By saving money little by little you can build up a decent nest egg without even trying. Here are our top practical tips that will help you to find money you never knew you had and then make it work as hard as possible.
Building up cash in a savings account might be high on your list of priorities, but you may think you just don’t have enough to set aside every month. However, if you collect together the leftovers that you otherwise would have spent, you can start growing your savings without needing to find the money elsewhere. Here’s how.
1. Sweep up your current account
If you have a current account that has a regular salary or other payment paid in, pay attention to how much (if any) you have left at the end of the month. Whatever is there can be transferred straight to savings, even if it’s only a negligible amount, so that it can start earning interest right away. As this is money that would be eclipsed by your next salary payment if left in your account, you won’t miss it by transferring it to your savings.
You can do this yourself manually each month by checking how much you have left over and moving it to your savings. Or, you could use a sweeping facility; these are often offered as part of a current account where your bank will automatically sweep any leftover money into your savings each month.
2. Budget
Drawing up a budget can be enormously helpful in a number of ways, especially if you’re trying to cut back on spending and need to identify your biggest outgoings. But they’re a good way of rewarding yourself too, by taking what you’ve saved by budgeting and putting it straight into your savings account.
Draw up a budget and identify any expenses that you can live without – whether that’s a daily coffee or a gym subscription you don’t use. Take the money you would usually have spent and move it to your savings to make the most of any money you were previously spending on non-essentials.
3. Cash in spare change
We all have plenty of spare change rattling around our homes, whether that’s down the sofa, in a piggy bank, or in jeans pockets. Start making the most of this change by cashing it in - you can do this at the bank or in several other ways. Transfer whatever you get from your coinage straight to your savings account to start seeing a return on it.
4. Get cashback
Using a cashback credit card or shopping through a cashback site can be a nice little earner if you know how to do it right. By getting some money back on what you spend you can essentially be making free money and so this should go straight into your savings pot to help turn pennies into pounds.
5. Get an account that rewards you
Several current accounts now offer a cash reward simply for using them, such as the Halifax Reward account which will pay the account-holder £5 for every month that they pay in £1,000. Or, you could simply get a current account that pays a decent rate of interest.
While the amount you ‘get paid’ may not be much, it’s still worth taking this out of your current account and putting it straight in savings to help build them up little by little. As the money you get from the bank is akin to free money you won’t be missing out by sending it to your savings.
6. Reward yourself for discounts
If you’ve had a certain purchase in mind for a while and have done your homework by shopping around to find the best price, it’s possible you may have saved a substantial amount. For example you may have seen digital radios selling for around £60 at several shops but find a special offer where you can buy one for £30.
In this case take the £30 you’ve essentially ‘saved’ and put it straight in your savings account. You won’t miss it because you will have anticipated spending around £60 anyway. You can also apply this method if you have used vouchers to get a discount on food or going out – take what you would have spent pre-discount and put it in your savings.
