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5 min read
Ready for a new challenge? It’s easier to start saving than you might think.
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Summer is officially over and it feels like a good time to reflect and assess our finances. One of the most expensive periods in the calendar is also fast approaching, as Christmas is just around the corner.
However, to avoid feeling overwhelmed by your festive shopping list, it’s a good idea to audit your finances now and prepare for the months ahead.
This audit should look at your current expenses and discover new ways to save money, as this will bolster your savings and minimise the risk of debt.
But if you aren’t managing to save any money each month, how can you start?
The good news is it’s easier than you might think. Savings challenges are a good way to kickstart your savings journey, as it encourages you to save little and often.
If you’re ready for the challenge, compare savings accounts to find the best place for your money. As you will be adding money to your savings pot regularly, it’s worth looking at instant access savings accounts as these come with similar flexibility to a current account, but with the bonus of interest. For example, you should be able to withdraw and deposit whenever you wish.
Alternatively, explore regular savings accounts as this type of account encourages you to deposit a certain amount of money each month, while earning high interest. However, these accounts do come with some restrictions, so always read the terms and conditions before applying.
Once you have a suitable savings account, it’s time to try a savings challenge. Remember, you’re in control and you can adapt the rules of any savings challenges to suit your budget.
If you want to start building your savings pot quickly, then it’s worth trying a daily savings challenge. Set yourself a target of saving each day and watch how quickly your savings grows.
Try saving £5 every day for 30 days and you’ll save £150. If you commit to this challenge for three months then you’ll have £450 - not bad for just a fiver a day.
If £5 every day feels a bit of a stretch, then another popular savings challenge is to save £1 on Monday, £2 on Tuesday and so on until you reach £7 on Sunday. Then on Monday you restart the challenge on £1 again. This tactic means you save £28 every week, so within six weeks you’ll have £168.
If you want to take this challenge to the next level, consider committing to it for one year as then you’ll have £1,456 saved!
So far, the savings challenges have encouraged you to save every day, but there is also a way to save on a monthly basis.
For example, follow a similar pattern to the £1 challenge, but change the rules to suit the 12 months in the year. So, in the first month save £10, then in the second month save £20 until you reach the 12th month and save £120. This will give you a total amount of £780.
You can also be flexible with this pattern and pay off the months when it suits you. For example, create a chart with each month and then cross it off once you’ve saved that amount. So, if in the third month you actually have £70 saved, skip ahead and cross it off. This flexibility means you are still sticking to the challenge but saving at a pace that suits your budget.
Another challenge you can try is to test your ability to not spend any money during a specific timeframe. For example, commit to at least two no-spend weekends every month and see how much you can save.
If you normally spend around £100 each weekend, then you could add an extra £200 into your savings pot each month. This will then increase your pot to £2,400 after one year. It might sound like a mountain to climb, but enjoying free activities or making the most of being at home can really pay off.
If your audit highlights some impulse spending, then reversing this habit could be a good way to save money.
For example, if you want to make an impulse purchase, then apply a 10-day rule. This means you have to wait 10 days until you can make the purchase, so set aside the money in a savings account until the time is up. A notice savings account works in a similar way, with different periods of notice before accessing your money.
If you still really need the item, then you can buy it - but if you don’t want it anymore then you can keep the money in savings. This will hopefully provide motivation for saving, rather than spending.
Overall, these savings challenges are simple but very effective ways to save money over time. With some determination, they will help you to build an emergency fund, so you’re ready for Christmas - and beyond!
