Metis AM
With the cost of living surging in the UK, it might not come as much of a surprise to hear that Brits are struggling to continue saving their money as effectively as before.
Research by savings and lending provider Hodge published by MoneyAge in October indicated that, of the people in the UK who do save, 81% will be forced to stop as the cost of living continues to increase.
Meanwhile, 58% of those who will still continue to be able to save said they are only doing so to set aside funds they can use in the event of future financial hardships.
Even more worryingly, 56% of respondents said they were going to need to use their savings to help them survive in these tough financial conditions. Furthermore, 20% claimed that they were going to have to rely on cash gifts from their family to help them to afford to live.
If you’re concerned that you might be in the position of not being able to save as much as you’d like to, it can be worth looking for methods that could help you to do so over the coming months.
So, discover five simple yet highly effective methods that could help you save money during this harsh economic environment.
1. Get yourself financially organised
If you want to work out how much you can afford to save, the first step you can take is to get financially organised and create a comprehensive budget of all your income and outgoings.
To create your budget, you should start by listing all your income, whether that’s from work, pensions, or other investments.
Then, calculate all your monthly outgoings, including mortgage or rent payments, food shopping, utility bills, and even small, regular expenditures such as subscription services or memberships you have.
By doing this, you’ll then have a figure for how much of your income you need to spend to live, and how much you’ll have left to save.
You might even notice outgoings that you don’t really need to be making, such as memberships or subscriptions you don’t really use.
2. Keep an emergency fund
As the Hodge survey results showed, more than half of those able to continue saving were doing so in order to build a fund of cash that they could fall back on as costs continue to rise.
Creating an emergency fund like this can be a highly prudent way to save. Doing so ensures you have money to hand if you need it for unexpected expenses, such as if your boiler suddenly gives up on you just as the cold weather has arrived.
Estimates vary for how much should be in your emergency fund, but a good rule of thumb is to have at least three months’ expenses. This should be in an easy access savings account so you can use this money instantly if you should need it.
By keeping these funds separate from the money you use to live, it can encourage you to leave it aside for its intended purpose.
You could even set up a direct debit into the account so that this money is taken from your income straight away to prevent you from spending it first.
3. Shop around for the best savings accounts
One concern you may have over your savings is that it may be losing value in real terms when compared to inflation.
Inflation has surged in the UK throughout 2022, reaching highs not seen in 40 years. As a result of the rising cost of goods and services, your saved money might have less spending power than it did a year ago.
As a result, you may want to search around for savings accounts with better terms that suit your needs. For example, if you’re willing to “lock” away your money in an account for a fixed term in return for a higher rate, you could look at one-, two-, or even five-year fixed-rate accounts.
By shopping around for the best rates on suitable accounts, you’ll make the most of the cash you do save by maximising how much it can generate in interest.
4. Consider using saving apps
As well as looking for the best savings account, you could consider using one of the many different apps and services out there to help you build a regular savings habit.
Services such as Plum use smart technology to analyse your spending and identify where you may be able to make savings. You can also use Plum’s artificial intelligence to set up automated deposits, helping you to put more money away over time.
Meanwhile, apps such as Moneybox allow you to round up and save your “spare change” – for example, if you made a transaction of £3.51, then 49 pence would be automatically contributed to your savings account. Saving little and often like this can make a significant difference to how much you set aside.
These apps can be highly useful in helping you to save money, especially if you’re finding it tricky to be disciplined when doing it yourself.
5. Work with a financial planner
Perhaps the very best thing to do if you’re concerned about saving money in the current climate is to work with a financial planner.
A financial planner can make all the difference to the way you manage your money. They’ll take a comprehensive look at your wealth and make suggestions to help you save your money even more effectively.
Most importantly, your planner will ask you about your goals for the future, using these to design a savings plan with your ambitions at the centre.
That way, whether your planner suggests using fixed-term accounts or even investing a greater proportion of your wealth, you can be confident that your money is on track to allow you to live the lifestyle you want in the future.
Get in touch
If you’d like help managing your money amid the cost of living crisis, please get in touch with us at Metis Wealth.
Email enquiries@metiswealth.co.uk or call 0345 450 5670 today to find out what we can do for you.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
