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Building up a savings pot can be a challenge, but having a bit of cash set aside makes a vital difference when life throws you a curveball, or if you want to make a long-held dream become a reality. And with UK Savings Week falling in September (9-15), now could be a great time to soak up some inspiration.
Whether you’re looking to repair some dents to your savings caused by summer holiday spending, or you’re even thinking as far ahead as budgeting for Christmas, putting a little money aside every now and then could really help to build your financial resilience over time.
Andrew Gall, head of savings and economics at the Building Societies Association (BSA), also believes having a savings buffer can help with our mental wellbeing.
“Having money in a savings pot not only makes us more resilient when things go wrong, it also improves our overall wellbeing, helping us to feel more optimistic and improving our ability to relax and sleep better,” says Gall.
“Building our savings with a good regular savings habit can also help us to achieve more of our dreams. Around half of UK adults already have a regular savings habit, but what matters is finding a pattern that works for you,” he adds.
“The motto for UK Savings Week is: ‘Savings, they’re what you make of them’ – so whatever level of saver you are, saving a little if you can, when you can, will make a difference to your life.”
How do I get started?
Gall says having clear goals in mind can really help savers to stay focused.
“The first step is to look at your incomings and outgoings, including asking yourself what you need as opposed to just want,” he says.
“Then it’s important to set a clear goal. Knowing what you are saving for and how much you need – whether it is the peace of mind from a rainy day fund, a holiday or a house extension – can keep you motivated and better able to resist temptations to spend on other things.”
How do I stay motivated?
“Savings don’t grow overnight, so you need to nurture the habit,” Gall advises. “Tell your friends or family about your savings aims, so that they can offer encouragement and support towards your goal.
“Finally, don’t deny yourself the occasional treat, but be more mindful when you allow yourself to spend. That way you are more likely to stay motivated to reach your savings goal.”
If you’re saving for a particular item or a trip away, doing online research into it from time to time, or regularly checking your savings balance, could also help you to stay engaged with your goal.
What if I slip up?
Don’t let a savings splurge or setback put you off your stride, and remind yourself that everyone makes mistakes from time to time.
There are also things you can do to “nudge” yourself back into better habits again, perhaps by setting up regular payments into your savings account, or “round-ups” in your banking app that will automatically deposit small amounts of money into savings when money is spent from a current account. Round-ups could be particularly useful if you don’t have big sums of money to put away, but you just want to get into the habit of saving regularly.
Pella Frost, head of everyday banking for HSBC UK, says the bank has a “savings goals” mobile banking app feature, which has seen customers creating 18,750 goals every month on average.
Launched April 2024, savers can choose from a list of short to medium-term goals, including travel, a new car or new business venture, and set the due date and amount target. HSBC UK has so far seen 7,000 goals completed in first five months of the initiative, with thousands more in progress. In terms of savings trends, the bank says popular goals include “house”, “travel”, “rainy day”, “car” and “gift”.
Frost adds: “Before opening a savings account, we recommend you review your budget so you know how much you can afford to lock away and for how long.”
Will tax erode my savings?
Many people earn interest on their savings without paying tax. Under the Personal Savings Allowance, basic rate taxpayers can get up to £1,000 in annual savings interest tax-free. The tax year runs from April 6 to April 5 the following year.
It’s also worth remembering that ISAs don’t count towards the allowance. You can save up to £20,000 into ISAs each year.
How can I check whether my savings are protected?
Money held in UK banks and building societies is generally protected under a “lifeboat” scheme called the Financial Services Compensation Scheme (FSCS). The scheme steps in so that customers can be paid out when financial firms go bust. Savings up to £85,000 are protected, per eligible person, per bank, building society or credit union.
It’s also worth bearing in mind though that some banks or building societies share protection across different brands, where they operate under one banking licence. The FSCS has a “protection checker” on their website (fscs.org.uk).
Money held in savings giant and Premium Bonds provider NS&I meanwhile has 100% security as it is backed by the Treasury.
Could some schemes help turbo-boost my savings?
Some employers run savings schemes, in addition to workplace pensions, so if you’re an employee it may be worth asking if anything is available.
There may also be government schemes that can help, such as the ‘Help to Save’ scheme which is available for people on low incomes. It allows certain people entitled to Working Tax Credit or Universal Credit to get a bonus of 50p for every £1 saved. More information about the scheme and applying is at www.gov.uk/get-help-savings-low-income.
Of you’re saving for a first home, a Lifetime Isa could also help to boost your savings. You must be aged at least 18 but under 40 to open a Lifetime Isa and the Government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. Terms and conditions apply though, and you could face a withdrawal charge for making an “unauthorised” withdrawal.
