Top tips to help you make the most out of your savings
by Brean Horne, Senior Writer
Getting the best return for your money is really important to ensure you have enough for a rainy day and meet your savings goals.
As part of UK Savings Week which runs from 18 to 24 September 2023, we’re digging into the must-know hacks to grow your money.
From setting up automated savings to finding the best rates, we round up eight hacks to help you boost your savings.
Move your money
The best way to boost your savings is to make sure it’s in a high-interest paying savings account. People across the UK are missing out on extra money with over a third keeping their savings in a current account that doesn’t pay interest, according to new data from UK Savings Week.
Being proactive and ensuring that your money is in a top-paying account will give your nest egg a boost. Pay close attention to when a fixed-rate deal is due to end so that you can shift your money into a better-paying account.
Sometimes banks issue new savings accounts that you need to open for a better rate rather than increase what you get in existing ones – so it’s always worth keeping an eye out for that too.
Remember that loyalty doesn’t always pay, especially when it comes to savings. So shop around for the best rates to grow your money. Our savings best buy table rounds up the best rates on the market to help you boost your savings.
Get free top ups from the government
Government-backed savings schemes are a great way to increase your returns with a free bonus.
Help to Save
Help to Save is an initiative for people on low income, who are entitled to certain benefits, to earn a bonus on their savings. Eligible savers can put away between £1 and £50 each month for up to 4 years.
And you’ll get a 50% bonus after the first 2 years and again when you hit the 4-year mark. The most you can pay into the account over the 4 years is £2,400 and the highest bonus you can earn is £1,200.
Savers from the age of 18 up to 40 years can open a Lifetime ISA to save for retirement or to buy their first home. You can save up to £4,000 a year and the government will add a 25% on your savings up to £1,000 per year.
It’s worth pointing out that you’ll have to pay a charge of 25% if you withdraw money for any other reason than buying your first home, being 60 or over, or if you’re terminally ill.
Automate your savings
Automating your savings makes the process easier and also ensures that you’re consistently putting money away. Setting up a standing order is a great way to ensure that money is put into your savings account.
A standing order is essentially a regular payment that you create to move money into another account. You can set the amount you wish to pay as well as the date the money is transferred.
If you do this straight after payday you’ll also be “paying yourself first” rather than seeing what’s left at the end of the month.
Savings app Plum uses artificial intelligence (AI) to work out how much you can afford to save regularly. Then you can choose whether to automate this amount of money being taken from your account.
Some banks offer a “round up” feature which rounds up your purchases to the nearest pound and puts the difference into a separate savings account Chase currently offers 5% interest on your spare change savings.
You could also earn 6.17% with NatWest or RBS if you link the round ups feature to a Digital Regular Saver account.
Set a savings goal
Creating manageable savings goals helps motivate you, builds consistency (which is key to saving) and increases your chances of successfully achieving your targets.
You can have as many savings goals as you like. For example, you might set up a savings target for birthday gifts or Christmas presents.
Perhaps there’s a holiday destination that you’ve always wanted to check off your list. Or you’d like to build a house deposit.
Whatever your savings goals are, it’s important to be realistic about how much you can afford to put away. You’ll need to make sure that all of your priority expenses are taken care
of first. Otherwise, you risk dipping into your savings to cover other costs.
Also, setting goals that are too ambitious or unrealistic can leave you feeling overwhelmed and disheartened. Which may affect your motivation to keep setting money aside.
Keep your savings separate
Keeping your savings in a separate account from your everyday spending money can help to boost your savings efforts.
You’ll be able to clearly see what’s in savings and what’s available for spending, while it also reduces the temptation to spend more than you need to.
And, as mentioned above, it ensures that you get the best return on your money too if you move it into a best buy savings account.
Digital banks like Monzo and Starling allow you to set up savings pots which help to keep your money separate. It’s important to compare rates though as you may be able to get better interest with a different savings account provider.
Try a savings challenge
Whether you’re a seasoned saver or just looking to get started, savings challenges can add a little bit of fun to the process. A savings challenge is essentially a set of rules about how much you need to save over a set period of time.
And the frequency at which you save varies depending on the challenge – so it could be daily, weekly or even monthly.
There are lots of different savings challenges out there that you can adapt to suit your own goals, how much you want to save and how long for. The table below rounds up some of the popular savings challenges out there and how they work.
|Challenge||Savings after a year||How it works|
|£1 savings challenge||£365||Save £1 each day for a year.|
|1p savings challenge||£667.95||Save 1p on the first day, 2p on the second, 3p on the third and so on until you save £3.56 on the final day.|
|52 week savings challenge||£1,378||Save £1 in week one, £2 in week 2, £3 in week three and so on until you hit the final week where you save £52.|
You can also tailor savings challenges to suit your own interests. For example, putting aside money each time your football team scores a goal. You can even automate them if you bank with Monzo.
Check out our savings challenges guide for more challenge ideas and a few hacks to keep you on target.
Maximise your tax-free allowances
Most UK earners won’t pay tax on their interest as they’re entitled to the Personal Savings Allowance (PSA) – which is the amount of interest you can earn from your savings tax-free.
Basic rate taxpayers have an allowance of £1,000 before having to pay tax, while higher rate taxpayers have an allowance of £500. (Earners in the additional rate bracket lose the PSA completely.)
But as interest rates get higher, there’s a chance that more people will go over these limits. In those cases, you might want to look at putting money into ISAs or even Premium Bonds where the returns are always tax-free.
Though sometimes the highest interest rates with tax deducted can still earn you more, so as ever compare your options. Read our guide about tax on savings for more details on how it works.
Use different types of savings accounts
There are lots of different types of savings accounts, each one offering different benefits to help grow your money. It’s worth having a range of savings accounts to create an effective strategy for making a return.
For example, you may wish to keep your rainy day fund in an easy-access savings account so that you can withdraw money for emergencies.
Whereas a regular savings account, notice account or fixed rate savings account – which are more restricted – tend to pay higher levels of interest. So may be better suited for long-term savings goals.
If you need a little guidance on which types might work best for you, the financial review website Smart Money People has created a handy savings account quiz.
You’ll just need to answer a few questions and will get some suggested savings account types that might suit you best.