At Hodge, we like to think saving money is more about investing in tomorrow, than sacrificing what you can spend today. Having money set aside, whether it’s for a rainy day fund or reaching a future goal, can make you feel financially secure and money confident.
So, if you’re new to balancing your spending and saving, or just need a refresh on what you know, let’s walk you through the essentials. From savings goals to savings accounts, we’ve got you and your money in ‘save hands’.
Why is saving important?
Building a habit of saving a little regularly is a smart money move. Here are some great reasons why:
1. Feeling financially secure
Mental Health and Money Advice found a strong link between the benefits of financial security and mental health. Having savings can give a sense of stability, peace of mind and allows you to feel not only in control of your money, but in control of your future.
Savings can also help you avoid the need for credit or loans for everyday expenses or big purchases, helping you to avoid debts and paying interest.
Knowing you’ve savings set aside can reduce stress and anxiety, knowing you’re better equipped to handle life’s challenges and uncertainties.
2. Being prepared for the unknown
A significant finding from our ‘cost of living research’ is that emergency savings are on the rise. More than half of the respondents (54%) reported creating an emergency cost of living savings fund in 2023.
Saving can provide a financial safety net meaning you can be prepared for the unexpected expenses life can throw at you. If the car doesn’t pass the MOT, need a plumber or have a hefty vet bill, you can dip into emergency funds and not rack up credit card debts, which could cost you more in the long run as interest builds.
3. Helping to make tomorrow’s memories
For most of us, life’s big purchases need planning, budgeting and saving. New car, first home, big holidays, dream weddings. They all have price tags attached and a savings account can give you the right place to start your savings pot and can also keep you on track, helping you maintain your focus on the bigger picture if your motivation wains or you’re tempted to spend rather than save.
Tips to grow your savings
Growing your savings can simply be a case of prioritising what you do with your discretionary income, which is any money left over after deducting all essential, fixed costs from your salary. The easiest way to do this is to review your spending and then create a budgeting plan. Here are four quick steps to get you on your way.
1. Review your outgoings
Review your monthly expenses to identify areas where you can cut back. Quick wins like cancelling unused subscriptions, reconsidering luxury expenses and prioritising needs over wants can mean extra goes into your savings account each month.
2. Embrace the 30-Day Rule
Before making non-essential purchases, wait for 30 days. This rule can help you save money by curbing impulsive buying decisions. If, after 30 days you’re still keen to make the purchase then you know it’s a well thought out decision. If not, move the money into your savings account.
3. Set realistic goals
Define clear and achievable savings goals. Whether it’s an emergency fund, a holiday, or a down payment, having specific targets helps you stay motivated. If your break down larger goals into smaller, more manageable milestones, you’ll be able to set realistic timeframes and gain a more tangible sense of progress each time you save.
4. Find the right budget for you
There are many popular budget plans which have been designed to fit around the different ways people manage their money. Such as the 50/30/20 rule which suggests putting 50% of income towards needs (essential spending), 30% towards wants (discretionary income) and 20% in a savings accounts. Or a pay yourself first budget, where you skim off a realistic amount from your monthly income before you spend on any non-essentials.
Read our ‘How to budget’ blog for some more budget plans that could work for you.
Which account is better for saving?
Opening up an account for saving money is the first step. It will keep your savings separate and you can also benefit from earning interest on the money in your savings account
When choosing a savings account it’s best to check the interest rate being offered, accessibility to your money, such as fixed or no-notice and placing your money with a trusted bank or financial service. Look for a savings account that best suits your financial goals and will help you to get there.
Hodge has some great savings options for you and your money.
How to start saving money with Hodge
Explore our savings account and find the right type of savings account for you. All our savings accounts have been designed to offer customers competitive rates alongside convenient features.
Explore our savings accounts or contact us.
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.