Does your monthly pay day feel like the equivalent of a high-speed train? Zipping into your bank account right on time, but just as quickly (or it can feel that way), it’s off again, speeding to various other destinations – energy bills, mortgage payments, food shops. You barely get the chance to appreciate it before it’s gone again. To try and make the most of your hard-earned cash, putting a little of it aside, could make a big difference.
So, welcome to our helpful hints on some quick and easy ways to save money each month and hopefully, keep your finances on the fast track to a location closer to home.
How to save money each month
Knowing why you want to keep a little aside to save each month is the first and most crucial step in keeping your finances in check. Whether you want to plan for a holiday, build up an emergency fund or make a big purchase, like saving for a wedding or house deposit, keep your end goal in mind and you’re more likely to stay motivated to get there.
Once you have a plan in mind, the next step is making savings a habit by developing a consistent savings strategy. Here’s some practical and straightforward money saving tips to help you start saving each month.
1. Cancel, switch or cutback on subscriptions
One of the quickest ways to save money is to review your monthly subscriptions. From rarely viewed streaming services, to magazine subscriptions you’ve forgotten, or gym memberships you don’t use, these monthly costs can add up. In comes your income, out goes your outgoings. Take a little time this month to review which subscriptions you are using and which you can go without, if even for a few months to test if you’ll even miss it. You might be surprised at how much you can save from the comfort of your own sofa.
2. Plan before you purchase
If impulse purchases are on repeat and saying no is not, planning ahead could be your secret weapon. Simple planning, such as working off a list in your weekly food shop can cut back on easy overspending. Making a packed lunch, cutting back on takeaways and throwing less away each week could all mean extra pounds in your savings account.
3. Savings before spending
One of the easiest ways to prioritise saving money over your spending is to understand your income vs your outgoings. From essential spend such as bills and rent, to not-so-essential things like socialising and hair appointments.
Having clear pots of money for each source of outgoings will help you manage your money in a clear and transparent way. For example, if you are paid £2,000 and know £1,200 is allocated for bills and rent, you could then automatically put £200 in a savings account and have £600 for other living expenses for the month. You could also choose an easy access savings account so if you really need to dip into your savings or have an emergency fund, you know its accessible.
It’s also good to remember even small, regular transfers can accumulate over time and contribute to your savings goals.
4. Bills bills bills
Bills can feel like a non-negotiable but believe it or not, there are ways to save money when it comes to utility, phone and even council tax bills. And who wouldn’t want to spend less on bills and free up more money for savings? Small changes like searching around for phone deals, switching energy provider and making sure you’re not overpaying on things like council tax (you can save 25% if you live on your own) are where there could be some hidden savings.
5. Savvy shopping
Looking for discounts and coupons, using loyalty cards and bulk buying on non-perishables are simple ways to pay less. If you’re shopping online, price comparison websites and apps can help you find the best deals on products, helping you get the most value for your money and hopefully adding a little extra to the savings pot!
How much should I be saving a month?
The amount you should save each month will vary based on your individual circumstances, such as income, lifestyle, expenses and money goals. A popular recommendation is to save around 20% of your income. It’s based on the 50/30/20 rule, which suggests many people can work towards allocating 50% of their income to needs (essential spend), 30% to wants (non-essential spend) and still have 20% to add to a savings account or debt repayment. If you need a little more help on whether to save or pay back debts, read our useful blog.
Remember, not everyone’s financial circumstances ar/e the same and the 50/30/20 rule may not work best for you right now. If 20% seems too daunting, start with a smaller amount and gradually increase it when you can. The key is to develop a regular saving habit. Even saving a small portion of your income each month can build up over time – when it comes to saving, every little bit counts.
If you’d prefer a budget plan, but not sure if the 50/30/20 rule works for you, check out five popular budget options here.
Which savings accounts should I be using?
Choosing the right savings account can be a superpower in keeping you saving. Luckily there’s many different options available for you to consider:
1. Easy access savings account
With an easy access savings account you have access to your money 24/7. It’s a perfect fit for short-term savings goals, starting an emergency fund and those who want to be able to deposit and withdraw cash at varying intervals, with most banks having a minimum deposit of just £1. As it’s a savings account, you’ll earn interest, but you also keep the flexibility of accessing your cash, like your current account.
2. Regular savings account
A regular savings account can be helpful for those looking to build a regular savings habit. Most regular savings account offer attractive interest rates for those willing to commit to saving a minimum each month over a set period. The terms will vary depending on who you choose to open an account with, so check things such as if there’s a minimum or maximum deposit amount and restrictions on withdrawals. We don’t currently offer a regular savings account option.
3. Fixed term savings account
Fixed term savings accounts such as bonds and ISAs lock away your money for a set period you choose, usually one, two, three or five years. There may also be a minimum deposit to open the account. A key benefit of a fixed term savings account is you’ll know what interest you’ll earn over that period and as you won’t be able to access the money (or will likely pay an early access fee if you do need to), you can have longer-term savings goals in place. Sometimes fixed terms savings accounts will offer more competitive interest rates than easy access or regular savings accounts so it’s a good idea to shop around.
You can take a look at our current interest rates here.
4. Cash ISAs
Individual Savings Accounts (ISAs) allow you to save money tax-free up to a certain limit. There are different types of ISAs, including Cash ISAs, Lifetime ISAs and Stocks and Shares ISAs. Cash ISAs are similar to regular savings accounts but with the added benefit of tax-free interest. You can find more about the tax efficient benefits of Cash ISAs here and our current interest rates here.
Start saving with Hodge
We’ve been supporting customers with their financial futures since 1965 and our deep knowledge and experience means you’re in safe hands. With a range of straightforward and flexible savings accounts, we’re here when you’re ready to start your own savings journey. Our savings account product range is designed to meet your needs and support you whatever stage of life you’re in, from opening your first savings account to planning towards a longer-term savings goal, we’re here for you in the moments that matter.
Visit our personal savings page to explore our offerings and find an account to suits your financial needs.
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.