Saving has been out of style for years – thanks to a combination of low interest rates and high inflation.
These meant that your money hardly earned anything while it was stashed in a savings account – and the little interest it did earn was lost as the value of cash fell, or rather plummeted.
But times are changing. Households stashed more savings in September than in any month since lockdown.
According to Bank of England data we put an extra £8.1bn into banks and building society accounts in September. This comes after a £3.2bn rise in August – and compares with an average monthly rise of £4.6bn during 2019, before the pandemic hit.
What has changed and why should you save?
People were saving during lockdown, because they had little to spend their money on. But since then, worries about the economic future may be causing a reluctance to spend.
There are plenty of rational reasons to become a saver.
Dealing with a crisis. The covid emergency demonstrated how important it is to have a financial buffer, because we simply don’t know what the future holds. Building an emergency fund is a lifeline if you have a personal financial crisis, such as a loss of income or having to pay for a car repair.
Avoiding debt. When you need to make a big purchase it is easy to reach for the credit card – and easy to get into debt that is very hard to get out of. Rather than build up a balance on your credit card which can be almost impossible to pay off – and which costs you money every month – you can buy the things you need with cash you already have.
Preparing for the future. Building a cash nest egg could be vital for your future. It could be the first step towards creating wealth, giving you something to turn into investment in a few years’ time.
Easy ways to get started
Trim the fat. Look at your monthly outgoings, and work out where you can cut your spending. Find another supplier for your phone, look at a cheaper supermarket for your weekly shop, stop paying for forgotten subscriptions, for the gym or the online service you no longer use.
Then add up the savings you make – and use this amount as the basis for a regular monthly payment into your savings fund.
Have a no-spend week. You still need to eat and the regular bills won’t stop coming in, but cutting out all spending on things like clothes, takeaways and taxis can leave you with extra cash. It could help you see what you really need to spend, and what you only think you need to spend – and it will certainly provide the cash you need to get started with saving.
Get help from the government. The government has a Help to Save scheme. This is a type of savings account that allows people entitled to Working Tax Credit or receiving Universal Credit to get a bonus of 50p for every £1 they save over 4 years, there is a savings limit of £50 per month.
Get help from your bank. Many banks now have schemes to help you save, such as rounding up every payment you make and putting the extra cash into a savings account. There are also apps that automatically calculates what you can afford to move from your current account into savings account based on your incomings and outgoings.
Put your money where it will work the hardest. The savings market is changing on an almost daily basis. Finding the best home for your savings – with the rates and terms you need – can be easier with some expert help. At Continuum we keep up to date with all the latest deals. We can help you find a more rewarding home for your savings, as well as ways to make it work harder.
Call us today.
The Financial Conduct Authority does not regulate deposit accounts.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.