In 2017 studies showed that around that around 40% of people in the UK had less than £100 in savings. Now in 2018, that figure has increased, with over 50% of people with little or no money put aside for rainy day emergencies.
While an inability to save is completely understandable, it’s no coincidence that this lack of savings corresponds with an increasing amount of people who are turning to payday lenders to get them through the month.
With more short-term loans taken, the problem increases – with less and less disposable income that can be saved.
Saving might feel impossible – but we’ll take you through some tried and tested measures that will help you to save, even just a little, so you’ve got a buffer zone to turn to instead of high-cost alternatives.
In 2017 studies showed that around that around 40% of people in the UK had less than £100 in savings
Work on clearing debt
Saving money isn’t going to make sense if what you’re putting away would be better spent clearing some of your debt. For example:
£100 saved will gain a very small amount of interest over the course of 1 year, less than £1 in most cases. However, £100 of outstanding debt could add up to significant debt, perhaps even doubling or tripling in size from some payday lenders over the course of the same year.
Therefore, it makes more sense to clear whatever nagging debt you can before you start putting money away to save. It might not feel like saving – but the sooner you’re clear of high-interest debt, the sooner you can funnel money into your savings.
Create a budget
There’s nothing glamourous about having a budget – but what a lot of people don’t realise is that a little bit of discipline with money could equal a lot of freedom in other areas.
To create a budget, make a note of how much income you bring into the house each month. Take away from this figure all of your outgoings – including your bills, direct debits, recurring card payments, etc.
The figure that you’re left with is your disposable income, well, almost. You should also take away any costs that relate to food shopping, travel and other important outgoings.
The figure that you have left is the amount you have for socialising, spending, booking holidays – or saving! The great thing about this disposable income – and to some degree – the money you spend on food and transport costs, is the fact that you can influence it. You might have a takeaway each week that costs £25. If you decide you could live without it, that’s suddenly £100 saved each month.
A budget isn’t just to control what you spend, it’s to give you a good idea of where your money currently goes. You might be shocked – and if you are, you’ve possibly just identified some areas that you could squeeze a little tighter on to let you put some money away.
Say no to auto-renewals
Auto-renewals are the best friend of the insurance, gym, phone and subscription companies – and that’s because they filter money out of your bank account and into theirs!
Auto-renewals are really great ways to spend more money than you need to on your chosen services – and it’s all about convenience. It’s much easier just to let these payments renew – but they often do at an increased cost – and it can be avoided!
Get into the habit of setting a reminder in your phone or diary a month to 6 weeks prior to your renewal date. Call the company in question and tell them you don’t want to renew – or, even better, switch off any ‘auto-renewal’ option if you can access your account online.
It might be a little more work, but shopping around again for these services is always the best bet and can save you hundreds of pounds when you compare it to just letting the amount continue to tick over.
Set up a savings account
You need to be seriously disciplined to keep money that you’re saving in your current account and not touch it. If you have this ability then congratulations! You’re in the minority, for most of us, setting up a savings account is absolutely key to putting any money away.
The bank you have a current account with will usually set up a savings account for you with little or no additional paperwork needed – and some, ISAs, mean you’ll save even more, as your savings become tax free.
When your account is up and running you might want to have a set criteria that you check against before you dip in and withdraw anything from it. Sleeping on the idea of withdrawals is usually smart – it gives you time to consider if you really need that purchase, or whether money would be better kept for emergencies.
Pennies make pounds
There’s a sure-fire way to fail at saving money – but it doesn’t stop people from doing it time and time again.
That method involves taking a huge chunk of money out of your current account and trying to ring-fence it to keep it as savings. In reality, cutting yourself seriously short doesn’t mean you’ll save, it just means you’ll dip into your savings account more readily as you go through the month.
This actually has a more negative result that no saving at all – as you can become convinced that you’re totally unable to save at all.
Instead, try putting away a small, unnoticeable amount each day, week or month. It might only be a few pounds to begin with, but putting it into your savings and seeing it stay there can be a huge morale boost – and don’t forget, even just saving £20 a month is £240 over the course of a year – money that could make a big difference if you need to get a car through its MOT, pay an unexpected bill or have a financial emergency…
Make saving automatic
Most savings accounts now come with an app that lets you administer your money from your smart phone. These apps often also come with the ability to set standing orders up quickly and easily – and even if you’re not an app fan, you can do this just as easily in a branch or with telephone banking.
If you put a small amount into your savings every time you’re paid, it’s less likely to be a painful outgoing later in the month. Auto-renewals mean money in the bank for companies – auto-savings means money in the bank for you!