IN the current cost of living crisis we’re all watching the pounds and the pennies.
But in a time like this saving has never been more imperative.
Though it may seem like a scary prospect, saving money doesn’t have to be complicated and you might be surprised by just how much you might be able to save.
Now is a great time to consider saving for those Christmas gifts so they don’t eat into your December pay check.
We spoke to financial Advisor Pete Ridley at Car Finance Saver to find how you could save up to £5,000 by December and how to figure out which method is best for you.
1. The ‘In for a penny’ Challenge – potential saving of £220
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Perhaps the easiest challenge to follow, the 1p challenge requires participants to save 1p every day Starting late? No problem, simply backdate the pennies.
With just under 200 days left in the year sticking to this challenge will save you £220 by Christmas.
The ‘in for a penny challenge’, is less intimidating than most challenges as it’s easy to follow and all financial contributions are small.
Missing a day may seem trivial as saving contributions are so small, however, because they are so small, missing several days can dramatically decrease your savings pot.
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Pete reckons this challenge is best if you are already in debt.
He said: Saving a penny, a day far less intimidating a task than saving upwards of £5. The biggest challenge will be saving that penny daily as it requires commitment to remember and patience."
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“Adopting the mantra, ‘look after the pennies and the pounds look after themselves’, is a great way to stay on track with this savings challenge.”
Final Number Standing Challenge – save around £227
The brainchild of Budget Bro Joe, the final number standing requires savers to check their bank balance daily, a great habit as many Brits cannot confirm how much they hold in their bank accounts.
Once the balance is checked, the ‘final number standing’ challengerequires savers to save the last number of their balance. For instance:
Balance Amount to save.
- 1,259 £9
- 566 £6
- 24.605 £5
By law of averages, saving via the final number standing method will save the average person £227 by December.
This challenge is easy to follow and creates a great habit in checking your bank account balance daily.
But it is not recommended if you are already in an overdraft.
Pay Not to be There challenge – save around £513.52
Missing an event to save funds or skipping a typical night out?
If you are missing out, save what you would have likely spent. If its an event, save the cost of the ticket or entry fee. Skipping one night out each month, between now and December will save you a total of £513.52.
This challenge not only creates saving habits but can potentially create other habits that are beneficial to your health.
But of course don’t take it on unless you can handle the Fomo!
Pete reckons this is one of the best saving options if you don’t like commitment.
He explains: “People tend to like this challenge as there is no real commitment. You don’t have to remember to keep it up or save specific amounts every day. Plus, it doesn’t matter what your income is, you can apply it to you.”
Envelope Your Savings Challenge – save around £5,050
This is a great challenge if you're into arts and crafts and still like the feel of real cash.
Obtaining 100 envelopes, number each from one to a hundred and shuffle. Pick one envelope each day and fill it with the amount shown.
Over the course of three months, this will save you £5,050.
Bear in mind this challenge is not for the faint hearted as it requires participants to frequently save large amounts. Remember, you can always adjust the challenge to suit your finances.
If stuffing an envelope, a day is unfeasible, choose just a couple a week, or even just the one. You could also reduce the number of envelopes from 100 to 50.
Not This Week, Next Week Challenge -save around £72
This biweekly challenge sees participants deposit multiples of four every other week into their savings. For instance:
- Week 1: £4
- Week 2: £0
- Week 3: £8
- Week 4: £0
- Week 5: £12
- Week 6: £0
This saving challenge is less intimidating than saving every week.
It also gives you more time to work around your finances so you can budget other spending where you need to.
But as months go on, the higher the amount saved. This may require some preparation.
Pete says it’s important to look at saving money the same way you would look at changing habits.
He said: “Swap contemplating what you should ‘cut out’ for ‘how can I change my spending habits’. If you ‘order in’, food several times a week, reduce this to a weekend treat.”
“If you frequently purchase a new outfit for summer drinks with friends, try renting. If you usually meet at a bar, try pre drinks at home where everybody brings a bottle.”
If you choose any of these saving methods think logically and realistically about how it will work for you.
Pet said: “Any saving challenge is prescriptive to a person and their circumstance. Unfortunately, there is no, ‘one size fits all’ recipe.”
“It’s a bad idea to adopt any challenge that is going to be unsustainable for you. If your new saving habit leaves you with little to no disposable income each month, it’s unlikely that you will stick to it,” he continued.
Often the process of saving is just as important as the final reward.
“Saving challenges should lead to excitement as participants look forward to gaining a lump sum at the end of it. If the challenge is sucking the joy from your life as you can no longer partake in anything that you enjoy, then it's best to avoid that challenge.”
And you may be wondering what you should do if you take on one of the challenges and find yourself with a little extra cash by Christmas?
Pete asks: “What will spark long term joy and/or relief? Paying off a credit card? Finally treating yourself to a spending splurge after months of saving? Or adding the cash to your current savings sum to reach your goals quicker?”
“Whatever you do is prescriptive to you but sit on the decision for at least a week to ensure you don’t experience ‘spenders’ guilt’.”
Christmas is the time of year where most of us spend the most money regardless of our finances. Think carefully about the final sum you end up working with.
If you have saved up all year by December why should that mean you spend more than you did last year?
Whilst saving for Christmas is a great idea, it's important to bear to think about bigger saving challenges that many Brits struggle with today like buying a house or a car.
Pete has shared his number one tip for bigger saving challenges.
He said: “If you slip up and neglect to stick to your savings plan, get back on track as fast as you can. Don’t be to hard on yourself – just move on.”
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