Eight ways to start saving successfully

Getting your head around the world of money can be tough. But, once you’ve got the fundamentals down, everything gets that bit easier. In this blog, the Pledge’s lead partner Money & Pensions Service explains how people can begin their savings journey.  

Ever faced a financial emergency like the boiler breaking down but not had the funds at hand to get it resolved? Or have you wanted to save for something big but struggled to get going?  

Help is at hand. Here are eight ways to start a healthy savings habit :   

1. Pay off your debts first  

You’re unlikely to earn more interest on your savings than you pay on your debt, so aim to pay off expensive borrowing, like credit cards, store cards and overdrafts before you start to save.  

If you’re looking for tips on how to reduce your  debt, we have some more information right here.  

2. Start small  

Even tiny amounts add up if you can save regularly. For example, saving just £3 a day adds up to £1,095 over a year, not including any interest.  

3. Separate your savings  

If you leave the money in your purse or bank account, it’s much more likely to get spent. It helps to keep your savings separate.   

Savings tactics like the jam-jar approach can help you save more by keeping your money out of sight, and out of mind.  

4. Earn interest on your money  

Open a savings account  and you can earn interest on yourmoney.  

You should be mindful of each account’s terms, for example, if you’re setting up an emergency fund, look for accounts where you can get access to your money when needed, rather than tying it up for a long time.   

But if you have a savings goal with a longer deadline, you could lock your money away and earn a fixed rate over a set period in a fixed term savings account.    

You don’t need to completely ignore current accounts. Some current accounts are now paying higher rates of interest, provided you follow all their terms and conditions.  

If you do use a current account for your savings, consider having a second current account for your bills and expenses so your money doesn’t get mixed up.  

5. Build a savings cushion  

As a rule of thumb, it’s helpful to set aside an emergency fund with enough money to cover your essential outgoings for three months. So, if you spend £1,000 a month on bills like your rent or mortgage, council tax, utility bills, food and so on, you will need to save £3,000 for a three-month fund.  

If you’re curious about how much you should save for  emergencies read more here.  

6. Set up a standing order  

A standing order is an instruction to your bank to pay money from one account to another at regular intervals. If you set up a standing order to pay money into your savings account each month, you won’t have to remember to manually make the transfer each time.   

7. Pay in after pay day  

If you set aside savings straight after you’re paid, you’re less likely to miss the money. Wait too long and the cash is much more likely to disappear into everyday expenses or non-essential items.  

You could even double up with our previous tip and set your standing order for payday.  

8. Set a savings goal  

Write down what you’re saving for and how much you need to save each month to reach your target.  Then set a date for when you aim to have saved enough. Putting a goal down on paper can make it more likely you’ll achieve it.  

One extra tip to help manage your money, try a free budget planner. This may make it easier to structure your goals, and gives you oversight of all your incomings and outgoings. The Money & Pensions Service has a free budget tool called Money Helper which you can try here.   

That’s everything for now. Keep an eye on the blog as we’ll be posting more articles to help you master your money. For an even deeper dive on all things savings, check out our previous blog post here.