Daily updates by the Money Saving Expert suggest that savings rates are finally beginning to creep back up. The movement has been encouraged by the Bank of England’s increase in the base rate to 0.75% on the 2nd of August 2018 – the highest it has been since 2009.
But the fact remains that, as a percentage of personal disposable incomes, household savings are at their lowest rate since 1963, said the Independent newspaper on the 2nd of November 2018 – with an estimated 16.8 million people having less than £100 saved for those inevitable rainy days.
So, maybe it is time to consider how you might make the whole business of saving somewhat less painful:
Make income tax rules work for you
- as the Mirror newspaper reported on the 29th of October 2018, the personal allowance for income tax has been raised a year earlier than planned from £11,850 to £12,500 with effect from April of 2019;
- in addition, if you pay income tax at the basic rate of 20% you may take advantage of the £1,000 a year tax allowance on the interest you earn from your savings – if you pay tax at the higher rate of 40%, the allowance is £500 a year;
- the tax regime, therefore, provides encouragement to make saving less painful;
An increase in income is a chance to increase your savings
- if you are fortunate enough to earn a raise in pay, this too may be encouragement to save at least part of the increase without feeling undue pain;
Technology to the rescue
- you might appreciate that the easiest way to save is to put a relatively small amount aside each month on a regular basis – but that still leaves you the decision of just how much you can afford, without forgetting to make the transfer;
- in this day and age – where it seems there is an app for everything – there are some which not only calculate how much you are able to save on a regular basis but actually transfer the money automatically to your chosen savings account;
Make it a game
- there are a number of games you might play to make the business of saving just that little bit more fun;
- one such challenge is to put away £1 in the first week, then £2 in the second, £3 in the third and so on – meaning that you’d be saving a mighty £52 a week by the end of the year, but have put away a grand total of almost £1,400 over the full 12 months;
- a variation on a similar theme is to aim to save £1 (or even just a penny) on Monday, double that amount on Tuesday and so on until you are saving £28 or 28p every week. By the end of the year you will have saved an impressive £1,456 if you were counting in pounds, or a healthy £667.95 if you'd been counting in pennies;
Spend less, save more
- if you make a concerted effort to spend less – by cutting back on the weekly supermarket bill, for example – that may also give you a comfortable cushion on which to save.
By making a few changes to the way in which you manage your money, you can start to save quite painlessly.
The data and information used in this article is accurate and up to date at the time of writing.