UK Savings Week is a great time to revisit your savings strategy

This is a financial promotion and is intended to provide information, not investment advice.

Last week was UK Savings Week, a national campaign led by the Building Societies Association (BSA). The aim of UK Savings Week is to raise awareness of the benefits of saving, and to help people build better saving habits no matter how much they have in their pot.

The week was an opportunity to explore modern savings habits, and the value of prioritising financial health in a challenging economy. The cost of living has been stubbornly high for the past few years, and with the possibility of tax hikes on the horizon it is natural that many people feel that they simply can’t afford to save. In fact, according to UK Savings Week statistics, about 14 million UK adults have less than £100 in accessible savings to fall back on.[1]

But setting aside just a few pounds per week can make a remarkable difference to your financial health.

How to start saving

You don’t need a large income or lump sum to start saving – it is more important to simply be consistent. £10 per week adds up to £520 per year, and when interest is added and compounded this modest sum can grow substantially over time.

Here are a few tips to get started on your savings journey:

1.     Look at your current spending

Track your outgoings for a month to spot small leaks. These may include unused subscriptions, frequent takeaways, or impulse purchases. When you identify an unnecessary cost, eliminate it and redirect it into your savings account.

2.     Automate your savings

Automating your savings is a powerful technique as it ensures that you are constantly saving a certain amount of money every week or month. Set up a standing order or direct debit to move money into savings the day you get paid. This way, you are effectively paying yourself first before the temptation to spend kicks in.

3.     Set a clear goal

What do you want to do with your savings? Whether you are building an emergency fund, saving for a holiday, or creating a deposit for a home, having a purpose makes it easier to stay motivated.

4.     Shop around

Compare savings accounts to ensure that you are getting a competitive interest rate, and don’t be afraid to switch savings accounts if you find a better deal elsewhere. Just don’t switch accounts too often or it could have a negative impact on your credit score.

5.     Diversify

There are lots of ways to save your money. A traditional bank-based savings account is the obvious choice, but it is also possible to diversify by spreading your money across different types of accounts, or different financial products. Gold is often considered a safe haven during times of economic volatility, while government bonds and some corporate bonds have a relatively low risk profile which makes them appealing to educated investors. You might also consider investing some of your savings as a way of diversifying your portfolio and potentially seeking higher returns, just as long as you are fully aware of the risks involved.

6.     Take advantage of tax breaks

Any earnings from savings and investments are subject to taxation under UK law. However there are a few ways to protect your savings income from tax. Cash ISAs are one of the most common savings accounts in the country, and they allow you to shield up to £20,000 per year from taxation.

Small, regular steps can compound into significant results over time. The most important thing is simply to start.

Capital is at risk. Past performance is no guarantee for future results.

Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.