How to start saving money
13 December 2024
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Originally published on 1 November 2023. Updated with new information and republished on 13 December 2024.
Wondering how to start saving money in a way that feels manageable? Whether you’re building a rainy-day fund, saving for big goals, or stretching your budget further, we’ve got practical tips to help you on your journey. Along with ideas for free family activities and seasonal adjustments, we’ll cover resources like the Government’s Help to Save scheme and credit union savings accounts—making it easier to start building your savings with confidence.
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How to free up more money for savings
Ready to start saving? The first step is to look at your budget and see what’s free to save. Start by setting up a budget that feels realistic—you’ll want to factor in all your usual expenses like food and utilities. Next, see where you can cut back. Maybe it’s a subscription you don’t use as much or swapping that Friday dinner out for a cosy meal at home.
Want to really kick-start your savings? Why not try a “No Spend Challenge”? Just set a time limit and aim to only spend money on the essentials during that period – you'll be amazed how much you could save!
Once you’ve adjusted your budget, decide on a monthly savings amount that works for you. Remember to keep it flexible so you can treat yourself occasionally, too.
How to build savings, boost your income, and make extra cash
If you’ve cut back on spending but want to build savings faster, boosting your income can help. Start by checking if you’re eligible for government benefits using the UK benefits calculators, which can help identify support like council tax reductions or childcare assistance.
If you’re saving on a lower income, the Government’s Help to Save scheme could be a good option. This account allows those receiving Working Tax Credit or Universal Credit to earn a bonus of 50p for every £1 saved over four years.
You might also want to think about a credit union savings account. A credit union is a Community-based financial co-op where members can save and borrow money. The wonderful thing about credit union savings accounts is that they often offer better interest rates compared to regular banks. Plus, your savings are protected up to £85,000 by the Financial Services Compensation Scheme, just like traditional banks.
Saving with a credit union also helps support your local Community. When you save with them, you’re contributing to a fund that provides loans to people in your area, helping to promote responsible lending and financial stability.
For a more flexible option, try selling unused items on sites like Vinted and Ebay can allow you to sell your unwanted clothing and items without any fees. Alternatively, taking on extra hours, or picking up a side hustle like food delivery or freelance work are also great ways to increase savings without a long-term commitment.
Money management tips
The first step to saving money is making the most of the income you already have. Taking time to organise your finances can really pay off—you’ll get a clearer picture of where your money is going, spot areas where you can save, and gain the ability to plan for the future. Here are some tips to help you get your finances in order:
Take control of your debt
If you have loans or credit card debt, a good first step is to focus on paying down the balances with the highest interest rates or fees, as this can save you money over time. Credit and store cards, for example, typically charge higher interest rates than personal bank loans, so prioritising them can make a big difference.
For Buy Now, Pay Later agreements, keep an eye out for overdue payment fees. Even though they might not charge interest, staying within the terms can help you avoid any unnecessary charges or impact on your credit score. As you work on reducing your debt, be sure to meet at least the minimum payments on all your credit cards and maintain monthly payments on loans to stay in good standing.
If you’d like more guidance, our advisors are here to help. They can offer budgeting support and can connect you with free debt advice, local money management workshops, and online resources to help you track spending, set up a budget, and start saving.
You can find out more by visiting our debt support page, checking out our help with debt blog, or by calling our Money Advice Team in England on 01772 666 446 or our Financial Inclusion Team in Scotland on 0131 657 0600.
Review your energy provider contracts
Have you thought about taking a moment to review your energy provider contracts? It could lead to some nice savings! Think about whether your current provider is still the best fit for you, or if it might be time to shop around for better deals. If you’re happy with your provider, fixing your tariff could help you dodge rising costs down the line. To help you make the best choice, check out the Money Saving Expert’s fixed energy calculator. It’s a handy tool to see if there are any affordable fixed-rate deals that work for you!
Save an emergency fund
Life often throws unexpected financial challenges your way, whether it’s a broken washing machine or an unplanned car repair. In these unpredictable times, having a financial cushion can make all the difference. Aim to save at least three months' worth of essential expenses in an instant access savings account. While it may seem daunting at first, this small sacrifice can help you avoid unnecessary stress when you need it most. Building your emergency savings is a crucial step toward protecting your financial wellbeing.
Check what benefits you’re eligible for
If you’re living on a low income, you could be entitled to benefits you didn’t even know existed. It’s essential to understand that Universal Credit is now replacing several benefits you may have previously claimed, such as Tax Credits, Housing Benefit, and Working Tax Credit.
Take a few minutes to check what benefits you’re currently receiving and find out how much you could potentially get each month. Start by using our Better off calculator to ensure you’re making the most of the support available to you.
In conclusion
Saving money can be tough, especially when we're all feeling the squeeze. However, there are practical steps you can take to enhance your financial future, cut costs, and explore ways to boost your income. We hope you found this guide helpful! For more useful tips and insights, be sure to check out our other resources on the My Place Hub