Pay off expensive debts first
There is no point in trying to save money if you are burdened with costly debt.
The average, easy-to-access savings account offers less than 0.2% interest, while on some loans you could pay more than 20%. Try paying off expensive debt with a credit card, bank card, or overdraft before you think about saving money.
Start a rainy day fund
Everyone should aim to have money in an easily accessible savings account to provide a financial safety net if the worst happens.
“We all need strong savings to face the unpleasant surprises that life tends to bring,” said Sarah Coles, personal finance analyst at investment firm Hargreaves Lansdown. “We should be working on three to six months of essential expenses in one easily accessible account. “
Basic expenses should include items such as housing costs, money for food, and large bills. Don’t be put off by the amount this represents – anything you can put aside for it will help if things go wrong.
Have a goal
Beyond saving for rainy days, you might want to put some money aside – and having a goal will motivate you. “Setting a goal and giving it a name can help keep you on track,” says Annabelle Williams, personal finance specialist at investment firm Nutmeg. “By making sense of your savings goals, like a new home, a specific trip, or a major purchase, you’re more likely to stick to your savings habits. “
Make it a regular habit
Regular savings accounts are a good option for those new to savings. You put money aside each month, usually through a standing order from your checking account.
These accounts offer some of the best interest rates, although the maximum you can put away is often not that high.
If you have a NatWest checking account, you can take advantage of its Digital Regular Saver account, which pays 3% interest in the market and is, he says, designed to help customers with little or no savings build a business. saving habit and building finance aptitude.
However, you can only pay up to £ 50 per month. TSB’s Monthly Saver pays 2% and saves you between £ 25 and £ 125 per month. Again, you must have a checking account with the bank to open one.
Most regular savings accounts last for one year and interest is paid at the end of the period. You will then need to shop for a new account for your lump sum.
For those with low incomes, the Government Savings Assistance Account is definitely worth considering. It allows certain people on a work tax credit or on a universal credit to get a bonus of 50 pence for every £ 1 saved over four years. You can put in between £ 1 and £ 50 each month, and the maximum you can earn in four years is £ 1,200 in bonus money. But paying into this account can affect some people’s eligibility for benefits and the amount they receive, so read the details carefully before committing.
Then there is Isa for Life, which allows people to save for property or their retirement. You can set aside up to £ 4,000 per year for up to age 50, and the government will add a 25% bonus to your savings, up to a maximum of £ 1,000 per year. To open one, you must be between 18 and 39 years old.
Tower increase your expenses …
Many banks make saving easier by forcing you to do so every time you pay for something.
Lloyds Bank has Save the Change. When you buy something with your debit card, if your account is in credit, it will round the amount spent to the nearest pound sterling and transfer the difference to a designated Lloyds savings account. “If a purchase is £ 2.20, the bank will transfer 80 pence, which could save someone £ 5.60 in a week if spent every day,” says the supplier’s Rachel Springall of Moneyfacts financial data.
The Chase digital bank does the same and deposits small change into a separate account where it will earn 5% interest for 12 months.
… or round down
Another technique is to log into your checking account, look at the balance and “mentally round it up,” Williams says. “If you have £ 221.60 until payday, round it up to £ 210 and transfer £ 11.60 in savings. It all adds up over time. “
Use an app
Chip and Plum are just two of the apps that offer “auto-save” functionality. Every few days, the technician does the math and automatically transfers part of your money to another account, which gradually adds up.
Plum’s free option includes automatic registration, while Chip changes its prices in mid-January so that standard membership is free.
A budgeting app might also help. Springall suggests Money Dashboard, which automatically categorizes expenses into “buckets,” such as household bills and groceries – this lets you see what you can afford to save once the essentials are covered.
Another budgeting app to check out is Emma, which analyzes transactions between accounts and categorizes them into expense categories. “Good budgeting starts with careful planning and reliable information,” its website promises.
Correction for better feedback
Some of the best interest rates are offered by fixed rate savings accounts, where you typically lock in your money for a year or more.
Of course, this will not suit everyone. At the time of this writing, you could get around 1.3% on a one-year fixed rate bond, around 1.6% on a two-year bond, and around 2.1% on a five-year bond. .
For the latest rates, keep a close eye on the Moneyfacts charts.
Change current account
If your checking account doesn’t cut the mustard, you can get free money – enough, perhaps, to start a nest egg – by moving it to a new provider. Many banks pay over £ 100 if you move to their place.
Nationwide will give you up to £ 125 if you are a member and upgrade to their FlexDirect checking account. If you are not yet a member it is £ 100.
Meanwhile, HSBC is offering £ 150 if you switch to their Advance or Premier accounts. Usually, the money goes into the checking account you switched to shortly after the move is complete. You can then use this money to open a new savings account or increase an existing account.