Make your Lockdown savings habit last a lifetime: Our top ten tips

Savers across the country have stashed away a record £157 billion during lockdown after many day-to-day expenses disappeared.

But as restrictions ease, with pubs, restaurants and non-essential shops now open, most will see their outgoings begin to creep up again as the economy starts to recover.

So as you start to spend again, Money Mail has ten tips for how to turn a new savings habit into a long-term commitment.

Banking it: Savers across the country have stashed away a record £157 billion during lockdown after many day-to-day expenses disappeared

1. Draw up a budget – and stick to it

Work out what expenses put the biggest dents in your bank balance before lockdown. 

Some, such as commuting costs, will be unavoidable. But making a budget should help you cut back on more needless spending, says Laura Suter of AJ Bell. 

Smartphone apps such as Snoop or Mint can analyse spending and show what your balance will be once all bills are paid. Many major banks offer similar services online.

2. Sort out any debt you have

With interest rates so low, there is little point in ploughing spare cash into savings if you are still paying off credit cards and loans. 

Consider clearing these first. Transferring debt to a 0 per cent credit card will cut interest charges. 

Natwest, M&S Bank and TSB currently offer the longest interest-free balance transfer deals at 28 months.

3. save the day you get paid

Once you have decided how much you can afford to save each month, set up a direct debit to transfer this money into a savings account as near to payday as possible. 

This will make it easier to see what you have to live on for the rest of the month.

4. keep a range of saving pots

As a rule, you should aim to have between three and six months’ worth of income set aside for emergencies. 

This should be easily accessible without penalties. Set up a separate holidays savings account. Long-term savings should be kept separate, too.

Slow your spending: If you want to buy something, vow to wait 24 hours before handing over any cash. This will help you cut down on impulse purchases

Slow your spending: If you want to buy something, vow to wait 24 hours before handing over any cash. This will help you cut down on impulse purchases

5. Watch your bank balance

Keeping a close eye on your balance can help you become more thoughtful about your finances, says Sarah Coles, of Hargreaves Lansdown. 

It will also stop you inadvertently slipping into your overdraft, which can incur costly fees.

Think about which moods trigger you to spend. You may be more likely to shop when you’re bored or sad.

6. Stop to think before you buy

If you want to buy something, vow to wait 24 hours before handing over any cash. This will help cut down on impulse purchases and make sure you only buy what you really need. 

Making it physically harder to spend money can also help. Unsubscribe to promotional emails which tempt you to shop online and remove saved card details from your computer.

Be prepared: As a rule, you should aim to have between three and six months' worth of income set aside for emergencies

Be prepared: As a rule, you should aim to have between three and six months’ worth of income set aside for emergencies

7. Don’t settle for a bad rate

Since the Bank of England base rate was cut to just 0.1 per cent, many of Britain’s biggest high street banks – including Lloyds, Halifax, Barclays, HSBC and TSB — have slashed interest rates to as low as 0.01 per cent. 

So don’t open a savings account with your current account provider until you’ve looked for a better deal elsewhere. 

Find out more about top savings rates below. You may also be able to earn a little more by opening an account via cashback websites such as TopCashback and Quidco.

8. Picture your goals

It can help to visualise your saving goals, especially if they feel a long way off. 

Create a mood board of pictures which represent what you are aiming for — such as a new home or a university education for your grandchildren. 

Looking at it will help you remember why it’s good to budget.

9. Reward yourself

Saving is hard work and it’s important to reward yourself now and again. If you reach a significant figure, treat yourself to something you really want. 

‘We are hard-wired to respond to rewards for good behaviour, so as long as you don’t overdo it, this shouldn’t hinder your progress,’ says Becky O’Connor, of Royal London.

10. Review your nest eggs often

Once you have a savings plan in place, set a date in the diary to review everything again. Try to do this every six months. 

Ms O’Connor adds: ‘A change in circumstances, like a pay rise, may prompt you to reassess your targets and how much you save.’

It also pays to keep a close eye on savings rates. Some accounts offer a bonus for a year, after which rates plummet.

Most easy-access rates are variable which means they can drop at any time.

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