How to save money, whatever your age and however much spare cash you have

Whatever stage of life you are at, and however much or little you have, you’ll find helpful advice on saving in this guide.

Sometimes it can seem that the world is conspiring against people who want to save money: rising house prices, the ever increasing cost of living, student debt, the low interest rates paid on savings accounts, and the end of final salary schemes for the current generation of workers.

The odds do indeed appear stacked against saving the sort of money that means you can pay off your mortgage, or even get a mortgage, have a better retirement, or be able to retire. But while it can be tough finding spare cash to invest or save, it’s still possible. 

Even if you’re not historically great with money, with discipline and research you can start practising new financial habits, and start putting money away for your future. And that’s what this guide will show you how to do. Just the fact you are reading it means you’re already one step closer to financial freedom than you were a few minutes ago.

So, here’s how to start saving your money – whatever your age and however much (spare) cash you have.

Deal with debt (yes that!)

Some of you may have student debt. Or even still students yourself. Read this article about student loans first to see what you need to be repaying.

If you are in serious amounts of debt you will need to pay these off first. Step Change is a charity which offers free debt advice, speak to them first. Don’t think of clearing your debts as a burden, see it as the first step towards a financially free you.

Start an emergency cash stash

If you are a householder or have a family make sure you have at least three months’ worth of bills/mortgage/rent in the bank. Make sure you include basics like food as well and allow something for childcare – because even if you lose your job you are going to need to get out there for interviews.

Tools such as a budget calculator can help you work out how much you need. This cash should ideally be held in an easy access savings account, there is no penalty for taking your money (apart from you will the interest you would have been paid on the money you take out).

This is money you need to try and forget about. It is for emergencies only, which takes us on to the next bit…

Become a mindful spender

Human beings excel at self sabotage. It could be because our mindset has not yet evolved to help us adapt to our relatively comfortable lives.

Various studies have shown that we still have the digestive systems of cavemen, so chances are our minds are still primed to run towards (or away from) the woolly mammoths and sabre toothed tigers that used to live alongside us. But we aren’t and we don’t.

What we do need to do is be mindful of the voice inside our head that tells us we need that 100 inch flat screen TV, that tells us the £250 a month we pay to lease a Range Rover is ‘money well spent’ or that a supermarket that charges more for its fruit and veg is somehow better than a slightly dimmer-lit, more basic one.

Changing your mindset around your spending will be the most powerful thing you can possibly do. You don’t have to be female to do some self help around your spending, books like Sheconomics can help change your mindset around money.

Start investing

There are many ways to invest. You can invest in things, for example property. If you own your own home, then you are (to some extent) investing in property. If you find yourself inheriting a property that you let out, then you are a buy to let investor.

Many people choose to buy shares in a company listed on a stock exchange. You can buy individual shares and then put them in a ‘wrapper’ with other shares to make sure you. Everyone has a tax-free allowance they can use, and a wrapper can be a pension, or an ISA.

If you have a pension through your work, you will also be an investor, typically in a passive fund which invests across many shares.

There are more sophisticated types of investments, which use a mixture of shares and money market instruments (for example derivatives or options – which effectively bet on the price of a share, or commodity going up or down).

There are other more up and coming forms of investment – such as crowdfunding or peer to peer lending. But these types of investment are really for those who can afford to write off the money they invest

Four ways you can start saving now on your phone

Rachel Springall, finance expert at Moneyfacts.co.uk, said anyone with a smart phone can start saving. It’s a small step in the right direction.

1) Open a simple savings account

Starting a savings pot can be done in just a few minutes online, and today some of the best easy access accounts are online-exclusive. For instance, savers can earn 1.50% AER (1.49% gross) with the Online Savings Account from Marcus by Goldman Sachs®.

Easy access accounts overall are improving, as the average rate of 0.63% is the highest seen since February 2016 when it was also 0.63%, so they are worth reviewing.

You can apply online at Marcus.co.uk but must have a UK mobile phone number.

2) Use Chip to save

Sometimes the action required to save gets put off or people simply don’t want to put away a set amount each month using a standing order. Now, there is a free app that can save a flexible amount of cash automatically, called Chip.

Chip works out how much money users could save and sends a text message as a notification before transferring the cash to a separate pot. Users can even see how long it would take them to save towards a certain goal, making it effortless to start building a savings fund.

Chip is free to download via Google Play (Android) and the App store (Apple), and connects to most of the biggest bank brands.

3) Save the change

Customers can ‘Save the Change’ using their Lloyds Bank current account to grow their savings. When customers are in credit, a single purchase is rounded up to the nearest pound, with the difference transferred into a separate account by signing up online.

Bit by bit these transactions can build up over time; if a purchase for £1.25 is made, Lloyds will transfer 75p into their savings account, which could see them save £5.25 in a week if this is spent every day. Customers can also activate ‘Everyday Offers’ to earn cashback at selected retailers, which can be activated online or through the bank’s mobile app.

Registering for ‘Save the Change’ online is free, as is activating ‘Everyday Offers’, and the Lloyds Bank mobile banking app is free to download via Google Play (Android) and the App store (Apple).

4) Budget to realise what you can save

Sometimes the easiest way to figure out whether it’s possible to save is by scrutinising both income and outgoings, but it might not be a task consumers want to work out manually.

Thankfully, there is an app for that; with Money Dashboard it’s easy to keep on top of everyday finances and it can help customers determine what spare cash is left to put towards a specific savings goal. Budgeting tools such as this one can help consumers figure out what they can afford to lose, such as a daily takeaway coffee.

Money Dashboard is free to download via Google Play (Android) and the App store (Apple), and connects to many brands.

Samantha is a freelance journalist and editorial consultant and currently a contributing editor at What Investment.

Photo by Luca Iaconelli