Amy Knight
A recent study by NerdWallet UK found that 90% of UK adults have a savings goal, with retirement, travel and building an emergency fund emerging as the most popular financial aspirations.
But making it to the end of the month with money to spare is sometimes easier said than done. We’ve put together nine habits that could transform how you feel about your finances – and especially help the 28% of UK adults who don’t feel confident they’ll achieve their savings goal.
1. Silence negative ‘self talk’
We all know someone who claims to be “terrible with money”. Perhaps you’ve even said it yourself. But believing that you’re “not good at saving” could be a big part of what’s holding you back.
“Instead of saying ‘I’m a terrible saver’, start saying ‘I’m good at saving’ or if that feels a bit too unrealistic at this stage, ‘I’m learning to be a good saver’,” suggests Emma Gosling, an independent financial coach and mindset consultant from St Albans, Hertfordshire. “We can all learn, we can all start somewhere, we can all improve. Saying things like that are going to give you a more positive frame of mind to get going,” she adds.
Gosling sticks Post-it notes around her home to help reinforce positive thinking, including money messages like ‘I love saving for my future’ and ‘More money means more holidays in the sun’. “They’re a constant reminder of why I’m taking action,” she explains.
2. Collect evidence that you can save
To prove to yourself that you can save successfully, avoid setting unrealistic goals or moving too much money into your savings too soon. For the first few months, start small and focus on forming new habits.
“Smaller actions are more likely to be successful because if you try to do massive changes at the beginning, you’re more likely to go back to your old familiar ways,” says Gosling.
Consistently saving small amounts (even as little as £10) enables you to prove to yourself that you do have the ability to save money, and this evidence is important for motivation.
3. Go back to your budget
“Every financial goal is made stronger with a strong budget,” says Mike Barrow, a financial planning consultant at the financial guidance platform Wealth Wizards. Some savers find the more detail they go into, the better their results – but this doesn’t necessarily mean spending hours on Excel spreadsheets.
Barrow says the 50:30:20 rule, where 50% of your income is dedicated to “needs”, 30% to “wants” and 20% for paying down debts and/or saving is a good place to start for the majority of people. The ratio can be adjusted based on what feels realistic for you. If learning how to budget money is new to you, the first step is to look at all your outgoings. “First of all understand where your money is going at the moment,” he suggests.
With higher interest rates looming large over borrowers, paying down high interest debts should be a top priority, alongside building an emergency fund.
4. Pay yourself first
As soon as you get paid, ensure your essential outgoings are covered (such as rent, utility bills and your phone contract). Then consider moving a chunk of the remaining money into a savings account before spending anything on “wants”.
Once bills have been paid and you’ve moved some money into savings, whatever you’re left with “you can do what you want with, knowing that it’s built into your budget and you’ve already hit all of those goals,” Barrow explains.
5. Automate to reduce anxiety
Money worries are the most common cause of anxiety for UK adults, according to research conducted in 2023 by the Mental Health Foundation, so it’s important to make saving as stress-free as you can.
Setting up a standing order to move money into your savings each month means you’ll have one less thing to remember. Barrow suggests treating savings like a bill, setting up an automatic payment to go out as soon after payday as possible. “Rather than going the whole month with this anxiety of ‘oh my god, I need to start saving, I should be saving, I need to cut back’; it’s just pay your bills, pay your savings,” he explains.
6. Make some pain-free swaps
Separate NerdWallet research showed that reducing expenditure on non-essentials was the most commonly used tactic for adults in the UK to increase their savings.
One way to save money fast, without impacting your quality of life, is to start “trading down” – an economic term that means swapping more expensive items for cheaper versions. For example, take your regular shopping list to a budget supermarket or buy own-brand items instead of your usual favourites. Over a few months, you could build up significant savings, while still buying the things you enjoy.
7. Create a pleasure fund
Separating money for saving and spending can be an empowering way to work towards your financial goals without feeling like you can’t have any fun. Sarah Brill, a certified financial coach based in London, advises her clients to set aside a pot of money, separate from their emergency fund, earmarked for luxuries.
Your pleasure fund is a pot of money that permits you to spend without feeling guilty, says Brill. “You do have to cut out some of the ad hoc spending to build that pot in the first place, but having that pot itself will create a bit more freedom,” she explains.
Trading down (see habit 5) could be an effective way to build yourself a pleasure fund, which you can continue to pay into regularly alongside longer-term savings pots such as a self-invested personal pension (SIPP).
8. Switch current account to get a headstart
Banks are constantly competing for your custom, sometimes offering financial incentives of up to £200 for you to leave your current provider and switch to them.
“That money can act as a boost to your savings so that you can make a dent in that savings target straightaway,” encourages Barrow, who says people don’t know about the rewards on offer.
Switching your current account isn’t as much of a hassle as you might assume, thanks to switching services such as Uswitch or the Current Account Switch Service. However, it’s important to read the criteria carefully, as there may be a minimum amount of money you’ll have to transfer to qualify for the reward payment. It’s also advisable to avoid switching too often, as this could impact your credit score. Barrow recommends no more than once every six months.
9. Mindful maths
Imagine you’ve seen a £40 item of clothing you’d like to buy. Instead of making an impulse purchase, consider how you could create a micro savings pot of £40, for example by forgoing your usual £4 coffee for 10 days in a row.
This money hack has the following benefits:
- It creates a time delay for you to consider whether you really want to spend that money.
- It adds further evidence and positive reinforcement to your ability to save (see habit 1).
- You may find you enjoy your new purchase even more, knowing that you saved for it.
Whatever your motivation for saving, it may be unrealistic to expect perfect progress towards it. As Barrow points out, “life doesn’t work like a spreadsheet”. However, if you feel as if your savings are currently going nowhere, combining some of these nine habits could get you moving in the right direction.
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