There are a massive number of articles, blog posts and YouTube videos about how to increase your savings, and they range from common sense to absolutely absurd.
At the end of the day we all know “limiting yourself to one Starbucks a week” is not going to help anyone get on the property ladder. Slicing a tenner a week off your outgoings is still only an extra £500ish a year, and at that rate you’ll be saving for 65 years to build up the average UK deposit.
But I’ve managed to drag my savings from zero (well, technically minus something with my student overdraft) to a number a little larger than the £32,927 average UK deposit over the last five years. I did it all by myself, while paying private rent, in London. It wasn’t just through earning more and spending less, though. I used a few tricks to add an extra £10k-ish to my savings that was essentially “free money” too, but more on that later.
Most articles about young people buying a house usually include an oh so subtle hint at the bootstrapping couple being given a juicy slice of inheritance somewhere along the line. Or if it isn’t that – they’ve been shacking up rent-free with their parents for a few years and/or been working themselves to the bone picking up extra shifts at McDonald’s in the evening and going without holidays/nights out/makeup or anything else that might make life slightly bearable.
All of these factors (obviously) are going to help you grow your savings, but in an effort to not be boring/assume you are willing or able to do any of that, I’m not going to include any of them in my tips.
Actually keep an eye on your bank account
This is the basics, don’t let denial be an excuse. Download your bank’s app and LOOK AT IT – at least once a week.
In the process of applying for a mortgage I had to submit a month’s bank statement from both me and my boyfriend and looking through his I saw that he’d been paying two phone bills… for possibly FOUR YEARS.
Don’t be like him.
I’ve reviewed the Starling joint account, the current account version of which is great too. If you find your banking app clunky or confusing, challenger banks like Monzo or Starling are good choices.
Pay yourself first
I used to save like this: get paid at the end of January, my bills come out in dribs and drabs throughout February, I buy things, whatever – then the day before payday I see what’s left in my account and move it to savings.
But if you switch it around so that a standing order sending money to your savings comes out on the 1st of the month, as do most of your bills, you’re going to find it gets easier to save a lot more.
Start off by making your standing order the same amount that you’d usually have left in your account at first until you become comfortable increasing it. Depending on how much you earn it’s possible to be moving across close to 40% of your take-home pay each month.
Hide your money
No, not in an Al Capone, money laundering way.
I’d recommend at first opening a new savings account with a different bank to the one you use for your current account. It’s so easy to swap money between accounts when they’re both on the same banking app – and you want to resist the temptation to move money out of savings unless it’s a real emergency.
Move your money around
Yes, I’m contradicting myself, but when you aren’t earning the maximum interest you can, you should move your funds ASAP. Even at a record low, inflation is currently 1.8% (thanks Brexit). That means if you aren’t getting at least 1.8% interest, your savings are actually becoming less valuable over time.
This is one of the ways I added £10k to my deposit for “free”.
Claim back what you’re owed
Have you been overpaying your student loan? Is there money on that Oyster card you haven’t used since 2014? Have you bothered to submit all the documents needed to claim an insurance payout?
So much of the money we waste every day is just through laziness. If you bought something that broke within the first couple of months, don’t just bin it and buy a new one. Get in touch with the company who sold you a faulty product and they’ll probably send you a brand new version, free of charge.
GET THAT MONEY BACK.
You need it now more than ever. If you can get your deposit up to that golden 25% then you’ll get access to the best interest rates on your mortgage, which can save you thousands in the long run.
Cut your bills
For this point I’m going to use my mobile phone contract as an example – I managed to claw back almost £100 just by being a little bit sneaky.
Here’s how to do it:
- Already be at the end of your current contract, or within 30 days of it ending.
- Take a look at what you’ve been using on your contract – work out how much data and minutes you really need.
- Find a SIM only deal that’s better than yours – I recommend checking HotUKDeals. Don’t go for something just because it’s cheap, if you usually use 10GB of data, don’t get a 2GB plan, because paying every time you go over is only going to make it more expensive.
- Check the cashback rates for taking out a new contract on TopCashback and Quidco. [These are both refer a friend links.]
- Call up your network and ask for your PAC code, if they want to offer you a deal to retain your business you can hear them out, but if it isn’t as good as what you’ll be saving with the new deal you found PLUS any cashback you can make for signing up, get that PAC code.
- Get a freebie PAYG sim with a different network and port your number onto that. Request another bloody PAC code.
- Order a new SIM for the cheap deal and port over your number for one last time.
I moved from Three on a unlimited minutes, texts & data sim to a 200 minute, unlimited texts & data plan (again, on Three), and saved £6 a month, PLUS £25 cashback for “switching” – despite the fact I was already on Three.
You can do this once a year, even if you’re already on the best plan for you, just for the cashback!
I’m not going to miss the extra minutes, but the bonus £100 a year is an easy win for me. Think of all the bills you have coming out of your account each month, and pretty much all of them can be negotiated down like this.
Much easier than saying no every time a friend asks you out for dinner, right? Short term pain, long term gain.
Keep track of what you’re saving
The number 1 most motivating thing I did while saving up for my deposit was to keep an ongoing tally of how much money I’d saved up. As I mentioned further up the list, I was moving my money around in order to rack up the most interest humanly possible, so it wasn’t often that I saw all of my savings in one pot.
The first year I started saving I drew a thermometer sort of thing in my filofax and coloured it in a little bit more every time I added to my deposit. But now I’m actually earning interest on my money it’s a lot more convenient to add the awkward numbers into an app.
I use Thriv. If you search saving goal on your app store you should get something similar. A spreadsheet should work too, but you don’t get the progress bar.
What do you reckon? Hopefully there was something new here for you – do you have any other tips to build a deposit without depriving yourself?