It is far easier to spend all of your monthly income without considering how much you should be saving for future expenses. In fact, research has found that one third of UK adults have never thought about cutting back their spending and adding more into their savings. Fortunately, there are some simple ways of putting money away for a rainy day! Here are five great ways you can save money without using a traditional savings account.
Do A Savings Challenge
Starting a challenge out of saving money is a great way of making a mundane task a bit more exciting and satisfying. It’s possible to save hundreds or even thousands in just one year by saving little and often!
Here’s one challenge you can try: you will have to be disciplined, but if you add 1 penny to your savings on day one, and then 2 pennies on day two, 3 pennies on day three and so forth, this will save over £650 at the end of the year.
Use AI Saving Apps
There has been a rise of smartphone apps that help you save money by using artificial intelligence to analyse your current account spending habits and automatically transfer a small sum into a savings pot. Plum is a really neat tool — it lives within your Facebook Messenger and provides you with insights on your spending habits and even suggests how you can save on things like utility bills! You can also chat to the AI, you can ask it to spontaneously save a set amount or stop the automatic savings if needs be.
One great feature is the opportunity to invest your saved money to earn interest of up to 23.3% in large companies like Apple and Facebook. Be careful though, your capital is at risk with investing, which means you could get back less money than you put in. You are able to select a risk level, to indicate how likely your investment will return as a loss.
Clear Your Debt Repayments
While this seems like a bittersweet way to save money, it can be very financially beneficial in the long-term. The vast majority of people have credit like overdrafts, short term loans and mortgages that need to be repaid, and it is well worth repaying these loans early to save yourself money on interest.
As interest rates are currently so low on savings accounts, the money you save on interest by clearing your credit is a lot better than what you’d be getting in a standard savings account.
If you can afford it, pay off your high-interest debts like payday loans first before making large mortgage repayments or the equivalent. If you do decide to repay you credit early, ensure that your lender doesn’t charge you any fees for an early repayment.
Get A Smarter Bank Account
Challenger banks like Monzo and Revolut are changing the way we manage our money, these online only bank accounts not only great for using abroad without fees but are also able to help you budget better!
With Revolut you can use a vault to store your money in for a financial goal. You can choose to put a one-off amount in there or cleverly, you can choose to round up your transactions on your card and add that to your vault. Those rounded up pennies will quickly add up!
Go Cash Only
Paying at the till is a different ball game now that contactless payments are widely accepted. It’s easier to pay by tapping your phone or bank card because it’s often more convenient. But research has found that people spending with their bank cards tend to spend up to 18% more than if they use cash.
It’s easier to be more care-free with money using a bank card as it physically has no monetary value, whereas cash does. For example, if you lose your bank card you cancel it quickly, and any fraudulent transactions might be able to be reversed. On the other hand, if you’ve lost cash, it’s gone and you cannot replace it.
When you next go shopping, take cash with you and try to leave your cards at home. This way you’ll know exactly how much you have to spend and you’ll have no way to over-indulge yourself!
Disclosure: Guest Post