When it comes to saving money, there are many different methods to try. It’s all about researching the various options until you find an approach that suits you and your personal financial situation. You might find that you prefer to save a set amount each month, week, or even day; or you may consider following one of the many savings challenges.
CashLady has rounded up a couple of popular savings challenges, as well as providing some general tips that could help you cut back on your monthly spending.
The information contained in this article is meant as a general guide and does not constitute nor should be taken as advice.
1. £1 Savings Challenge
As the name suggests, this challenge requires you to transfer £1 a day into your savings account, which will equate to £365 a year (or £366 if it’s a Leap Year!). If you prefer, you could even take part the ‘old-fashioned’ way by depositing your £1 in cash format.
Worried that you may give in to temptation and dip your hand in to cover bus fares and chocolate bar cravings? Save and smash money boxes, which can be bought for around £11 from Amazon, ensure that your funds cannot be touched unless the pot is broken open. Clear smash boxes are also available, which could be a great way for kids in particular to watch their savings physically build up.
2. 1p Savings Challenge
The 1p savings challenge could help you set aside just under £668 over the course of a year. How does it work? It’s straightforward: you just increase the amount of money you’re saving by 1p each day.
If you started the challenge on January 1, you would deposit a single penny into your savings account. On January 2, you’d save 2p, and so on. On the last day of the year, t December 31, you would save the maximum amount of £3.65.
Before you start, it’s worth checking that your savings account doesn’t have any restrictions on the minimum amount of money that you’re able to deposit.
3. The Reverse 1p Savings Challenge
If you’re worried that you might struggle to keep up with the 1p saving challenge during the often-expensive month of December, you could consider reversing the plan instead. You’ll make your first deposit of £3.65 on January 1, and then work your way backwards, eventually saving just 1p on December 31.
4. 50/30/20 Savings Challenge
The 50/30/20 method aims to split your monthly income into three sections:
- 50% to be spent on needs, such as bills;
- 30% to spend on your ‘wants’ (new clothes, meals, nights out, etc); and
- 20% to be put into savings.
If sticking to the 50/30/20 rule on a £2,000 monthly income after tax, your outgoings could look like this:
- £1,000 on needs;
- £600 on ‘nice to haves’; and
- £400 put to one side for savings.
Of course, the 50/30/20 rule is only a guideline - some months, you might choose to put more or less than 20% of your income into your savings.
Top savings tip: received a bonus at work or some extra income from your side-hustle? Why not pop it straight into your savings to boost your funds?
5. Round-up Challenge
Each time you make a payment on your debit card, round it up to the nearest pound and move the ‘change’ into your savings account.
Let’s say you spend the following in one day:
- £6.70 on train fares - rounded up to the nearest pound leaves 30p.
- £3.50 on a latte - rounded up to the nearest pound leaves 50p.
- £5.65 on a meal deal - rounded up to the nearest pound leaves 35p.
- £1.40 on your favourite chocolate bar - rounded up to the nearest pound leaves 60p.
Add together all the spare change you’ve accumulated over the course of the day and move the total amount into your savings. In this instance, the overall amount saved would be £1.75. This might not seem like a groundbreaking amount, but over time, these small deposits will soon add up. When it comes to saving, every little really does help!
Again, you may prefer to do this challenge with physical money instead, in which case, spare change can be added to a jar or moneybox at the end of each day.
Top savings tip: Think about what you’re working towards. Is it a trip to EuroDisney? A new sofa? An upgraded car? Print out a picture of your goal and stick it to the front of your moneybox for inspiration. When you’re debating using the money to fund a cheeky takeaway, look at the picture and ask yourself whether a chicken korma is really better than a weekend at Disney or a luscious new sofa to lounge on?
6. No-Spend Challenge
If you’re a bit of a self-confessed frivolous spender, this challenge could be the one for you. For a set period of time – a month is usually a good starting point – task yourself to spend money on essentials only.
Essential outgoings include things such as bills, groceries, and commuting costs.
Pre-work latte? That’ll have to go.
That new top you’ve got your eye on? Sorry, it’ll have to wait!
A Friday night takeaway? It’s not essential.
Either all or some of the money you have left over after paying for your necessities at the end of the no-spend month can be moved into your savings account.
Need a bit of motivation to help you get started? No-spend progress charts can be downloaded and printed off for free online.
Other Ways to Save Money
- Put some time aside to carefully go through your monthly outgoings. You might find that you have active Direct Debits for old subscriptions or gym memberships that you’re no longer making use of. Cancelling anything that you’re not getting your money’s worth from could help to stretch your budget.
- Shop around for better deals on things like phone contracts, broadband, and gas and electricity. Before you switch, check to see whether you’ll be charged any fees for leaving your existing supplier early.
- Looking for frugal foodie tips? Start by switching to a cheaper supermarket. In 2023, Aldi was crowned the cheapest supermarket in the UK. Go one further by swapping labels for own-brand products. A lower price doesn’t mean reduced quality!
- Where possible, try to ditch the car for shorter journeys and use your own two feet instead. If you’re just nipping to the local shop for a pint of milk, leave the car at home and reap the rewards of a good walk - beneficial for your wallet and your health!
- Storing your debit card details on the shopping sites and apps you regularly buy from can make checking out quick and all too easy. Reduce the ease by removing your debit card details. The time it takes for you to physically get up and find your purse or wallet will give you the opportunity to reassess the purchase.
- Many of us are guilty of impulse-buying from time to time. If you see something you’re tempted to buy, give yourself at least 24 hours before deciding. During this time, ask yourself if you can afford the item, whether it’s a want or a need, and how often you’ll use it.
Final Thoughts
Saving can be tricky to get the hang of, but once you’ve found a method that suits you, it should become easier. Eventually, after a bit of practise, putting money into savings could become second nature when planning your monthly budget.
Don’t beat yourself up if you’re short of money one month and can’t afford to put any cash aside, and don’t stress about how much you are or aren’t saving. Instead, celebrate and be proud of the fact that you are saving and enjoy watching your money grow.
Remember, savings should never take priority over paying for your essentials. If you find that you’re sacrificing food shops or falling behind on your bills to fulfil a savings goal, it’s time to take a step back. Saving is important, but it’s not as important as covering the cost of your necessities and keeping on top of your bills and any credit commitments.
If you're worried about money...
If you’re struggling with your finances, please know that you can access free money and debt management advice through various charities and organisations, such as StepChange, MoneyHelper, Citizens Advice, and National Debtline.
While reaching out and asking for support may feel daunting, remember that it’s the first step towards taking back control of your financial situation and getting your confidence back.
The information contained in this article is meant as a general guide and does not constitute nor should be taken as financial advice.
October 2024.