Saving money doesn't have to be a chore - it's possible to build up funds for a rainy day with minimal effort. We show you how.
For many the idea of saving money brings to mind a long slow slog without much reward, but saving doesn’t have to be hard work. There are ways to grow your nest egg without even noticing you’re doing it – we give you our top 5 tips for building your savings; minimum effort required.
1. Set up a standing order to your savings account
One of the easiest ways to start building up your savings is to set up a standing order from your current account to your savings account, so that the balance in your savings will start to grow on its own without you having to remember to physically move the money from one account to the other.
You can set the standing order to transfer any amount you wish, but even a small amount will start to add up after a few months. For example, if you transferred £50 straight from your salary to your savings account every month, it would take just 10 months to build up £500 – and that’s without factoring in interest accrued over that time.
It’s a good idea to set up the standing order so that it automatically siphons off the money you want saved as soon as you get paid – that way you never see the money, so you never miss it. You’ll have to make a decision about how much money you can realistically afford to pay into your savings each month.
After the first month of setting up the standing order, you don’t have to do anything more but sit back and watch your savings grow.
2. Make use of account sweeping
Some current accounts offer the use of an automated sweep facility that will automatically ‘sweep’ any spare cash you have left in your account into your savings account on a certain date each month. You get to choose the date and you’ll be able to choose how much is swept into your savings, either transferring all your remaining balance at the end of a month or leaving a set amount behind.
Sweep facilities will only take money from your current account when you’re in credit so they won’t transfer money to your savings account if you’re overdrawn or if there isn’t any cash left to transfer on your chosen sweep date. As such they’re a great way of guaranteeing that at least some money will go into your savings on a regular basis – with no further action required on your behalf after you have set up the sweep.
3. Make the most of accounts that reward you
Several current accounts are available that will pay you a small amount each month when you deposit a certain amount or keep your balance above a specified threshold. For example the Halifax Reward Current Account pays you £5 for every month that you deposit more than £1,000, whether you’re in credit or overdrawn.
If you manage to secure the benefits of an account such as this, it’s worth taking the cash your bank pays you and putting it straight into your savings. This way instead of being lost in your current account balance it starts working hard straight away and earning you interest for nothing.
4. Take advantage of banks that help you save
Some banks have special facilities set up that are designed to help you move money, little by little, into your savings account in order to grow your nest egg. For example Lloyds TSB offers current accounts that come with a ‘Save The Change’ feature, meaning that every time you use your debit card the amount you spend is rounded up to the nearest pound, and the difference is sent straight to your savings account.
This is a great way to save without knowing you’re doing it because every time you use your debit card, for everyday spending or for anything else, a little more money will be added to your savings.
5. Invest in a penny jar
The old adage is as true today as ever – a little really does go a long way. The simple act of putting away a bit of cash every day in a penny jar can eventually pay dividends, even if you are only emptying your purse of extra pennies and silver.
It’s worth using a penny jar that can’t easily be broken into to avoid temptation, and every now and then consider putting some pound coins or notes in to boost your balance. Only empty the jar when it’s full to the brim, and take the coins to the bank to be deposited in your savings.
By combining all these methods it’s possible to have a decent amount of money saved up before you know it – saving doesn’t have to be hard.
