Saving money can feel difficult, especially with rising costs and uncertain economic times.
There are several practical steps you can take to increase your savings in the UK.
Whether you want to save for a rainy day, a holiday, or retirement, here are clear and actionable ways to boost your savings.
1. Set Clear Savings Goals
Having a specific goal will keep you focused. Decide how much you want to save and by when. For example:
- Saving for an emergency fund of £1,000 in 6 months
- Putting aside £5,000 for a holiday in two years
- Building up a pension for retirement
Setting a goal makes it easier to track progress and stay motivated.
2. Automate Your Savings
One of the simplest ways to save is by automating your contributions. Set up a standing order or direct debit to transfer money to a savings account as soon as you get paid. For example:
- A monthly transfer of £200 from your current account to a savings account can quickly add up.
By automating the process, you remove the temptation to spend the money elsewhere.
3. Choose the Right Savings Account
The interest rate offered by your savings account can make a significant difference. Research and compare accounts to find the best deals. Consider:
- High-interest savings accounts – these usually offer better rates than standard accounts.
- ISAs (Individual Savings Accounts) – the most popular being Cash ISAs. They allow your savings to grow tax-free. You can save up to £20,000 per year in an ISA (for the 2024/25 tax year).
- Fixed-rate bonds – these offer a higher interest rate if you are happy to lock your money away for a set period (1 year, 3 years, etc.).
A higher interest rate means more money earned on your savings over time.
4. Cut Unnecessary Expenses
Take a close look at your spending habits. Reducing unnecessary costs will free up more money to save. Start by:
- Canceling subscriptions – Do you really need all your streaming services, gym memberships, or magazine subscriptions?
- Meal prepping – Cooking meals at home is usually cheaper than dining out or buying takeaway.
- Comparing utility providers – Switch to a cheaper gas, electricity, or broadband provider. Websites like Compare the Market or MoneySuperMarket can help you find better deals.
The more you cut from your daily or monthly expenses, the more you can save.
5. Take Advantage of Cashback and Rewards
Earn extra savings by taking advantage of cashback programs and rewards schemes. For example:
- Cashback credit cards – Some credit cards offer cashback on every purchase. If you pay off the balance in full every month, this can be an easy way to make savings.
- Reward schemes – Supermarkets like Tesco, Sainsbury’s, and Waitrose offer loyalty points that can be converted into discounts or vouchers.
- Cashback websites – Before making online purchases, check sites like TopCashback or Quidco for cashback offers.
These rewards may seem small, but they can add up over time and boost your savings.
6. Consider Switching to Cheaper Alternatives
It’s easy to stick with what’s familiar, but sometimes switching to a cheaper option can save you a significant amount. Some examples include:
- Switching energy providers – Using websites like Ofgem’s Energy Price Comparison Tool to compare and switch to a cheaper energy supplier.
- Switching insurance providers – Whether it’s car, home, or life insurance, it’s worth shopping around for the best deals. Insurers often raise premiums, but you can find cheaper rates by comparing quotes online.
Making these changes could save you hundreds of pounds each year.
7. Use a Budgeting App
A budgeting app can help you track your spending and identify where you can cut back. Popular options in the UK include:
- Monzo – Helps you track your spending and set savings goals.
- Emma – A finance app that categorizes your expenses and helps you save automatically.
- Yolt – Provides an overview of all your accounts in one place to help manage your money.
By knowing where your money goes each month, you can find areas to save more.
8. Save Windfalls and Bonuses
If you receive unexpected money, like a bonus at work or a tax rebate, consider saving it rather than spending it. Putting these windfalls into your savings account can give your savings a quick boost. For example:
- A £500 tax rebate could instantly grow your emergency fund or go towards your holiday savings.
It’s easy to think of windfalls as “extra” money, but saving them will help you build your savings faster.
9. Take Advantage of Government Schemes
The UK government offers various savings schemes that can help you grow your money tax-free. Some important ones to consider:
- Help to Save – A government-backed savings account for people on low incomes. You can earn a bonus of up to 50% of what you save, up to a maximum of £1,200.
- Pension Contributions – The government offers tax relief on pension contributions. This can help you save for retirement while also reducing your taxable income.
These schemes are designed to encourage saving and can significantly boost your long-term savings.
10. Invest for the Future
If you’re looking to save for long-term goals, consider investing in stocks and shares. The UK stock market has historically offered higher returns than savings accounts. Some options include:
- Stocks and Shares ISAs – These allow you to invest in the stock market without paying tax on any returns.
- Investment funds – These pools of money allow you to invest in a wide range of assets and can offer better returns than cash savings.
Investing involves more risk, but it can provide better returns over time, especially if you start early.
11. Review Your Debts
Paying off high-interest debt is an important part of saving money. Debt like credit cards or personal loans can be expensive due to high interest rates. Try to:
- Pay off high-interest debt first – Clear debts with high interest rates (e.g., credit cards) before focusing on lower-interest debts (e.g., student loans).
- Consolidate debt – If you have several loans or credit cards, consolidating them into one loan with a lower interest rate can make it easier to pay off and save money in interest.
Paying down your debts will leave you with more money to put towards savings.
12. Avoid Impulse Purchases
Impulse buying can quickly eat into your savings. To prevent this, try:
- Making a shopping list – Stick to it and avoid buying things you don’t need.
- Waiting 24 hours – Before making a big purchase, take a day to think it through. This gives you time to assess whether it’s truly necessary.
This simple habit can stop unnecessary spending and free up more money for your savings.
Conclusion
Boosting your savings in the UK doesn’t have to be complicated.
Whether it’s cutting back on spending, taking advantage of cashback, or using government-backed savings schemes, small actions can add up to significant results.
By setting clear goals, using the right accounts, and tracking your spending, you’ll be well on your way to achieving your savings targets.
