Kickstart your savings habit

19 July 2012

On average, we squirrel away just £87 a month now, down from £100 this time last year, according to National Savings & Investments' (NS&I) latest quarterly savings survey.

On top of that, almost a quarter of us (23%) aren't saving anything at all, up from 17% in the spring of 2011.

"When times are tough it can be difficult to save but even putting away a few pounds each week will help act as a financial cushion, should you face an emergency," says John Prout, retail customer director at NS&I.

"It is worth everyone taking another look at their finances to make sure their money goes as far as possible."

How to up your savings

Having some savings built up is a very liberating thing. So how can you improve, or create, a saving habit?

Start off by working out a monthly budget so you can see how much money you can afford to save, even if it's only £25 a month at first, it will soon build up. If you are going to start setting money aside, then the best home for it is a regular savings account.

These pay attractive rates of interest, as long as you make a monthly deposit. The best buy is Nottingham BS's Diamond Jubilee Saver, which pays 6% and you can save between £10 and £100 per month.

Another way to build up your savings without even really noticing is to ask your current account provider if it can set up a 'sweep' facility on your account. This means that at the end of each month your bank will take whatever is left in your account and sweep it into a savings account for you.

Finally, if you are a Lloyds TSB customer you can sign up to its 'Save the Change' service. With this, whenever you use your debit card your bank will round up the amount you spend to the nearest pound and put the difference in a savings account for you.

Once you've built up some savings don't forget to use your ISA allowance. Money in an ISA will grow more quickly as you don't have to share the interest with the taxman.

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