Knowing where to start when you want to save money can feel daunting, but it doesn’t need to be. With a few small changes to the way you manage your money, you can create a clear path forward to get where you want to be financially.
Here are some steps to help you get started.
1. Open a savings account
Savings accounts can be a smart way to store your money and make it grow. As well as removing the temptation to spend any funds left in your current account, savings accounts enable you to earn interest on your money over time.
What’s more, you can then earn interest on the interest you’ve already earned, speeding up your saving. This is known as compound interest.
Finding the right type of savings account is key. If you’re happy to lock your money away for a while, a fixed rate savings account can help you maximise the interest you earn. An easy access savings account could give you flexibility to withdraw if you need to, while a regular savings account may offer rewards for regular contributions. There are also Individual Savings Accounts (ISAs) that enable you to save without having to pay tax on the interest earned.
The type of savings account that’ll suit you will depend on your goals, how often you plan on contributing, and when you’ll need to access the money.
Explore: Different types of savings accounts.
2. Create savings goals
Whether it’s for a purchase, an event, or peace of mind, having a specific goal to save towards can help you stay focused. Once you have your goal, decide how much money you want to save and how soon you need to save it. Then work out a realistic plan on how you can achieve this.
There are calculators that can help you do this. For example, you could use our calculator to see how much you could save over 12 months with a Regular Saver account. Our Regular Saver is available to HSBC UK current account customers.
If you’re not sure how much you’re able to save a month, you can review your spending and try something like the 50-30-20 guide to see if it could work for you.
You may want to try writing down your savings goals and placing them somewhere visible like the fridge, or create a note in your phone. Having these little reminders can keep your goal at the front of your mind and make it easier to stick to your plan.
3. Pay yourself first
Prioritising your saving is important for staying on track. If you can, pay money into your savings account as soon as you get paid (allowing enough money left over to cover your mortgage/rent and bills). If you’re saving the same amount each month, you can set up a standing order so you don’t forget to move your money.
For HSBC customers using our mobile app, you can try the Balance After Bills tool to help make sure you’ll have enough to cover your monthly costs. Based on your regular bills, it estimates what you'll owe for the month ahead. Then it subtracts that amount from your current balance to show you what you could have left.
4. Save while you spend
To get into the habit of saving regularly, you could check your balance at the end of each day and put any extra pence into your savings pot. For example, if your balance is £166.05, you could add 5p to your savings. It's an easy way to keep your savings growing while having little impact on your day-to-day spending.
If you want to try something different, you could build up from 1p. You start by paying in 1p to your savings, then 2p the next day, 3p the next day and so on. If you’re able to do this for a year you’ll end up with £667.95, as well as what you earn in interest.
5. Keep saving
Once you reach your goal, there's no need to stop. According to the Money Advice Service, you should, ideally, have around three months of your living costs saved - to cover you should something unexpected happen.1 You may end up having different savings pots for different purposes, such as one for your emergency fund and another for a new car.
If you’re struggling to maintain momentum and reach your goal, don’t stop. Saving even a small amount is better than nothing. Work on developing the habit and then try to gradually build the amount you save over time.
If you’re finding it difficult to free up the cash to get your savings to grow, there are some tricks that may be able to help.
Book a financial health check
You can book an appointment with one of our financial fitness trainers, who can take you through a quick and easy 30 minute financial health check. Our financial fitness trainers are on hand to speak to you about your banking needs - and you don’t have to be an HSBC customer to benefit from this service.
They won’t give financial advice, but they’re here to help you achieve your financial goals, whatever they may be. They will be able to explain where you’re doing well and where you may be able to improve focusing on what is important to you.