How to start saving regularly

Last updated: 20th November 2017

  

One of the biggest financial challenges people face is saving money regularly. In a recent survey, we found that 23% of adults put less than £40 in their savings account per month.

Here's how you can get into the regular saving habit.

Figure out how much you can save

The first thing to do is figure out how much you're able to save.

Start by listing your monthly income and outgoings. This includes:

  • Salary
  • Fixed outgoings, like rent, commuting to work or subscriptions
  • Variable outgoings, like food and leisure

Once you've worked this out, you know roughly how much you can save each month.

If you're saving for a particular occassion, you can set yourself a savings target. Use our Savings Calculator to work out how long it will take you to reach your target.

Find the right savings account for you

It's tempting to choose a savings account simply because it has the best interest rate, but this might not be the best option for you. There are other features to consider.

Some accounts limit how much you can deposit each month, for example. Others don't let you withdraw your money, which won't suit you if you need quick access to your savings.

There are also savings accounts specifically designed to reward regular saving.

So shop around, and carefully read the details of each product so you know exactly what's on offer.

Make saving a habit

Saving money is easier when it becomes a habit.

If you only save money when you've got some spare, you're constantly forcing yourself to make sensible decisions.

But if you save the same amount at the beginning of every month, the process becomes automatic, and saving can become effortless.

Automate your finances

Getting into the savings habit is easier if you can automate your finances.

Try setting up a standing order to your savings account (it's best to make the deposits on payday, if you earn a regular salary).

By making automatic payments, you'll get used to the money leaving your account. Before long, you'll forget about these transactions altogether (it'll just be part of your monthly expenses, like rent or commuting costs), and your savings will build up quicker than you'd think.

Understand interest

Most savings accounts earn "compound interest". This is the interest that's earned on interest. It works like this:

In the first year, the money you put in the account will earn interest. That interest will be paid into the same account.

If you leave this interest in your account, next year that money will also earn interest. So the more money you save, the larger the amount you'll earn from interest payments.

Not all savings accounts pay the interest back into your account. In these cases, compound interest won't apply.

Ready to start saving?

Have a look at our savings accounts.

Choose a savings account

This information does not constitute legal or financial advice given by Leeds Building Society. No reliance should be placed on this guide and you must make your own decisions. We recommend that you seek legal and/or financial advice if you have any questions or queries.

Cash ISAs are available to individuals aged 16 and over who are resident in the UK for tax purposes. Leeds Building Society only offers Cash ISAs.

The maximum you can invest in a Cash ISA for the 2017/18 tax year is £20,000 less any amount invested in a Stocks and Shares ISA and/or an Innovative Finance ISA in the same tax year.

*Tax-free means that interest payable is exempt from income tax.