According to a survey carried out earlier this year by Skipton Building Society, a quarter of adults in the UK have no savings at all; this includes one in ten people over 55, who have set nothing aside for retirement.
Over a third of those surveyed said that the main problem was that their outgoings were higher than their income, even though they knew not having anything set aside was a considerable risk should something go wrong (anything from a broken boiler to losing their job). If you find yourself in a similar situation, there is never a better time to start saving than now.
Pay Off Your Debts
Before you begin saving, think about paying off your debts including loans, hire purchase agreements and credit cards. The interest rates on debts will be higher than those on savings so the sooner you can pay them off, the better.
Top 5 Ways To Save
Once you’ve paid off your debts, it’s time to start saving. Here, we look at five ways you can begin saving for the future.
1. Decide on a savings goal
How much you need to save will depend on what you are saving for. Is it, so you have a pot of money to pay for emergencies such as that broken boiler, for example, do you want to go on holiday or are you hoping for a comfortable retirement?
No matter what your saving goals, you should consider setting money each month until you have enough to cover three months’ worth of outgoings, just in case the worst happens, and you lose your job.
It might be that you want to save for more than one of these goals; if you do, prioritise them and start with the most achievable (which will motivate you to keep saving).
2. Come up with a savings plan
Once you know what you are saving for, and have a financial goal in mind, work out how much you need to save a month to reach your goal, then stick to it.
It might be that you need to save quite a bit to reach your goal. If you aren’t used to saving, build up to this amount slowly, saving a pound a day, for example, equals £365 a year.
3. Open a separate savings account
If you aren’t used to saving, keeping all your money in one account might be too tempting. Keep your savings safe by opening a separate savings account; the bonus here is that it will probably have a better rate of interest than your current account.
You’ll earn more interest if all your savings are in one place but, if you have more than one savings goal, you might be better placed opening separate accounts for each of your goals.
4. Find the best place for your savings
Not all savings accounts are created equal, and you need to find the right one for you. The account you choose depends on your saving goals. Short term goals, for example, are better saved in a savings accounts, term deposit or short-term ISA. For longer-term goals (more than ten years) shares, bonds or funds might be a better option.
Look around for the best saving options for you. Comparison websites like here on Lending Expert are a great option to see which banks offer the best saving rates.
5. Set-up a standing order
It’s much easier to save money if you don’t have to remember to move your money (it makes it much less tempting to spend what you should be saving too). Set-up a standing order so that you find it easier to save as much as you need to each month.
Set up standing orders so they come out of your account straight after payday, that way you won’t miss the money.
Beyond Your Bank Account
As well as saving into a bank account, there are other ways to save money that you can build into your daily or weekly lives. The 52 Week Challenge is an example of this. You start week one by putting £1 in a jar. On week two, you put £2 away and so on until you put away £52 in week 52. By the end of the year, you’ve saved £1,378. The Penny Saving Challenge is similar. Here you put 1p away on day one, 2p on day two and so on. By the end of the year, you’ll have saved around £600.
Saving this way can be fun, but it also makes a habit of saving easier, which is what you need if you aren’t in the savings habit. It shouldn’t be the only way you save, but it can be useful for short-term goals like paying for Christmas presents or going on holiday.