If you’re trying to figure out how to start saving money, remember that even the smallest amounts add up over time.
According to The Money Charity, 12.8 million households in the UK have either no savings at all or less than £1500 set aside. If you’re one of them, don’t despair. We’ve come with 10 easy ways to start building up your savings.
1. Find one area where you’re overspending
If you don’t have a budget set up, you’ll need one to start saving money. Understanding your spending habits will help you make changes so you can spend less and save more.
Budgeting doesn’t have to be hard – just keep track of everything you spend money on for a month. You can use a simple spreadsheet or one of the many budgeting apps available.
At the end of the month, sit down and analyse your expenses. Find one category where you are spending too much, such as eating out, entertainment or shopping. Then figure out ways to cut down on those expenses so you can send some extra money to your savings.
2. Set savings goals
Visualising what you’re saving for can help. Do you want to have enough money set aside for a down payment on a home? Do you want to save for the holiday of your dreams? Or do you want to have a certain amount saved by the end of next year?
Whatever your goal, pick a specific number and date. You can then calculate how much you need to save every month to reach that goal. The more specific you are, the more you can push yourself to choose savings over spending next time temptation arises.
3. Pay yourself first
Make savings automatic by setting up a Direct Debit to your savings account every month. The amount is less important than the regularity. Even if you can only send £50 to your savings account every month, it all adds up.
Make sure the money is debited before you pay any bills or use it for anything else. That way, it’s like the money never existed and you likely won’t miss it.
4. Treat it like a game
There are many saving challenges you can use to start saving money. Saving challenges work because they feel like a game, so you’re more likely to push yourself to complete them.
You can do the penny challenge, where you save one penny on day 1, two pennies on day 2, and so on. Continue this way and you’ll have close to £670 by the end of a year. You could try saving every £5 note you get, or just empty any change in your pocket into a jar at the end of each day.
Once you’re done with your chosen challenge, deposit the total into your savings account.
5. Avoid debt
Stop taking on debt, if possible. Every penny you pay in interest is money you could be sending to your savings account. If you already have a lot of debt and are having trouble dealing with it, talk to a financial advisor. Consolidating your debt might help you lower your interest rate and speed up your debt repayment. Then you’ll be in a stronger position to start saving.
6. Cancel automatic subscriptions and memberships
It’s ok to keep paying for Netflix and the gym if you use them regularly. If you don’t, cancel them and find other ways to entertain yourself.
Make a list of everything you’re paying for –Spotify, Amazon Prime, subscription boxes – and really ask yourself if they’re all worth keeping. Be ruthless. The more you can live without, the more you can send to your savings account every month.
7. Take advantage of free anything
Find free entertainment anywhere you can. Start by contacting the tourism office in your own town and see what free events are available locally. Then check if nearby museums, galleries or attractions offer free or discounted days.
Have a free afternoon? Use it to volunteer at the local dog shelter or have a picnic at the local park instead of spending money on lunch. Or set up a clothing swap party with friends to combine fun with free “shopping.”
8. Improve your credit score
The better your credit score, the better interest rates you’ll get on a mortgage, a car loan and even a consolidation loan to pay off debt. To improve your credit score, start by paying your bills on time and keeping the balances low on your credit cards.
9. Sell what you don’t need
Need a way to jumpstart your savings? Get rid of anything in your home that you don’t use or don’t need. That could be anything from old books to that ugly crystal vase your aunt gave you to furniture and electronics. Any money you make, no matter how little, send it straight to your savings.
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