income
Saving can be a struggle when you don’t have the money to spare. But you don’t necessarily have to go without to start building a small savings pot. There might be some easy ways for your to boost you income in order to be able to afford to save a little more each month.
You could sell things you no longer use on Facebook Marketplace, eBay or Vinted? It’s also a good idea to take advantage of cashback when you shop. Maddy Alexander-Grout, founder of the Mad About Money App, says: “Make sure you have a cashback browser on your computer,” she adds, “or use cashback apps like Karma Vouchers or JamDoughnut”.
If you’ve got space on your drive or a garage you never use, you could even consider renting that out, using an app like Just Park. Check out our guide for even more ways you can make extra money to boost your income.
7. Keep your family motivated with a savings goal
These are all easy ways to get saving without making huge changes to your spending. But to really motivate yourself and your family, it helps to set a clear, achievable goal.
Whether it’s a family holiday or a day out with the kids, by visualising and focusing on your goal, you’ll find it easier to put more money away.
It’s also a good idea to get everyone in the family on board. The kids will be much happier ditching takeaways for frozen pizza, or swapping the cinema for movie nights at home, if there’s family-focused goal to save for like summer days out or a trip to a theme park.
Getting the kids involved can also help to teach them about managing their own money and set them up for a stable financial future. (Read our guide to the pros and cons of pocket money to help get them started on their financial journey).
