Many households in the UK are struggling to save. In fact, half of Brits have £1,000 or less in savings, according to research by financial comparison site finder.com. So, Finder’s experts have put together these tips to help you boost your savings.
1. Have a goal
Getting started with saving isn’t easy, but having a goal helps. Keeping in mind that new piece of furniture, or the flat you want to save a deposit for, will help you to stay motivated.
2. Decide how much you can afford to save each month
Even putting just a little each month into a savings account is an important habit to get into. Some people swear by the 50/30/20 budgeting principle, which suggests that you should allocate 50% of your income for needs, 30% for paying off debt (or if you don’t have debt, then buying extras you want) and 20% for savings.
However, this may not work for everyone, so assess your situation and be realistic about how much you can save each month. Put this allocated amount into a savings pot as soon as you get paid to reduce the chances of spending it elsewhere.
3. Open a regular savings account
Some banks offer savings accounts where you contribute a set amount each month, which is ideal if you’re just starting your savings journey.
These often have higher interest rates as there’s a limit to how much you can contribute to the account each month. This will help you get into the habit of saving regularly and boost what you’re saving.
4. Consider challenger banks and digital money apps
Many digital banks and money apps offer higher interest rates on easy-access accounts than high street banks offer, so consider the whole market. For example, providers such as Chip, Plum and Chase currently offer savings account rates of more than 4%.
5. Shop around for fixed-rate cash ISAs
If you can afford to lock away some of your savings for a set period, you can often find good rates on fixed-term cash ISAs. Your savings are also tax-free when held in an ISA.
Cash ISAs have been notorious for low interest rates in the past, but these have been rising steadily thanks to a series of base rate hikes by the Bank of England. The average rate on a 1-year fixed rate ISA in October 2023 was 5.48%. With fixed rates higher than they’ve been in a while, now could be a good time to lock some of your savings away for a year in a fixed-term account.
You can put up to £20,000 a year in ISAs, which renew at the start of the new tax year in April.
6. Be proactive and stay on top of your savings
Savings rates can quickly change, and any deals you signed up for may only be valid for a certain period.
Set reminders on your phone or in your calendar to review your savings accounts at regular intervals to make sure your money is not sitting stagnant. If you think you can find a better deal elsewhere and your money is no longer locked away, make the switch!
7. Boost your pot with free cash
Many of us are reluctant to switch banks because we’re loyal to our current provider. In fact, a recent Finder survey found that only 14% of Brits have switched banks to take advantage of a switching deal before, and the top reason for not doing so, affecting a third of Brits, was loyalty.
However, several banks currently offer a bonus of up to £200 for switching to them, and the process is free and simple through the Current Account Switching Service (CASS). This gives you an easy cash bonus to boost your savings pot.
About the author
Sophie Barber is a content manager for finder.com in the UK, and she has over 5 years of experience in writing and publishing informative online articles for a variety of websites. She has a Master’s in English from the University of Exeter and is passionate about creating content that taps into trending topics and helps make personal finance decisions easier.
This article originally appeared on finder.com/uk and was syndicated by MediaFeed.org.
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