No one expects a child to open a book and be able to read. Yet we expect to be able to develop a level of financial understanding without any teaching – nine in 10 adults don’t talk about money.

Of course, children are unconsciously absorbing messages around money. They may hear their parents sighing when they pay for the weekly shop. They may notice that treats don’t happen as often. They may see friends going on holidays and be told “We can’t afford it”, without any explanation. By the age of seven children have already developed attitudes around money.

But whether you’re just starting to save or are finding it hard to make it a routine, developing a saving habit is something we all need, regardless of our income. Here we’ll share ways to help you change your mindset from spender to saver.

The importance of savings goals

According to financial adviser Sarah Astley, having a savings goal is key. “Saving without a purpose is a difficult concept to make sacrifices for. The excitement of going out to new places and spending time with your friends is always going to be more desirable than having the money in your bank account.”

Before you set your goals, take a look at your income and spending. Our Budget Planner is a great place to start, and can really help you understand your money better. Writing down your essential and non-essential spending can help you figure out how much you can start saving and think about how you want to save it.

You might already see where you could be saving, and small changes can make a difference. “You’ll know areas in your life where you think, ‘I could reign that back a little bit’,” says Sarah.

Now think about setting your goals. It helps to divide them into short term, such as paying off debt or saving for a wedding; and long term, such as building a deposit for a house or saving more into your pension.

Short term savings goals

When it comes to shorter goals, the ‘1p challenge’ is a great place to start. This works by saving just 1p more every day for a year. So on 1st January you save 1p, then on 2nd January 2p, on 3rd January 3p – and so on. When you add £3.65 to the savings pot on 31st December, you will have saved £667.95. Small savings really do add up!

Look closely at your spending habits and think how the little sums might add up over time. How much could you save if you didn’t spend on takeaways for a month? Building financial security is like building muscle: you start with the weights you can handle and build up slowly until you reach your goal.

Break your saving goal into small chunks; it might be easier to think about saving £5 a hundred times than saving £500. Challenge yourself to swap out one expensive branded food product for a cheaper alternative each week, and log the savings you make as a result.

Try dividing up your money so you can see how much you’ve saved towards your goal – you can use an app that allows you to split your money into different pots. That way, your savings are a bit more out of sight and you’re less likely to be tempted to dip in. You might even earn some interest on the money you’re tucking away.

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Long term savings goals

Long term goals can be tougher to maintain, because the reward is so much further away. You might have to try a few savings hacks before you find one that works for you.

Perhaps you could try working towards saving a certain proportion of your income every month. The proportions will vary for everyone, but you could think about spending half your income on essentials such as rent or mortgage, bills and food; 30% on discretionary expenses such as eating out or holidays; and 20% on paying off debt or saving. Remember it’s best to pay off debt before starting to save if you can.

You might prefer to use the idea of “pay yourself first”, where money is automatically routed into savings or your pension before it reaches your pocket. What’s important is that saving, however little, is built into your budget today, rather than being something you’ll do in the future.

How to boost your retirement savings

Remember if you’re saving for your retirement, you don’t have to do it by yourself. If you have a personal pension, the government will boost your pension savings by 25% through tax relief, making every £100 you save worth £125. The amount of tax relief you may be eligible for depends on your circumstances though. If you’re enrolled in a workplace pension your employer should be contributing as well. Most people will get tax relief on that money, too. So increasing what you’re paying into a pension is a very tax efficient way of saving for the future.

If you haven’t logged in recently, it’s a good idea to check-in on your pension to see how much you’re contributing and whether you can top it up. Even small increases now may help grow your pot and make a difference to your retirement income in the future.


Saving for retirement

Whether you’re self-employed and looking to save for retirement, or want to bring your pensions together, our Personal Pension could be right for you. The value of your investment will go up and down though, so you may get back less than you put in.

What’s next?

There are lots of resources to help you build the savings habit. Head to MoneyHelper for impartial guidance on all aspects of money. And if you’re over 50 and thinking about the best way to access your pension savings, you can make an appointment with Pension Wise, a free and impartial government guidance service designed to help you understand your retirement income options.

Like any habit, saving will take time to become second nature (and remember, it takes 66 days to build a habit) but if you stick with it you will reap the benefits.

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