In Sunday’s Observer, journalist Polly Vernon wrote that her coffee habit had so far cost her around £20,000 (four large cups a day, at £2,000 a year). And, as she says, she’s not the only one – 11 million of us visit a Starbucks, Costa or Café Nero every week. Cut out that little habit and you’ll soon save enough for that Gaggia espresso machine.
2. Round up when you spend
Some US bank accounts will round up your purchases to the nearest dollar and put the excess into a savings account for you. I haven’t seen a UK equivalent, though it may well exist. In any case, you can do the same thing yourself.
3. Organise a direct debit
Each month, siphon off a set amount from your current account directly to a savings account. That way your money will grow without you having to think about it. You’ll find that you adjust your spending accordingly and, when you remember to check into your savings account, there will be a nice surprise waiting for you.
4. Open an ISA
A cash ISA is the first place you should put your savings. UK taxpayers are allowed up to £5,640 tax-free savings each year. Many ISAs are instant access, allowing you to access your money. But once it’s withdrawn, you can’t then redeposit it. Check out some of the best rates here.
5. Look at your monthly outgoings
Obviously many of them – like rent/mortgage and bills – are unavoidable. Some, like your mobile phone or gym membership, you may also consider non-negotiables. But there will be many areas where you can cut costs. All those dull-sounding sacrifices – cycling to work instead of taking public transport, avoiding that weekly takeout, taking a packed lunch instead of going to Pret – really do make a difference. Make a game of it – see how much you can cut your monthly spending by, and then stick the difference into a savings account.
6. Don’t be afraid to start small
It’s tempting to think that saving is pointless unless you’re putting aside a few hundred pounds a month. This isn’t true. The easiest way to save is to put aside meagre amounts of money that you won’t miss. They’ll soon add up.
7. Have a goal
It helps if you’re saving for something. That might be the deposit on a flat, a holiday, or just a blow-out night. Either way, if you reward yourself with something tangible, saving becomes a much less punitive experience.