In the current cost of living crisis, we’re all watching the pounds and pennies.
But at a time like this, saving has never been more important than it is today.
While it may seem like a scary prospect, saving money doesn’t have to be complicated and you may be surprised at how much you can save.
Now is a good time to start thinking about saving for Christmas gifts so they don’t eat up your December paycheck.
We spoke to financial advisor Pete Ridley at auto finance saver Find out how you can save up to £5,000 between December and find out which method works best for you.
1. The In for a penny challenge – potential savings of £220
Perhaps the easiest challenge to follow, the 1p challenge requires participants to save 1p each day. Are you starting too late? No problem, just backdate the pennies.
With just under 200 days left in the year, you can save £220 by Christmas by taking on this challenge.
The In for a Penny Challenge is less intimidating than most challenges as it is easy to follow and all financial contributions are small.
Missing a day might seem trivial given how small the savings contribution is. However, because they are so small, missing several days can drastically drain your savings pot.
Pete thinks this challenge is best when you’re already in debt.
He said: “Saving a penny is a far less daunting task than saving more than £5. The biggest challenge will be saving that penny every day as it takes commitment and patience.”
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“Adopting the mantra of ‘Mind the pennies and the pounds mind yourself’ is a great way to stay on track in this savings challenge.”
Final Number Standing Challenge – save around £227
The final figure is an idea of Budget Bro Joe and will require savers to check their bank balances daily, a good habit as many Brits can’t confirm how much they have in their bank accounts.
Once the balance has been verified, the Final Number Standing challenge requires savers to save the last number of their account balance. For example:
Remaining amount to be saved.
According to the average law, the average person saves £227 by December if they save using the final number method.
This challenge is easy to follow and will make you into a habit of checking your balance daily.
However, it is not recommended if you already have an overdraft facility.
Pay Not to be There Challenge – save around £513.52
Missing an event to save money or missing a typical night out?
If you miss something, save what you probably would have spent. If it’s an event, save on the cost of the ticket or entry. If you skip a night every month between now and December you will save a total of £513.52.
Not only does this challenge lead to saving habits, but it can potentially lead to other habits that are beneficial to your health.
But of course don’t pick it up unless you can handle the fomo!
Pete thinks this is one of the best savings 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 think about moving on or saving certain amounts every day. Also, it doesn’t matter what your income is, you can apply it to yourself.”
Design your savings challenge – save around £5,050
This is a great challenge if you are into crafts and still like the feel of real money.
Get 100 envelopes, number each one from one to a hundred, and shuffle them. Select an envelope each day and fill it with the amount shown.
This will save you £5,050 over three months.
Keep in mind that this challenge is not for the faint of heart as participants often have to save large amounts. Remember that you can always adjust the challenge to suit your finances.
Stuffing an envelope a day isn’t feasible, pick just a few a week or even just one. You can also reduce the number of envelopes from 100 to 50.
Not This Week, Next Week Challenge – save around £72
In this bi-weekly challenge, participants deposit multiples of four on their savings every two weeks. For example:
- Week 1: £4
- Week 2: £0
- Week 3: £8
- Week 4: £0
- Week 5: £12
- Week 6: £0
This savings challenge is less intimidating than weekly savings.
It also gives you more time to take care of your finances, so you can plan other expenses where you need them.
But the more months go by, the greater the amount saved. This may require some preparation.
Pete says it’s important to look at saving the same way you change habits.
He said, “Switch and think about what to ‘leave out’ rather than ‘How can I change my spending habits?’.” If you ‘order’ food several times a week, you’re reducing that to a weekend treat.”
“If you find yourself frequently shopping for a new outfit for summer drinks with friends, try renting. If you usually meet at a bar, try the aperitif at home, where everyone brings a bottle.”
If you choose one of these saving methods, think logically and realistically about how it will work for you.
Pet said, “Every rescue challenge is dependent on a person and their circumstances. Unfortunately, there is no one-size-fits-all formula.”
“It’s a bad idea to take on a challenge that will be unbearable for you. If your new saving habit leaves you with little or no disposable income each month, you’re unlikely to stick with it,” he continued.
Often the process of saving is just as important as the eventual reward.
“Savings challenges should generate excitement as participants look forward to receiving a lump sum at the end. If the challenge is to take away your enjoyment of life because you can no longer participate in what you enjoy, then it is best to avoid that challenge.”
And you might be wondering what should you do if you take on one of the challenges and have a little extra cash before Christmas?
Pete asks, “What will trigger long-term joy and/or relief? Pay off credit card? After months of saving, are you finally treating yourself to some cash? Or add the money to your current savings to reach your goals faster?”
“Whatever you do, it’s a requirement for you, but wait at least a week for the decision to make sure you don’t feel ‘financier guilt.'”
Christmas is the time of year when most of us spend the most money regardless of our finances. Think carefully about what final amount you end up working with.
If you’ve been saving all year through December, why should you be spending more than you did last year?
While saving up for Christmas is a great idea, it’s important to think about bigger saving challenges that many Britons are grappling with today, like buying a house or car.
Pete shared his top tip for bigger savings challenges.
He said: “If you make a mistake and don’t stick to your savings plan, get back on track as soon as possible. Don’t be too hard on yourself — just keep going.”